Innovations and processes that have gone into creating new products are successful to the extent that they meet specific market needs. Companies use marketing models to ensure that their target market is ready to receive the created product. The models help firms to understand the buying decisions of customers before putting the product out. These models are useful in the product cycle because they determine effective methods of selling more and spending less in the process.
The market mix model is a strategy for firms introducing new products into the market. This model creates a marketing strategy to meet the customer's needs and also enhances the organization's performance. Marketers analyze the results of their current marketing and sales incomes against expenditures. They then devise ways of enhancing the sales by lowering or increasing the expenses put into the process of creating the product.
The product portfolio model is especially applicable for commercial firms innovating more than one product. Organizations can prioritize their products in order of maturity to increase the cash flow. Products are categorized as mature and generating positive income, mature but with a declining return on investment, products with low market share but have a high market growth rate and products that must be eliminated because they have low market shares and low returns.
The growth strategy model is also known as the Ansoff matrix. This model focuses on the processes of innovating new products to successfully penetrate new or existing markets. Innovators and marketers face the challenge of how to maximize returns when they sell absolutely new products to new customers. Firms also use this model in deciding whether to diversify so as to innovate and market products related to their usual product innovations. They can also choose to diversify to unrelated markets so as to maximize their customer base.