Ch. 11 - Developing and Managing Products

New product is important to sustain growth, increase revenues, and profits, and replace obsolete items. It is a product new to the world, the market, the producer, the seller, or some combination of these. There are six categories of new products, Chanel has established three categories of new products:

Ø  New products lines- Chanel’s first product was jersey haut couture, the little black dress. Since, then, Chanel has expanded into fragrances, watches, glasses, cosmetic products, jewelries, luxury bags, and accessories.

Ø  Additions to existing product lines- Chanel frequently produce new product item to its existing product lines. Recently, Chanel introduced its new series of Spring-Summer 2014 handbags. Also, Chanel introduces its new fragrances in the N^。5 and Coco fragrance series.

Ø  Repositioned products- Chanel has repositioned the N^。5 fragrance from classic elder to sexy allure. Back in the old days, N^。5 were to attract over 40 years old. Its advertisings were women dressed in formal ways. Recently, the target market of N^。5 is customer over 25 years old not just over 40 year old. The advertisings are sexy women wear little clothing.

Ø  Lower-Priced products- Chanel are upscale and exclusive product. It does not offer lower price products.

Product Life Cycles

Product life cycle (PLC) is a concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death).

v  Introductory stage:

The introductory stage of the Product Life Cycle represent the full-scale launch of a new product into the marketplace. In this stage, the rate of failure is high, not many competition, frequently needs product modification, and limited distribution. Chanel’s brand new style backpack fall in this stage. The style with graffiti is new design that Chanel has never had before; that may cause high failure rate. This product has less competition because Chanel competitors do not have this style.

v  Growth stage:

The growth stage is after surviving from the introductory stage. In this stage, the sales grow at an increasing rate and profit reaches the peak, now there are more competitors, and large companies may start to acquire small pioneering firms. Chanel No.5 perfume series fall in this stage, where they face more competitors. In this stage, the aggressive branding advertising is needed. The advertising of the products become less informative and focus on attracting consumers’ emotions. The advertisements of No.5 perfume series are vintage style that present its theme of classical that intended to attract customers and differentiable from its competitors.

v  Maturity stage:

A period during which sales increase at a decreasing rate signals the beginning of the maturity stage of the life cycle. Normally, this is the longest stage of the product life cycle. Some of Chanel’s dresses are in this stage. According to the Bloomberg news, Chanel had sold-out Dresses.

v    Decline stage:

     When Chanel’s product is long-run drop in sales signals the beginning of the decline stage. This means that the product is going to be removed from the market.