From these answers, one can determine the parameters of the S-curve response function and use linear programming techniques to determine resource allocations.

Decision algorithms that result in extreme solutions, such as allocating most of the sales force to one product while neglecting another product often do not yield practical solutions.

For mature products, sales increase very little as a function of advertising expenditures. For newer products however, there is a very positive correlation.

Portfolio models may be used to allocate resources among major product lines or business units. The BCG growth-share matrix is one such model.

New Product Diffusion Curve

As a new product diffuses into the market, some types of consumers such as innovators and early adopters buy the product before other consumers. The product adoption follows a trajectory that is shaped like a bell curve and is known as the product diffusion curve. The marketing strategy should take this adoption curve into account and address factors that influence the rate of adoption by the different types of consumers.

Dynamic Product Management Strategies

Two fundamental issues of product management are whether to pioneer or follow, and how to manage the product over its life cycle.

Order of market entry is very important. In fact, the forecasted market share relative to the pioneering brand is the pioneering brand's share divided by the square root of the order of entry. For example, the brand that entered third is forecasted to have 1/√3 times the market share of the first entrant (Marketing Science, Vol. 14, No. 3, Part 2 of 2, 1995.) This rule was determined empirically.

The pioneering advantage is obtained from both the supply and demand side. From the supply side, there are raw material advantages, better experience effects to provide a cost advantage, and channel pre-emption. On the demand side, there is the advantage of familiarity, the chance to set a standard, and the choice of perceptual position.

Once a firm gains a pioneering advantage, it can maintain it by improving the product, creating a standard, advertise that it was the first, and introduce a new product in the market that may cannibalise the first but deter other firms from entering.

There also are disadvantages to being the pioneer. Being first allows a competitor to leapfrog the early technology. The incumbent develops inertia in its R&D and may not be a flexible as newcomers. Developing an industry has costs that the pioneer must bear alone, and the way the industry develops and its potential size are not deterministic.

There are four classic price/selling effort strategies:

In general, products are clustered in the low-low or high-high categories. If a product is in a mixed category, after introduction it will tend to move to the low-low or high-high one.

Increasing the breadth of the product line as several advantages. A firm can better serve multiple segments, it can occupy more of the distributors' shelf space, it offers customers a more complete selection, and it pre-empts competition. While a wider range of products will cause a firm to cannibalise some of its own sales, it is better to do so oneself rather than let the competition do so.

The drawbacks of broad product lines are reduced volume for each brand (cannibalisation), greater manufacturing complexity, increased inventory, more management resources required, more advertising (or less per brand), clutter and confusion in advertising for both customers and distributors.

To increase profits from existing brands, a firm can improve its production efficiency, increase the demand through more users, more uses, and more usage. A firm also can defend its existing base through line extensions (expand on a current brand), flanker brands (new brands in an existing product area), and brand extensions.