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Product life cycle &

Marketing Strategies

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Why a product life cycle?

A companys positioning and differentiation strategymust change as the product, market, andcompetitors change over theproduct life cycle(PLC)

When we say that a product has a life cycle we assertfour things:

i. Products have a limited life.

ii. Products sales pass through distinct stages, eachposing different challenges, opportunities andproblems to the seller.

iii.Profits rise and fall at different stages of theproduct life cycle.

iv.Products require different marketing, financial,manufacturing, purchasing, and human resourcestrategies in each life cycle stages.

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Product Life Cycle

product life cycle is the course of aproducts sales and profits over time.

product life cycle(PLC) deals with the

life of a product in the market withrespect to business or commercialcosts and sales measures.

The five stages of each product lifecycleare product development,introduction, growth, maturity anddecline.

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Time

ProductDevelop-ment

Introduction

Profits

Sales

Growth Maturity Decline

Sales andProfits

Sales and Profits Over the Products

Lifetime

Product Life Cycle

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Sales

Sales

Costs

Costs

Profits

Profits

Marketing Objectives

Marketing Objectives

Product

Product

Price

Price

Low

Low

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

Distribution

Distribution Build selective distribution

Build selective distribution

Promotion

Promotion Heavy to entice product trial

Heavy to entice product trial

Summary of Characteristics, Objectives, &

Strategies

Introduction Stage of the PLC

h f h

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Sales

Sales

Costs

Costs

Profits

Profits

Marketing Objectives

Marketing Objectives

Product

Product

Price

Price

Rapidly rising

Rapidly rising

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

Distribution

Distribution Build intensive distribution

Build intensive distribution

Promotion

Promotion Reduce to take advantage of demand

Reduce to take advantage of demand

Summary of Characteristics, Objectives, &Strategies

Growth Stage of thePLC

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SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

PeakPeak

Low cost per customerLow cost per customer

HighHigh

Maximize profits while defending market shareMaximize profits while defending market share

Diversify brand and modelsDiversify brand and models

Match or best competitorsMatch or best competitors

DistributionDistribution Build more intensive distributionBuild more intensive distribution

PromotionPromotion Increase to encourage brand switchingIncrease to encourage brand switching

Summary of Characteristics, Objectives, &Strategies

Maturity Stage of the PLC

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SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

DecliningDeclining

Low cost per customerLow cost per customer

DecliningDeclining

Reduce expenditures and milk the brandReduce expenditures and milk the brand

Phase out weak itemsPhase out weak items

Cut priceCut price

DistributionDistribution Selective: phase out unprofitable outletsSelective: phase out unprofitable outlets

PromotionPromotion Reduce to minimum levelReduce to minimum level

Summary of Characteristics, Objectives, &

Strategies

Decline Stage of the PLC

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Three special categoriesof PLC

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Continued

A Style is a basic and distinctive mode ofexpression appearing in a field ofhuman endeavor. Styles appear inhomes, clothing, art etc.

A Fashion is a currently accepted orpopular style in a given field. Fashionpass through four stages:

Distinctiveness, emulation, massfashion, decline.

Fads are fashions that comes quickly intopublic view , are adopted with great

zeal, peak early, and decline very fast.

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Four Introductory

Marketing Strategies

Rapid-Rapid-skimmingskimmingstrategystrategy

Rapid-Rapid-skimmingskimmingstrategystrategy

Rapid-Rapid-penetrationpenetrationstrategystrategy

Rapid-Rapid-penetrationpenetrationstrategystrategy

Slow-Slow-penetrationpenetrationstrategystrategy

Slow-Slow-penetrationpenetrationstrategystrategy

Slow-Slow-skimmingskimmingstrategystrategy

Slow-Slow-skimmingskimmingstrategystrategy

PricePrice

LowLow

HighHigh

PromotionPromotionHighHigh LowLow

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Marketing strategies for Growthstage

During the growth stage, the firm uses severalstrategies to sustain rapid market growth.

Improves product quality and adds newfeatures and improved styling.

Adds new models and flanker products(i.e.,

products of different sizes, flavors, and so forththat 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 toproduct- preference advertising.

It lowers price to attract the next layer of price sensitive buyers.

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Marketing strategies forMaturity stage

Three potentially useful ways to changethe course for a brand are market,product, and marketing programmodification.

Market Modification

Sales volume = no. of brand users *usage rate per user.

Expand the no. of brand usersConvert nonusers

Enter new market segments

Attract competitors customers

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Continued..

Increase the usage rate among usersHave consumers use the product onmore occasions.

Have consumers use more of theproduct on each occasion

Have consumers use the product in newways.

Product modificationTrying to stimulate sales by

modifying the products characteristicsthrough

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Continued..

Quality improvement:

Aims at increasing the products functionalperformance.

Eg: Aashirvaad, Annapoorna, Pillsbury, Naturefresh

Feature improvement

Aims at adding new features, such as size, weight,materials, additives, and accessories, that expandthe products performance, versatility, safety, orconvenience.

Style improvement

Aims at increasing the products esthetics appeal.

Eg; New car models, New Coke

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Decline Stage

Increase investment

Resolve uncertainties - stable investment

Selective niches

Harvesting Divesting

To establish a system for identifying weakproducts.

Some firms abandon declining markets earlierthan others.

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