One of my favorite teaching topics is the product or market life cycle, the semi-theoretical construct that represents in a graphical manner how “every” new category moves from Introduction to Growth to Shakeout to Maturity (and eventually Decline, which I don’t cover in class because it is too depressing).
In Introduction, usually a lone innovator is making lots of revenue and losing a ton of money making consumers aware of its new product (mucho marketing spend eats up any profits; see Amazon, late 1990s). Copy cats then jump in, and the category enters Growth – and becomes profitable for everyone.
Later, market saturation takes place, and it becomes harder for so many competitors to grow. This is Shakeout, and just like it sounds, less capable players fold or get acquired. Eventually, the category reaches Maturity, rising at the meager rate of population growth.
Think mp3 players, e-readers, tablets.
But my students are smart, and challenge my examples. Consider Apple. It now has the most successful mp3 player and tablet, but it wasn’t the “introducer” in either case. It hung back and watched the first entrants fail (e.g., see Microsoft 2001 PC tablet).
I sometimes think the text books should redraw the market cycle graphic to take into account this “zero” phase of category introduction FAILURE.
But what I can’t figure out is how I would illustrate this – companies that play the role of failed “introducer” AND the role of “quick follower.” And then fail again to sustain a market.
So they TRY FOR A THIRD TIME. (See Groundhog Day.)
Today in Part 1, I introduce you to PepsiCo. The company’s beverage division just announced it will be launching Pepsi Next in test markets this summer. “A reduced-sugar and reduced-calorie cola.”
It should. This is Pepsi’s THIRD try at this unwanted category.
Pepsi XL in the 90s. Pepsi Edge in the 00s. Now this. Said a Pepsi spokesman: “…the product was created for consumers who want full-calorie colas but are decreasing consumption…”
Problem being Pepsi Next is “reduced calorie,” not “full calorie.” This is the Snackwell’s story, again and again. And now again. Put a straw in this one – it’s done.
Will Pepsi go the well again in the year 2020? Since it already has the name Pepsi Max, I say we try this “half-calorie” thing with something called Pepsi Mid. Or Pepsi Middle.