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PRODUCT LIFE CYCLE
BY
ARUN TRIPATHI
ABHISHEK OJHA
AMRINDER SINGH BAKSHI
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PLC - Product Life Cycle
Product Life Cycle ² shows the stages that
products go through from development to
withdrawalfrom the market
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Introduction
The seller tries to stimulate demand
Promotion campaigns to get increase public awareness
Explain how the product is used,
Features Advantages Benefits
You will lose money, but you expect to make profits in the
future
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Introduction
Sales are low, and profits are below the line because your
costs are greater than the amount of money you make
you have ³negative´ profit
Need to spend a lot of money on promotion
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Growth
A lot is sold - The seller tries to sell as much as possible
Other competitor companies watch, and decide about
joining in with a competitor product
³success breeds imitation´ (Text)
Growth will continue until too many competitors in the
market - and the market is saturated
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Growth
At the end of the growth stage, profits start to decline
when competition means you have to spend more money
on promotion to keep sales going.
Spending money on promotion cuts into your profit
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Maturity
Many competitors have joined - the market is saturated
The only way to sell is to begin to lower the price - and
profits decrease
It is difficult to tell the different between products since most
have the same F.A.B. - Features, Advantages & Benefits
Competition can get ³Nasty´ and commercials are intense
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Maturity
³Persuasive Promotion´ becomes more important during
this stage
That is to say, you have commercials almost begging the
customer to still buy your product because you still make it just as good.
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Decline
Newer products are now more attractive - even a low low
price does not make consumers want to buy.
Profit margin declines - and so the only way to make
money is to sell a high volume
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Decline
To increase volume you try to
1. Increase the number of customers - get new customers
2. Increase the amount each customer uses
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Fashions - currently popular products
that tend to follow recurring life cycleseg. Wide lapels, 3 button suits, high
heels vs. wedge heel
³the currently acceptable style´
Fashions & Fads
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Fads - Fashions with abbreviated life
cycles - only popular with certain groups - music
- fast food
- children¶s toys
Fashions & Fads
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Fashions & Fads
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1. Increase frequency of use
by present customers
2. Add new users
3. Find new uses
4. Change product quality or packaging
Extending the Product Life Cycle
Market
Modification
ProductModification
Purpose: to sell more product and cover original investment
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Extending the product Cycle
To prevent the product going into decline
you modify the market
MARKET MODIFICATION
you look for new consumers by changing
the product so it has new users - and then
new customers (Baking soda, vinegar, Q-
tips, Avon Skin So Soft, vaseline
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Extending the product Cycle
MARKET MODIFICATION
Windex for cleaning jewelry
Javex bleach for toilets
Lemons for hair colouring
beer for hair
Bounce for in the garbage, gym bag etc.
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Extending the product Cycle
PRODUCT MODIFICATION
CD players
chip flavours - many kinds
flavoured tongue depressors
couples seats at movie theatre
digital sound at theatres
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Overlap of Life Cycle for Products A and B
WINDOWS 95
1991 1995 1996 1997
WINDOWS 3.1
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Most people have a problems thinking this
theory is relevant because they apply it
to specific product brands - it should beapplied only to a general product
category
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Length of Cycle Stages
Products move through the cycle at different
speeds
sometimes introduction is very long, or veryshort, depending on how easy it is for the
public to understand the F.A.B.
Not all products follow the same pattern
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Life Cycle Length
Some products move very fast because they
are new and have no competition so the
intro stage is short, and they go direct togrowth stage.
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Life Cycle Length
Because of
technology and
globalization
the introduction stage is getting very short
some cycles more quickly to maturity, then
have many product modifications so thedecline stage drags on and on
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Speed of the PLC
Since the Intro Stage is getting shorter, and
sometimes the Growth Stage doesn¶t last
too long (because competitors move in)
companies must continually come up withnew products
You can tell when they are in the growth
stage because this is when they introduce
new model variations, and someimprovements to the product
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Product Life Cycle Considerations in Marketing
Strategy
Understand that profits have a predictable
pattern
in the early stages, focus is on productinformation
in the later stages, focus is on brand
promotion
use market segmentation in maturity stage tomaintain strong core customer basis
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Product Life-Cycle Strategies
The Product Life Cycle (PLC) has Five Stages
Product Development, Introduction, Growth, Maturity,
Decline
Not all products follow this cycle:
Fads
Styles
Fashions
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Product Life-Cycle Strategies
The product life cycle concept can be applied to a:
Product class (soft drinks)
Product form (diet colas)
Brand (Diet Dr. Pepper)
Using the PLC to forecast brand performance or to develop
marketing strategies is problematic
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Product Life-Cycle Strategies
Product development
Introduction
Growth
Maturity
Decline
Begins when the
company develops a
new-product idea
Sales are zero
Investment costs are high Profits are negative
PLC StagesPLC Stages
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Product Life-Cycle Strategies
Product development
Introduction
Growth
Maturity
Decline
Low sales
High cost per customer
acquired
Negative profits
Innovators aretargeted
Little competition
PLC StagesPLC Stages
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Marketing Strategies: Introduction
Stage
Product ² Offer a basic product
Price ² Use cost-plus basis to set
Distribution ² Build selective distribution
Advertising ² Build awareness among early adopters
and dealers/resellers
Sales Promotion ² Heavy expenditures to create trial
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Product Life-Cycle Strategies
Product development
Introduction
Growth
Maturity
Decline
Rapidly rising sales
Average cost per
customer
Rising profits
Early adopters aretargeted
Growing competition
PLC StagesPLC Stages
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Marketing Strategies:
Growth Stage
Product ² Offer product extensions, service, warranty
Price ² Penetration pricing
Distribution ² Build intensive distribution
Advertising ² Build awareness and interest in the mass market
Sales Promotion ² Reduce expenditures to takeadvantage of consumer demand
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Product Life-Cycle Strategies
Product development
Introduction
Growth
Maturity
Decline
Sales peak
Low cost per customer
High profits
Middle majority are
targeted
Competition begins to
decline
PLC StagesPLC Stages
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Marketing Strategies:
Maturity Stage
Product ² Diversify brand and models
Price ² Set to match or beat competition
Distribution ² Build more intensive distribution
Advertising ² Stress brand differences and benefits Sales Promotion ² Increase to encourage brand
switching
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Product Life-Cycle Strategies
Product development
Introduction
Growth
Maturity
Decline
Declining sales
Low cost per customer
Declining profits
Laggards are targeted
Declining competition
PLC StagesPLC Stages
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Marketing Strategies: Decline Stage
Product ² Phase out weak items
Price ² Cut price
Distribution ² Use selective distribution: phase out
unprofitable outlets Advertising ² Reduce to level needed to retain hard-
core loyalists
Sales Promotion ² Reduce to minimal level