Product life cycle & Marketing Strategies

Why a product life cycle?

A companys positioning and differentiation strategy must change as the product, market, and competitors change over the product life cycle(PLC) When we say that a product has a life cycle we assert four things: i. Products have a limited life. ii. Products sales pass through distinct stages, each posing different challenges, opportunities and problems to the seller. iii.Profits rise and fall at different stages of the product life cycle. iv.Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life cycle stages.

Product Life Cycle

product life cycle is the course of a products sales and profits over time. product life cycle(PLC) deals with the life of a product in the market with respect to business or commercial costs and sales measures. The five stages of each product lifecycle are product development, introduction, growth, maturity and decline.

Product Life Cycle

Sales and Profits Profits Time Decline Sales

Product Development

Introduction

Growth

Maturity

Sales and Profits Over the Products Lifetime

Introduction Stage of the PLC

Summary of Characteristics, Objectives, & Strategies Sales Low Sales Low
Costs Costs Profits Profits Marketing Objectives Marketing Objectives Product Product Price Price Distribution Distribution Promotion Promotion High cost per customer High cost per customer Negative Negative Create product awareness and trial Create product awareness and trial Offer a basic product Offer a basic product Use cost-plus formula Use cost-plus formula Build selective distribution Build selective distribution Heavy to entice product trial Heavy to entice product trial

Summary of Characteristics, Objectives, & Strategies Sales Rapidly rising Sales Rapidly rising
Costs Costs Profits Profits Marketing Objectives Marketing Objectives Product Product Price Price Distribution Distribution Promotion Promotion Average cost per customer Average cost per customer Rising Rising Maximize market share Maximize market share Offer extension, service, warranty Offer extension, service, warranty Penetration strategy Penetration strategy Build intensive distribution Build intensive distribution Reduce to take advantage of demand Reduce to take advantage of demand

Growth Stage of the PLC

Maturity Stage of the PLC

Summary of Characteristics, Objectives, & Strategies Sales Peak
Sales Peak Costs Costs Profits Profits Marketing Objectives Marketing Objectives Product Product Price Price Distribution Distribution Promotion Promotion Low cost per customer Low cost per customer High High Maximize profits while defending market share Maximize profits while defending market share Diversify brand and models Diversify brand and models Match or best competitors Match or best competitors Build more intensive distribution Build more intensive distribution Increase to encourage brand switching Increase to encourage brand switching

Decline Stage of the PLC

Summary of Characteristics, Objectives, & Strategies Sales Declining
Sales Declining Costs Costs Profits Profits Marketing Objectives Marketing Objectives Product Product Price Price Distribution Distribution Promotion Promotion Low cost per customer Low cost per customer Declining Declining
Reduce expenditures and milk the brand Reduce expenditures and milk the brand

Phase out weak items Phase out weak items Cut price Cut price
Selective: phase out unprofitable outlets Selective: phase out unprofitable outlets Reduce to minimum level Reduce to minimum level

Three special categories of PLC

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A Style is a basic and distinctive mode of expression appearing in a field of human endeavor. Styles appear in homes, clothing, art etc. A Fashion is a currently accepted or popular style in a given field. Fashion pass through four stages: Distinctiveness, emulation, mass fashion, decline. Fads are fashions that comes quickly into public view , are adopted with great zeal, peak early, and decline very fast.

Four Introductory Marketing Strategies

High High

Promotion

Low

Rapidskimming strategy Rapidpenetration strategy

Slowskimming strategy Slowpenetration strategy

Price
Low

Marketing strategies for Growth stage

During the growth stage, the firm uses several strategies to sustain rapid market growth. Improves product quality and adds new features and improved styling. Adds new models and flanker products(i.e., products of different sizes, flavors, and so forth that protect the main product). It enters new market segments It increases its distribution coverage and enters new distribution channels. It shifts from product- awareness advertising to product- preference advertising. It lowers price to attract the next layer of price sensitive buyers.

Marketing strategies for Maturity stage

Three potentially useful ways to change the course for a brand are market, product, and marketing program modification. Market Modification Sales volume = no. of brand users * usage rate per user. Expand the no. of brand users Convert nonusers Enter new market segments Attract competitors customers

Continued..
Increase the usage rate among users Have consumers use the product on more occasions. Have consumers use more of the product on each occasion Have consumers use the product in new ways. Product modification Trying to stimulate sales by modifying the products characteristics through

Continued..
Quality improvement: Aims at increasing the products functional performance. Eg: Aashirvaad, Annapoorna, Pillsbury, Naturefresh Feature improvement Aims at adding new features, such as size, weight, materials, additives, and accessories, that expand the products performance, versatility, safety, or convenience. Style improvement Aims at increasing the products esthetics appeal. Eg; New car models, New Coke

Decline Stage
Increase investment Resolve uncertainties - stable investment Selective niches Harvesting Divesting To establish a system for identifying weak products. Some firms abandon declining markets earlier than others.

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