On April 2008, Pizza Hut announced the introduction of a new product line called the “Tuscani Pasta”. Like any product, this product has a life cycle. Different strategies should be maintained through each stage of the cycle in order to move the product throughout the cycle.
1.Introduction Stage:The main purpose of this stage is to introduce the new product to the market. The company must be aware of the tremendous amount of time and money which will be spent at this stage in order to attract consumers, grab their attention to this new product, and make them try it.
In this stage, there are several strategies for the company to follow:
•The company must well advertise their new product and obtain a trademark for it so customers will be aware about this product. Pizza Hut had spread many of announcements about their new product “Pasta Hut”. They alerted the customers by several ways:Pizza Hut’s web site was redesigned and many attractive pictures of the new pasta were added in their homepage. They also created a new URL to market the Tuscani Pasta. In addition, they gave out coupons and they advertized the new product everywhere in the newspaper, magazines, and TV.
•At this stage, sale growth might be slow. So, it is recommended to keep the price relatively high in order to overcome the high costs associated with introducing the new product. Therefore, the revenue may be low, too.
•At the beginning, the distribution must be limited until people become more familiar with the product. Pasta Hut has followed this pattern by introducing this new product in main cities that are known with their multi-cultural population.
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How does a firm's pricing policy relate to the product's life cycle? When a company launches a new product, it knows the product won't last forever. However, the company does expect to earn a satisfactory profit to cover all the effort and risk that went into launching it. A firm can never accurately predict the lifetime of a product, but the lifetime involves four distinct stages. These four ...
•A company should also start first with one or few products in order to test the customer’s reaction. As in Pasta Hut, they produced only two types: creamy Chicken Alfredo and Meaty Marinara.
2.Growth Stage:In the growth stage, the highest rate of sales for the company is maintained. The raise in the number of customers who are aware of the product will lead to rapid growth in revenue. During this stage, competitors have just started to arise and they are still in the introduction stage.
This stage is the best time of every new product where the costs are less and the revenue is high and strategies can include:
•Increase the amount of advertisements to build brand preferences and to attract new target market. For instance, Past Hut made more ads and added new slogans to the ads to attract more customers. They gave it an Italian name (Tuscani Pastas) to give it a classy Italian atmosphere and to attract different ethnic groups. They also put some ads, which shows the pastas as a luxuries meal and not a fast food.
•Price can be maintained at the same level if the company noticed the demand is increasing. In some situations, the company can reduce the price as a strategy to attract new customers who cares about the price. In the case of Tuscani Pasta, a reduction in the price can be a clever idea to attract students and labors.
•It is the best time to expand the distribution of the product to draw as many customers as the company can before competitors can reach them. Pasta Hut started at this stage to sell their pastas in almost all Pizza Huts stores in all most all the cities.
•This stage is the perfect time to adjust the product and to add some additional features on it. Different packaging options, and different portions are now available in the pastas of the Pasta Hut.
3.Maturity Stage:This is the longest and the most challenging stage where a company wants to maintain its success, increase the market share, and extend the products life cycle with the existence of high and tough Competitors who offer similar products with competing futures and prices.
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Case Analysis: Pizza Hut - A Customer Loyalty Program List of Facts In 1958 the Carney brothers opened their first Pizza Hut restaurant. The company was so successful that by 1977 it had more than 3,200 restaurants. Further it was acquired by PepsiCo. The quantity of restaurants increased to 12,300 and Pizza hut became the worlds largest pizza restaurant chain. In 1986 Pizza Hut implemented the ...
In order to uphold this success for the longest period:•The company must put more effort on advertising to establish loyal customers. These ads must let the product seem more unique and improved. For example: Pasta Huts new logo may contain the words bigger, better, or more flavor. They also can offer promotions on their Pastas.
•Price should be lowered because the competition is higher and it is a great way to attract the consumer.
•New distribution channels must be added and different incentives can be introduced. In this case Pasta Hut can give offers to students or other target customers so they keep their loyalty.
•A good step is to bring in a new line in the product, apply some modifications, or add some other features to the product be able to differentiate it from other competitor’s products. In this case, Pizza Hut can introduce additional types of pastas with different flavors and additional contents.
4.Decline Stage:During the decline stage, or sometimes referred to the aging stage, the public taste will change, new technologies will enter the market, and the market will be full of competitors and many other similar products. In this case, the competition is high and demand on the product probably will be low. Therefore, cost for producing this product might increase and revenues will decrease.
The only factor that makes the product continue its production is the loyal customers. For that reason:
•Marketers should study their product lines to know which is the most popular one and decide whether to keep producing it or no. For instance Pasta Hut can only keep the two most popular pastas in their lines.
•Distribution must be more selective in places where the demand on the product is high. For example, Pasta Hut can sell its product only in universities’ food court if they found high demand of this pasta in universities’ food court.
This is the last stage in the product life cycle. After that, if the company noticed that this product is not beneficial anymore (the cost is increasing and revenues are not covering this cost), they should stop producing this product and think of another product line.
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In today’s world, where market is unpredictable, strategies play crucial role in defending a firm’s product position. “The main reason why companies must continually develop new products is because products have life cycle”, (Bittel, 1980). Just as operation managers must be prepared to develop new products, they must also be prepared to develop strategies for both new and ...
1 QuickMBA, “The Product Life Cycle”, 2 MSNmoney, “Pasta Hut: Millions and Millions Sold”, 3 Pizzahut, 4 USAtoday, “Pizza Hut preparing pans of pasta for delivery”, 5 PRweek, “Pizza Hut scores big with Tuscani Pastas”,
