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New Product Development Outline For New Energy Bar – Product Life Cycle and Pricing Planning

New Product Development Outline For New Energy Bar – Product Life Cycle and Pricing Planning

The new PowerBar GelBar combines two growing market segment products into one – the growing segment of energy drinks and the growing, yet moving quickly towards mature, market of energy bars. In this stage of product development, it is necessary to focus on the product life cycle stage of the bar, the upcoming stages and our contingency plan for each as we reach it, marketing mix actions that can be taken to promote the product, and touch briefly on the initial pricing strategy.

Product life cycle stage currently
Despite the fact that GelBar combines a growing product with a growing/mature product, I believe GelBar is in its introduction phase. However, because of the nature of the ingredients, it is a non-disruptive product that will likely mirror a low learning curve product. This means the introduction stage will be short and fast. Because of this, I expect competition for the GelBar quickly once the product is launched.

There is some logic behind claiming that the product is in fact an extension of the growth stage for PowerBar and a way for the firm to stave off the decline in the maturity stage. From a macro perspective, this is true, but the product itself must start in the introduction stage. Because the firm will view the product as new growth product, GelBar will enjoy market exposure and a large advertising budget potential that will allow it to penetrate the market quickly and with large customer awareness.

Planning for future product life cycle stages
Introduction – Launch product with intensive marketing efforts and skimming pricing. Package the product in flashy packaging to attract customers to purchase the product. Launch in limited markets to test customer reactions and correct problems in the product prior to mass market.

Growth – During this phase, I expect multiple competitors to enter the market. More flavors of the GelBar can be introduced and the promotion would focus on the differences between GelBar and the competition. We will expand the locations that offer GelBar as we roll out the product launch across multiple markets.

Maturity – Continue to introduce new product variations until GelBar reaches a full product line. Stock the product in all stores with an impulse buy section, including gas stations, athletic stores, grocery stores, and others.

Decline – Slowly cut the production of the bar and offer alternative bars to encourage customers to switch while reducing the cost of switching (i.e. reduce the risk of losing according to the prospector theory). Begin to replace the GelBar with the next innovation at select outlets to test the new products.

Promoting GelBar using the marketing mix – three strategies for pushing the product forward
Product – With multiple bars and energy drinks on the market, product packaging and ease of use are paramount. GelBar should be promoted with a product size similar to a Snickers to facilitate the idea of a snack on the go. The physical packaging of the bar should emphasize the combination of the ingredients inside. Possible combinations include two-tone packaging that focuses on the orange color of 5 Hour Energy and the gold of PowerBar or black and white to visually emphasize the two distinct ingredients.

Bundling of the product is also important. The bar should be available in both singles and pack form. This pack form would allow the serious athlete to purchase 6 to 10 bars at a time for a reduced price per bar. By increasing the amount of bars available to purchase at a single time, GelBar appeals to higher-end athletes as well as discount membership stores such as Sam’s Club or Costco.

Promotion – Because the initital market for GelBar is high-end sports enthusiasts, advertising will be limited to clearly relevant sporting events. Possible events and end user groups include community sporting events, high school sporting events, corporate-sponsored sports, and professional sports athletes.

As the product matures in the product life cycle, general advertising will be used. By getting sports athletes on board at an early stage, natural promotion will happen as fans see athletes using GelBar at sporting events. Additionally, GelBar can hire celebrity endorsements from these initial professional sports adopters. This will increase GelBar’s visibility to the average consumer and will help to increase sales as the placement of GelBar is also expanded into the growth and maturity stages of the product life cycle.

Placement – GelBar is meant for serious athletes, thus placement initially will be in high-end sports shops and venues such as professional or amateur league sporting events. These limited test markets will allow us to correct customer complaints with the new product before rolling it out to grocery stores and health food stores regionally. Because we feel GelBar may be both a planned and impulse purchase, the product should be stocked in two locations within every venue – both near the cash register for impulse buys and near other energy bars for planned purchases.

Once the product matures, GelBar should be in every gas station, discount membership retailer, grocery store, workout facility and athletic equipment store. This large market penetration will provide the most value for customers as GelBar will be readily accessible while working out or at short notice.

Setting the price of GelBar to accomplish these goals
GelBar is a high end product initially that becomes a mass consumer product as it matures. Because of this, a skimming pricing strategy would work the best at first. While GelBar should be given away at sporting events to minimize prospector theory impacts to the end user at first, eventually the product should be priced above the market rate for an energy bar when it is launched across a few select markets. This high price will ensure only the high-end athlete buys the bar and creates GelBar as a status energy bar.

However, once competition begins to enter the market, the price needs to be reworked. By switching from a skimming to penetration pricing plan, GelBar will be able to command the market and effectively compete with the new bars that are launched by our rivals. Because we were a status symbol bar, GelBar should be widely accepted by the mass consumer as long as we have the association with high performance and elite athletes. This lowering of price will make the product available to all types of athletes, not just elite. The end goal of the pricing strategy is to become similar in mentality to Gatorade or Powerade, both brands that are synonymous with a workout food.

Careful analysis of the product life cycle and understanding what each stage looks like will be key to successfully launching and promoting the GelBar. By utilizing different marketing mix strategies at each product life cycle stage, GelBar can stay one step ahead of the competition and maintain its market share. Using each stage of the life cycle, including decline, as a way to promote GelBar will lock in the core customer – the elite athlete, while at the same time making sure the product is readily accepted by the mass consumer when we launch into the mass market segment.