AOL Continues to Rely on LaggardsOver the years, we have talked many times in this space about the Product Life Cycle (PLC) and its implications for marketing decision making. For instance, back in February of this year we discussed how a number of once popular beers were entering the Maturity stage of the PLC, while way back in 2010 we saw how the video rental business was quickly fading into the Decline stage.

While considering issues products face when they enter a certain stage of the PLC is quite useful, what may be even more interesting is examining the characteristic of customers who make purchases within each stage. We can do this by looking at buyer characteristics associated with the five Adopter Categories. When evaluating buyers in each of the Adopter Categories, many marketers find consumers classified as Laggards to be quite interesting. What distinguishes these consumers from those in other categories is that they are the last to adopt an innovative product because they are reluctant to change from what they are accustom to using. The reasons these buyers continue to purchase a product that has seen its best days are numerous. One reason is that Laggards view switching to something new as requiring too much effort on their part to learn about the new product.

Another reason Laggards resist changing is that newer products are just not readily available to them and getting access to these products would be very costly. A good example of this can be found with customers still using dial-up for Internet access, such as customers living in remote areas who continue to pay for dial-up through AOL. In August, we discussed AOL's financial situation still relies heavily on these dial-up customers. Four months later, this story from Time offers even more information on AOL's reliance on old customers. According to this story, AOL still has 2.3 million dial-up subscribers who, on average, have been customers for over 14 years. What is even more fascinating is that the AOL division responsible for dial-up is a true cash cow. In fact, the story states that nearly all of AOL's third quarter profits come from this division.

The story also suggests that the reason these customers cling to dial-up has more to do with access than to choice. Consequently, the story does not paint a particularly good picture of the service being offered, as customers interviewed for this story consider the service to be very slow. Yet, the complaints of customers should not be a surprise. As we note, one of the primary strategies for companies who still provide products in a declining market is to spend less on products while charging higher prices. This "milking strategy" can go on for some time, so expect AOL to rely on the financial support of dial-up customers for many years to come.

If there is one thing that marketers crave but is beyond their control it is to be viewed favorably by the media, such as news reporters and bloggers. Consequently, for leading marketing organizations, maintaining a healthy relationship with the media is one of the most important goals of their public relations efforts. And as we note in our Public Relations tutorial, the reasons marketers often bend over backwards to please the media is that when members of a target market are exposed to a story written or broadcast by what they perceive as trusted media, they often believe what the news media says.  For the marketer who is the focus of the media's message, this can help establish a potentially high level of credibility for the company.

To get into the good graces of the media, some companies bend over backwards to make sure media members are exposed to the goods or services they are promoting. For instance, one way to expose reporters or bloggers to a firm's offerings is to invite them to a location where they can sample products, watch consumers consume the company's products, or, best of all, consume products themselves. Of course, as media members are exposed to the products, the marketer's PR person will hover and try to influence them by continually explaining how great their products are compared to competitors' products.

Unfortunately, there are instances when exposing the media to a company's products can prove to be a bad idea. For example, sometimes a member of the media will sample a food or beverage that was not at the level the marketer promoted resulting in a poor product review. Or a magazine's interview with a company executive does not go well leading the reporter to wonder about the executive's managerial skills. Or maybe a product just fails when a reporter is exposed to it. That is what appears to have happened to restaurant chain TGI Fridays. As discussed in this Time story, TGI Fridays is currently running a major television advertising campaign featuring a drone that flies mistletoe around the restaurant with the goal of hovering above loving couples. Unfortunately, when a media crew was invited to watch the drone in action, this flying machine malfunctioned and ended up cutting off the tip of a photographer's nose.

Obviously this is not good publicity and will likely be the butt of jokes on late-night shows. That cannot be good for T.G.I Fridays, so it will be worth watching whether they end up pulling their drone ad.

People who are generally unfamiliar with marketing often assume that this business function is only used for the purpose of selling products. While these folks may accept that marketing occurs in non-profit companies as well as in for-profits, they seem to think the key measure of success in marketing will always be based on how much revenue is generated. It is certainly understandable why people think this way especially given what they see during the holiday season. This time of the year customers are being inundated with advertisements for goods and services, and mailboxes around the world are being flooded with requests for charitable donations.

Yet, there is another strategy within marketing that is clearly not intended to be a revenue generator – Cause Marketing. As we note in our What is Marketing? tutorial, companies can use marketing technique to help present them as being socially responsible. One way to do this is by focusing marketing efforts on a particular social cause that is intended to help society. As we note, while taking this approach may not instantly result in a benefit to the company, over time being perceive as socially responsible can build a strong reputation among targeted customers. An example is how General Mills used Cause Marketing for its Green Giant brand.

For marketers considering a Cause Marketing strategy, this story from CRM Magazine is worth reading. It offers excellent suggestions for building an effective Cause Marketing campaign that includes: spending time finding the right cause; embracing social media and mobile apps; and the need to craft a compelling message. The story also provides several interesting statistics suggesting, that over the long-run, Cause Marketing is well worth the effort.

We are the first to admit that we probably do not direct enough attention in our posts to the marketing area related to physical distribution. Yet, while product distribution may not be as glamorous as advertising or product design, it is enormously important for two reasons. First, a company's distribution system represents a cost. While there are some situations where distribution can create revenue (e.g., shipping products for someone else), by and large storing and moving products costs money. Consequently, a well-run distribution system offers benefits to the firm's bottom line by keeping costs low. In fact, even small changes that save only a few cents per pound of product handled can yield substantial gains. Why? Because many companies move thousands of pounds of product each day. Thus, saving just a few cents per pound will eventually add up to a sizable financial gain.

Second, and probably easier for the non-distribution person to understand, efficiently managing product movement can lead to greater customer satisfaction from distribution partners, such as retailers, and from the end customer, such as consumers. For retailers, they can only sell what they have in stock, so they strive to eliminate stockouts (i.e., no product available) by handling products from manufacturers with reliable distribution systems. For consumers, and especially those purchasing online, the ability for a retailer to deliver the order quickly can lead to positive evaluations of their purchasing experience.

For firms seeking to build efficiency into product movement they often turn to technology. For instance, companies utilize routing software to guide their trucks to destinations along the quickest path possible. Another way is through automated warehouses where pallets filled with product are moved to storage racks or onto trucks using computer-controlled pallet jacks.

Yet, one part of distribution that has always been a labor intensive problem involves product fulfillment for small individual purchases, such as small orders placed online. Internet orders are generally filled by an employee who must walk around a warehouse locating the requested items. Of course, this can be quite time consuming. Now there is technology that addresses order picking. As explained in this National Public Radio story, Amazon is using specialized robots programmed to bring products to employees who fill the orders. According to the story, Amazon uses over 15,000 robots in its warehouses.

When this report of Amazon using robots in the warehouse is considered alongside their research into using drones to deliver orders, one has to wonder if many humans will be part of product distribution in the near future. While the story suggests jobs are actually increasing, the question of robots eventually replacing humans remains.

As we talk about in our Planning for the Product Life Cycle tutorial, the maturity stage of the PLC is a tough place to be. At this point in its life, a brand has seen the good times decline to the point where many in the company behind the product believe spending more to support it is not a good idea. Instead, they look to other strategies including trying to get rid of the problem by selling the product to another company that believes it has a better idea for resurrecting it. A second idea is to hold on to the brand but support it with very limited funding. Essentially the owner of the product lets the it fall to the PLC Decline Stage, where it has slim chance of recovering, though it may last there for some time and provide nice income thanks to purchases made by older, brand loyal customers.

However, for some products a third idea exists: try to grow the product again and extend the product life cycle. We note several strategies for extending a product's PLC but the success of these depends on many things, including whether the brand's management has figured out at the right time where the product is in the PLC and has not waited too long to try something new.

As discussed in this New York Times story, a cough drop brand by the name of Smith Brothers is trying to grow its business once again. The product has been around for many years, yet has been neglected by multiple owners. Now a somewhat none traditional owner, a New York hedge fund, is attempting to infuse new life into these cough drops. The story talks about the new owners' plans to improve sales of this product, including spending $2.5 million on advertising. Of course, whether this is too late remains to be seen.

In addition to talking about the Smith Brothers product, the story also lists a number of other once-famous brands that are also considered in the majority stage including once well-known names as Comet, Duncan Hines and Parkay.