Extending the Product Life cycle

Overview
This study looks:
◗ The Cadbury Snack range
◗ The product life cycle
◗ Repositioning as a strategy for maturity
introduction
Cadbury Ireland is a subsidiary of Cadbury-Schweppes
plc, a global leader in the manufacture of confectionery and
beverage products. Cadbury Ireland was set up in 1932 and
today has three production plants, in Coolock and Dun
Laoghaire in Dublin and Rathmore, Co. Kerry. More than
200 products are exported from Ireland to 30 countries
around the world, contributing over €110m to Irish trade.
The distinctive taste of Cadbury Ireland’s products is due
to the use of local ingredients and the company is one of
the largest users of indigenous Irish materials.
Cadbury Snack
The Cadbury Snack range was launched in the 1950s in
Ireland. The range consists of three main products:
◗ Snack Wafer in distinctive pink packaging
◗ Snack Shortcake in distinctive yellow packaging
◗ Snack Sandwich in distinctive purple packaging
The Snack range is the third biggest confectionery brand
in Ireland accounting for over €22m of Cadbury retail
sales. The fact that the Snack range still commands such
a strong market presence over 50 years later is testament
to the strong management both of the brand itself and its
product life cycle.
The Product
Life Cycle concept
The product life cycle model helps marketers identify the
different stages that the sales and profits of a product go
through during the course of its lifetime. There are five
stages to the product life cycle: introduction, growth,
maturity, saturation and decline.
1. Introduction: Sales are slow as the product is not yet
known. Costs are high due to heavy marketing spend to
create awareness. Emphasis is on advertising and
distribution. The recently launched Cadbury Snaps
range is an example of a brand at the introduction stage.
2. Growth: This stage shows growing market acceptance
and increasing profits. Competitors begin to enter the
marketplace. The business concentrates on optimising
product availability. The Natural Confectionery
Company is an example of brand at growth stage.
3. Maturity: The rate of sales growth slows down as the product
has been widely distributed and sold. The company now
focuses on creating brand extensions and promotion offers to
boost sales. New product research is critical to ensure future
sales. The Cadbury Snack range is an example of a brand at the
maturity stage.
4. Saturation: Sales slow down as the market becomes saturated.
Profits level off and may even decline due to increased investment
in marketing to defend against competitors. McDonald’s is an
example of a brand that has reached saturation stage.
5. Decline: Sales slow down dramatically and profits fall off. The
product may be dropped to make way for new products and the
cycle recommences. MG Rover is an example of a brand that
has reached the decline stage.
The product life cycle is very useful for managers as it can act as
a guide for changes in strategy at different stages in the product’s
life. However, the concept runs the danger of becoming a selffulfilling
prophecy. In reality, not all products (or brands) follow
the "S" curve of the product life cycle. Some fad products die
quickly after introduction (Christmas toys for example). Others
manage to live indefinitely. The Cadbury brand has been in
existence since 1824 and is still the number one brand in
confectionery products.
So how do some brands live forever? The answer lies in actions
taken at the maturity stage of the life cycle. If the product or brand
is to remain popular it must move with the times to stay relevant to
modern consumers. This process is known as repositioning.
Positioning
Brand positioning is the aspect of the brand actively
communicated to the target audience, specifically, its competitive
advantage, values and imagery. It is strongly related to the
perception and image of the product. When devising a positioning
strategy for a product, marketers must establish a unique and
distinctive image of that product in the mind of the consumer. This
will differentiate a company’s product from its competitors.
Why is Repositioning necessary?
When products reach maturity they are well known. However, as
competing products enter the market, mature products can begin to
look old and tired. Action must then be taken to refresh the
product’s image. Repositioning can create new appeal for existing
consumers or attract new consumers. The table below summarises
the major repositioning strategies:
Repositioning strategies are used to respond to changes in
consumer tastes or market conditions, or a change in competitor
strategy. The extent of the repositioning will depend on the level of
change in tastes, lifestyles and technologies, and also on how well
competitors are doing.
Repositioning Snack - Why?
Since its launch in the 1950s Cadbury Snack has enjoyed great
popularity and has always been one of the leading confectionery
brands in the country. The Snack range of products were
positioned as traditional tea break accompaniments. This strategy
proved successful as market research shows Snack products are
perceived as "honest, friendly, trustworthy and sociable", "fun",
"light-hearted" and "part of who we are". These are very important
values for any brand. These values were not being communicated
to consumers in an engaging way. This presented an opportunity
Market research showed that while the brand was held in great
affection, the level of identification with the brand was weakening.
Furthermore, research identified that consumer loyalty ratings for
Business 2000
n i n t h e d i t ion
2/4
2005/06
CADBURY
Extending the product life cycle through repositioning
Variations of the Product Life Cycle
Sales
Time
Style
Sales Time
Fad
Sales
Time
Fashion
Image repositioning
The product and target market
stay the same but the image of
the product changes.
e.g. Cadbury Snack
Intangible repositioning
Using the same product to target
a different market segment.
e.g. Lucozade change from
targeting the sick to
targeting athletes
Product repositioning
Changing the product to
make it more attractive to the
current market.
e.g. Most new models of cars
Tangible repositioning
The most radical strategy as
both product and target
market are changed.
e.g. Volkswagen’s revitalising
of the Skoda brand
the Snack brand were low at 2%. In contrast the Dairy Milk brand
has loyalty ratings of over 30%. The Snack brand had become
perceived as the product for "an older, settled person". Something
had to be done to make Snack more appealing to the critical
younger market. Cadbury decided to reposition the brand.