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PRODUCT LIFE CYCLE
Page 1
INTRODUCTION
The product life cycle describes the sale pattern of a product over time. After
launching the product the management wants the product to enjoy a long and happy life.
Although it does not expect the product to sell forever, the company wants a decent profit
to cover all the effort and risk that went into launching it. Management is aware that each
product will have a life cycle, although the exact shape and length is not known in
advance.Generally the time span begins with products introduction in the market and ends
with its obsolescence and replacement. While the form of the life cycle is fairly standard
and is subject to variations.
The product life cycle is based upon the biological life cycle. For example, a seed
is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down
roots as it becomes an adult (maturity); after a long period as an adult the plant begins to
shrink and die out (decline).some products may have a short life cycle, whereas others
may enjoy a longer life. Product life cycle refers to the progression or products sales and
profits over its lifetime.
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History
Inspiration for the burgeoning business process now known as PLM came when American
Motors Corporation (AMC) was looking for a way to speed up its product development
process to compete better against its larger competitors in 1985, according to François
Castaing, Vice President for Product Engineering and Development.[9]
After introducing
its compact Jeep Cherokee (XJ), the vehicle that launched the modern sport utility
vehicle (SUV) market, AMC began development of a new model, that later came out as
the Jeep Grand Cherokee. The first part in its quest for faster product development
was computer-aided design(CAD) software system that make engineers more productive.
The second part in this effort was the new communication system that allowed conflicts to
be resolved faster, as well as reducing costly engineering changes because all drawings
and documents were in a central database. The product data management was so effective,
that after AMC was purchased by Chrysler, the system was expanded throughout the
enterprise connecting everyone involved in designing and building products. While
an early adopter of PLM technology, Chrysler was able to become the auto
industry's lowest-cost producer, recording development costs that were half of the industry
average by the mid-1990s
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It¶s said that a product has a life cycle is to assert f our things:
1. Products have limited life.
2. Product sales pass through distinct stages, each posing different challenge
opportunities, and problems to seller.
3. Profits rise and fall at different stages of product life cycle.
4. Product requires different marketing, financial, manufacturing, purchasing, and
human resource strategies in each life cycle stage.
The concept underlying the premises of product life cycle is that all products
pass through the stages outlined below:
1. Introduction stage.
2. Growth stage.
3. Maturity stage.
4. Decline stage.
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PRODUCT LIFE CYCLE
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GRAPHICAL REPRESENTATION OF STAGES OF PRODUCT LIFE
CYCLE.
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BASIC STAGES IN PRODUCT LIFE CYCLE
The first and foremost stage of products life cycle is the INTRODUCTION stage. The
INTRODUCTION stage starts when the new product is first launched. Introduction takes
time and the sales growth tends to be slow at this stage. Because it takes time to roll out a
new product and fill dealer pipelines .if the product introduction proved to be successful,
rapid GROWTH stages are reached and sales increase markedly. According to the
concept of life cycle, the market for any product is limited, and sales will generally fall
short of their potential. When this point is reached, the market enters the maturation stage.
The life cycle goes on further to assume that each product eventually is replaced by
another or that initial rapid growth will end in decline.
If a product enters a market that has already moved into MATURE stage.
Competition is intense because the product must compete for share of an existing market
Thai is not experiencing growth. Once the market enters the DECLINE stage, new
products are not entering the market and demand levels are falling. At this, the objective is
to increase market share to maintain stable sales levels.
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INTRODUCTION STAGE
Introductory stage is (also called as mark et pioneering stage)is the first stage in the
life cycle of the product.
During the introduction stage, the product is just introduced to the market . In this stage,
the firm seeks to build product awareness and develop a market for the product. Sales
revenue begins to grow along with demand but rate of growth is rather slow. There may
not be ready market for product. Sales are low, the product undergoes teething troubles;
profit seems remote possibility; demands have to be created & developed; & the
customers have to be prompted to try out the product. The profit during this stage may be
less due to low sales that also supplemented by heavy production & distribution cost. The
expenditure on advertising will also be heavy. Consumer will purchase on trail basis. The
impact on the marketing mix is as follows:
y Product branding and quality level is established and intellectual property
protection such as patents and trademarks are obtained.
y Pricing may be low penetration pricing to build market share rapidly, or high skim
pricing to recover development costs.
y
Distribution is selective until consumers show acceptance of the product.
y Promotion is aimed at innovators and early adopters. Marketing communications
seeks to build product awareness and to educate potential consumers about the
product.
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Sales revenue begins to grow along with demand but the rate of growth is rather slow.
There may not be ready market for the product .Sales are low, the product undergoes
teething troubles; profit seems a remote possibility; demands have to be created &
developed; &the customer have to be promoted to try out the product. The profit during
this stage may be less due to low sales that also supplemented by heavy production &
distribution costs. The expenditure on advertising will also be heavy .Consumer will
purchase the product on trail basis.
The stage poses several problems for the marketer. The complexity of the problems & the
duration of the stage depend upon the nature of the product, its price, its technological
newness & the consumer¶s view of the product. In this stage , the demand has to be
created & developed so the firm has to invest heavily in the promotion & wait for the
reward.
Introduction stage is characterized by:
*Low sales.
*High promotional expenditure.
*Low or no competition if the product is innovative.
*Loss or negligible profits.
*Survival problems, if there is strong competition.
*Higher dealer¶s incentives.
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GROWTH STAGE:
Growth stage is the second stage in the life cycle of the product.
During the growth stage, the product is accepted by the consumer and traders. The market
demand for the product increase and the size of the market grows and the sales increase
with speed. The profit from the sales also increases. The firm gives special attention to
raise the volume of sales.
Then when during this stages, the introductory is setting down with is product,
competitors enter into scene with similar or slightly improved version of the product. The
introductory may have to alter his product at this stage. He has to stay ahead of his
competitors and persuade the customer to prefer his brand.
For this, sales promotion measures at consumer level and dealer level should be given
consideration. Advertisement should also be made extensively so as to have new customer
for the product .The dealers should be encouraged to repeat orders. Competition-oriented
pricing is useful during this stage. Similarly, marketing and distribution efficiency
becomes decisive factors at this stage.
In this way, during the growth stage, the volume of sale increases with speed. The new
customers join the existing users of the product. As a result, the sales and profits of the
company keep on increasing.
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The impact on the mark eting mix in growth stage is as f ollows:
Product: New product features and packaging options are introduced and the product
is diversified. There is improvement of product quality.
Price: The price usually remains high due to entry of competitors.
Distribution: Distribution becomes more intensive. Trade discounts are minimal if
resellers show a strong interest in the product.
Promotion: Increased advertising to build brand preference.
Growth stage is characterized by:
* Rapid growth in sales.
* Rise in profits.
* Repeat purchases and brand loyalty.
* Increasing competition.
* Introduction of more product models.
* Intensive promotional effort.
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MATURITY STAGE
Maturity stage is the f ourth stage in life cycle of the product
In maturity stage, sales turnover reaches to the highest level. Demand tends to reach a
saturation point. This maturity stage normally lasts longer than the previous stages and it
poses strong challenges to the marketing management. Most products are in the maturity
stage of the life cycle, and therefore most of the marketing management deals with the
mature products. Price competition becomes intense. The marketing expenditure goes on
increasing and this brings the margin of profit down. Additional expenditure is also
incurred for product modification, improvement, differentiation and development. Even
broadening of the product line will be necessary in order to face pressure of competition.
Along with this, special sales promotion measures are necessary in order to stimulate
demand and face market competition. Thus special attention needs to be given for raising
marketing effectiveness.In short, relatively low price, increased marketing costs, keener
competition and lesser profits are faced in this stage. This situation continues for some
period and this leads to saturation position.
It¶s a stage when sales turnover reaches to a specific level, which is a saturation point.
Orders are only of replacement orders. Consumption achieves a constant rate. It is not
possible to raise the volume of sales to higher level. Efforts are required to be made to
maintain the position in the market by facing the competitiors effectively.
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Maturity stage is characterized by:
*Stagnation of sales.
*Decline in profits.
*Intense competition.
*Retentive or reminder advertising.
Although many products in the mature stage appear to remain unchanged for long periods,
most successful ones are actually evolving to meet consumer needs. Product managers
should do more than simply ride along with or defend their mature product a good offense
is the best defense. They should consider modifying the market, product, and marketing
mix.The company can try modifying the marketing mix improving sales by changing one
or more elements.
y It can cut prices to attract new users and competitor¶s customers.
y It can launch a better advertising campaign or use aggressive sales promotions
trade deals, cents-off, premiums, and contests.
y The company can also move into larger market channels, using mass
merchandisers.
y Finally, the company can offer new or improved services to buyers.
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The company might also try modifying the product changing characteristics such as
quality, features, or style to attract new users and to inspire more usage.
y It might improve the product¶s quality and performance its durability, reliability,
speed, or taste.
y It might add new features that expand the product¶s usefulness, safety, or
convenience.
y Finally the company can improve the product¶s styling and attractiveness.
The company might try to expand the market for its mature brand by working with the two
factors that make up sales volume:
Volume= number of brand users * usage rate per user
It can try to expand the number of brand users:
y By converting non users
y By entering into new segments.
y By winning competitors customers.
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The impact on the mark eting mix in maturity stage is as f ollows:
Product:
Products are modified again, this time in reaction to competitor products. The
packaging may also change to exploit new segments sometimes (e.g. shampoo sachets
introduced to make shampoo accessible to lower income groups).
Price:
Since sales volumes are high, prices come down and discounts are more frequent.
Pricing wars break out among competitors as they vie for the ever shrinking new-
customer base in a saturating market. Sometimes a product may not reduce prices but
increase them to distinguish themselves as a superior product.
Distribution:
New distribution channels are explored and incentives are provided to resellers in
order to avoid losing shelf space to competitors.
Promotion:
Emphasis on differentiation and building of brand loyalty. The promotion budget may
be a little lesser than previous stages.
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DECLINE STAGE
Decline stage is the f ourth and last stage of product life cycle.
The sales of most product forms and brands eventually decline. Sales decline for many
reasons, including technological advance, shifts in consumer tastes, and increased in
competition, entry of new products or due to reduction of the support of customer. Sales
drops severely in due course and the product fail to get support from the market.
Carrying a weak product can be very costly to a firm, and not just in profit terms. There
are many hidden costs. A weak product may take up too much of management¶s time. It
often requires frequent price and inventory adjustments. It requires advertising and sales
force attention that might be better used to make ³healthy´ products more profitable. A
product¶s failing reputation can cause customer concerns about the company and its other
products. The biggest cost may well lie in the future. Keeping weak products delays the
search for replacements, creates a lopsided product mix, hurts current profits, and weakens
the company¶s foothold on the future.
For these reasons, company need to pay more attention to their highest aging products.
The firm¶s first task is to identify those products in the decline stage by regularly
reviewing the sales, market shares, costs, and profit trends. Then management must decide
whether to maintain, harvest or drop each of these declining products.Management may
decide to maintain the brand without change in the hope the competitors will leave the
industry.
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Management may decide to reposition or reformulate the brand in hopes of moving it back
into the growth stage of the product life cycle. For that the firm has to reduce the price to
maintain the support of the customers. Expenditure on advertising and sales promotion
will have to be bought down as such expenditure is not adequately rewarded.
In a study of company strategies in declining industries, Kathryn Harrigan identified five
decline strategies available to the firm:
y Increasing the firm¶s investment (to dominate the market or strengthen its
competitive position).
y Maintaining the firm¶s investment level until the uncertainties about the industries
are revolved.
y Decreasing the firm¶s investment level selectively, by dropping unprofitable
customer groups, while simultaneously strengthening the firm¶s investment to
recover cash quickly.
y Harvesting (³milking´) the firm¶s investment to recover cash quickly.
y Divesting the business quickly by disposing of its assets as advantageously as
possible.
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In short, the mark eting mix may be modified as f ollows:
y Product ±
The number of products in the product line may be reduced. Rejuvenate surviving
products to make them look new again.
y Price ±
Prices may be lowered to liquidate inventory of discontinued products.
y Prices-
Prices may be maintained for continued products serving a niche market.
y Distribution ±
Distribution becomes more selective. Channels that no longer are profitable are
phased out.
y Promotion ±
Expenditures are lower and aimed at reinforcing the brand image for continued
products.
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Decline stage is characterized by:
y Entry of substitute.
y Decline in sales.
y Decline in profits at a rapid pace.
y Minimum promotional effort.
y Withdrawal or modification in products.
y Repositioning of product.
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INTRODUCTION STAGE
The f ollowing are the various strategies at the introduction stage:-
1. Product strategies:
Normally, the firm will concentrate on the single product which is introduced. The
firm may not go for product line extension. Again, the firm may not come up with
various models to cater the different market segments.
The firm may spend additional funds on research and development to further
improve the product, if need to be more so in the case of consumer durable such as
automobiles, in order to correct the defects, if any, noticed after launching the
product.
2. Price and promotion strategies:
In relation to price and promotion, a firm may follow one of the following four
strategies.
a) Rapid sk imming:
The product can be launched at high price and with high promotional expenditure.
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This strategies is suitable:
y When the market is large in size.
y When a large part of the market is unaware of the product and therefore, high
promotion, is required.
y When the buyers are willing to pay a higher price.
y Where there is a need to build brand image or preferences as competition are likely
in near future.
This strategy brings certain benefits:
y The firm may generate profit at the introduction stage, which will enable the firm
to cover up either partly or wholly the development expenses.
y This strategy will enable the firm to build a good brand image which will enable to
face competition effectively as and when the competitors enter the market.
b) Slow sk imming:
The product can be launched at high price and with low promotional expenditure.
This strategy is suitable:
y When the market size is limited
y When the potential buyers are aware of the products features, uses, etc. and
therefore, low promotion.
y Where buyers are willing to pay a high price.
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This strategy brings certain benefits:
y The firm may generate profits at the introductory stage.
y It requires less promotional expenditure and as such low marketing overheads.
c) Rapid penetration:
The firm can launch the product at low price and with high promotional
expenditure.
This strategy is suitable:
y When the market is large in size
y When a large part of the market is unaware of the product, and therefore high
promotion.
y Where the buyers are price sensitive.
y Where there is possibility of strong competition in near future, so high promotional
expenditure to build brand image or preference
y Where the company is in a position to achieve economic of large scale production
and distribution.
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This strategy brings certain benefits:
y The firm can capture a large market share.
y It may build good brand image, which will enable to face competition effectively
as and when the competitors enter the market.
d) Slow penetration:
The product can be launched at a low price and with low promotional
expenditure.
This strategy is suitable:
y When the market is large in size, so low pricing.
y When the large part of the market is aware of the product¶s feature, uses, etc and so
low promotion.
y Where the buyers are sensitive.
y When there is possibility of limited competition in future may be due to high
development expenditure for new entrants.
y Where the company is in a position to achieve economies of large scale production
and distribution.
This strategy brings certain benefits:
y It will enable the firm to capture a large share of the market
y It requires less promotional expenditure and as such low marketing overheads.
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3. Distribution strategies:
a) Concentrated distribution strategy:
The firm may follow concentrated distribution strategy, i.e distribution of the
product through specific dealers in a particular market area. Distribution efforts are
directed to satisfy market segments.
b) Mass distribution strategy:
The firm may also follow mass distribution strategy i.e distribution of the product
through all the possible dealers over a large market area, even at the national level.
However it makes sense to go for concentrated, distribution strategy at the
introduction stage.
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GROWTH STAGE
The growth stage is characterized by the entry of competitors, sales grow, profits increase,
and price and promotion may remain the same or may change depending upon demand,
competition and other market forces.
During this stage, the firm may follow several strategies to sustain rapid growth as long as
possible.
1. Product strategies:
a) Product improvement:
The firm may undertake product improvement so as to face the competition
effectively. Product improvement can be in terms of its features, packing, design,
shape, quality, etc.
b) Introduction of new models:
The firm may introduce different models of the product, targeting to different
market segments. Each model may have different brand name or there may be
brand extension with certain addition to the brand name, such as model number.
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2. Price and promotion strategy:
a) Penetration pricing:
The firm may reduce the price due to economic of large scale production and
distribution. The low pricing strategy is followed so as to face the competition
effectively. New entrants may find it difficult to compete with low prices.
b) Push and pull promotion strategies:
The firm may adopt push and pull promotion strategy. A push promotion strategy
requires trade promotion activities (incentives) so as to induce dealers to stock and
push the product in the market.
A pull promotion strategy requires promotional efforts directed at customers, such
as various sales promotion schemes and advertising so that the consumers demand
the product from the dealers.
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3. Distribution strategies:
a) New mark et segments:
The firm may look for new segments to increase the sales. For instance, if the is
directed mainly as young generation, the firm may also direct it to order
generation, as in the case of pepsi and cadbury¶s dairy milk.
b) Increase in distribution converge:
The firm may increase distribution coverage from local to regional and from
regional to national level. The increase in distribution coverage will enable the
firm to have rapid growth in its sales.
c) New distribution channels:
The firm may also introduce new distribution channels to increase its sales. The
firm may go for setting up chain stores or enter into franchise agreements to
increase the sales.
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MATURITY STAGE:
A majority of the products are in the maturity stage. At this stage, the sales remain more or
less the same. This stage normally lasts longer as compared to the previous two stages,
and marketers have to come up with various strategies to stay in the market. The following
are the marketing strategies at maturity stage.
1. Product modification:
The marketers may place lot of emphases on product improvement in respect of
quality, features, design, etc. The product modifications are intended to increase
product¶s performance such as greater speed, longer durability, etc and to generate
enhanced customer satisfaction.
Therefore, the company has to place a lot of focus on Research & Development for
the purpose of product improvement.
2. Price and promotion strategies:
The firm may follow the same (price and promotion) strategies as followed
during the growth stage, i.e.
a) Penetration pricing:
The firm may reduce the price due to economies of large-scale production and
distribution. The low pricing strategy is followed as to face the competition
effectively. New entrants may find it difficult to compete with low prices.
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b) Push and pull promotion strategies:
The firm may adopt push and pull promotion strategy. A push promotion
strategy requires trade promotion activities (incentives) so as to induce dealers
to stock and push the product in the market.
A pull promotion strategy requires promotional efforts directed at customers,
such as various sales promotion schemes, and advertising so that the customers
demand the product from the dealers.
The firm has to come up with innovative promotion schemes such as:
Exchange offers, exchanging old products with a new one as in the case of
TVs, washing machines etc.
Sales on installment facility at low or no interest charges.
Extending warranty for longer period.
Providing quick and efficient after-sale-services.
Maintaining and enhancing customer and dealer relationship through gift,
contest, etc.
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3. Distribution strategies:
a) Focus on profitable segments:
The marketers may concentrate on profitable market segment, and may exit from
unprofitable segments. This enables the firm to reduce its overheads and increase
the profits.
b) Focus on improvement channels of distributions:
The firm may have to concentrate on important channels of distributions and
discard expensive or unprofitable channels of distribution.This would enable the
firm to maintain and enhance good relation with important channels of
distribution. This would enable the firm to maintain and enhance good relation
with important channels of distribution.
c) Exit f rom un-profitable mark et areas:
The firm may also exit from unprofitable market areas and concentrate on those
market areas, which generate good sales and profits.
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DECLINE STAGE
The decline stage is characterized by decline in sales at low level, and also profits decline
considerably. The firm may follow the following strategies at the decline stage:
1. Product strategies :
a) Withdrawal of weak er brands:
The firm may withdraw weaker brands and concentrates on selectively brands,
which generate sales and profits.
b) Introduction of new product:
The firm may also introduce a new product, which has a good potential in the
market, and market it profitably.
c) Wait and watch strategy:
At times the firm may adopt a wait and watch policy. The firm may not withdraw
the weaker brand, but wait for other firms who are facing the same problem of
lower sales to withdraw the then getting the bigger share of the market.
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2. Price and promotion strategies :
The firm has to maintain the same price, as lowering the price may not be feasible.
The promotional expenditure may reduced depending upon the availability of
funds and market situation.
3. Distribution strategies:
The firm may follow the distribution strategies:
Continued focus on profitable segments.
Emphasis on selective segments.
Distributions through selective channels.
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The four main stages of a product's life cycle and the accompanying characteristics are:
Stage Characteristics
1.Mark et
introduction stage
1. costs are high
2. slow sales volumes to start
3. little or no competition
4. demand has to be created
5. customers have to be prompted to try the product
6. makes no money at this stage
2. Growth stage
1. costs reduced due to economies of scale
2. sales volume increases significantly
3. profitability begins to rise
4. public awareness increases
5. competition begins to increase with a few new players in
establishing market
6. increased competition leads to price decreases
3. Maturity stage
1. costs are lowered as a result of production volumes
increasing and experience curve effects
2. sales volume peaks and market saturation is reached
3. increase in competitors entering the market
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4. prices tend to drop due to the proliferation of competing
products
5.
brand differentiation and feature diversification is
emphasized to maintain or increase market share
6. Industrial profits go down
4. Saturation and
decline stage
1. costs become counter-optimal
2. sales volume decline or stabilize
3. prices, profitability diminish
4. profit becomes more a challenge of production/distribution
efficiency than increased sales
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Product lifecycle management
This article is about the term that refers to managing product design and production
details. For the marketing term, see Product life cycle management (marketing).
A generic lifecycle of products
In industry, product lifecycle management (PLM) is the process of managing the entire
lifecycle of a product from its conception, through design and manufacture, to service and
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disposal. PLM integrates people, data, processes and business systems and provides a
product information backbone for companies and their extended enterprise.
'Product lifecycle management' (PLM) should be distinguished from 'Product life cycle
management (marketing)' (PLCM). PLM describes the engineering aspect of a product,
from managing descriptions and properties of a product through its development and
useful life; whereas, PLCM refers to the commercial management of life of a product in
the business market with respect to costs and sales measures.
Product lifecycle management is one of the four cornerstones of a
corporation's information technology structure. All companies need to manage
communications and information with their customers (CRM-Customer Relationship
Management), their suppliers (SCM-Supply Chain Management), their resources within
the enterprise (ERP-Enterprise Resource Planning) and their planning (SDLC-Systems
Development Life Cycle). In addition, manufacturing engineering companies must also
develop, describe, manage and communicate information about their products.
A form of PLM called people-centric PLM. While traditional PLM tools have been
deployed only on release or during the release phase, people-centric PLM targets the
design phase.
Recent (as of 2009) ICT development (EU funded PROMISE project 2004-2008) has
allowed PLM to extend beyond traditional PLM and integrate sensor data and real time
'lifecycle event data' into PLM, as well as allowing this information to be made available
to different players in the total lifecycle of an individual product (closing the information
loop). This has resulted in the extension of PLM into Closed Loop Lifecycle
Management (CL2M).
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Benefits
Documented benefits of product lifecycle management include:
Reduced time to market
Improved product quality
Reduced prototyping costs
More accurate and timely Request For Quote generation
Ability to quickly identify potential sales opportunities and revenue contributions
Savings through the re-use of original data
A framework for product optimization
Reduced waste
Savings through the complete integration of engineering workflows
Documentation that can assist in proving Compliance for RoHS or Title 21 CFR Part
11
Ability to provide Contract Manufacturers with access to a centralized product record
Within PLM there are five primary areas;
1. Systems Engineering (SE)
2. Product and Portfolio Management (PPM)
3. Product Design (CAx)
4. Manufacturing Process Management (MPM)
5. Product Data Management (PDM)
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Phases of product lifecycle and corresponding technologies
Many software solutions have developed to organize and integrate the different phases of
a product¶s lifecycle. PLM should not be seen as a single software product but a collection
of software tools and working methods integrated together to address either single stages
of the lifecycle or connect different tasks or manage the whole process. Some software
providers cover the whole PLM range while others a single niche application. Some
applications can span many fields of PLM with different modules within the same data
model. An overview of the fields within PLM is covered here. It should be noted however
that the simple classifications do not always fit exactly, many areas overlap and many
software products cover more than one area or do not fit easily into one category. It should
also not be forgotten that one of the main goals of PLM is to collect knowledge that can be
reused for other projects and to coordinate simultaneous concurrent development of many
products. It is about business processes, people and methods as much as software
application solutions. Although PLM is mainly associated with engineering tasks it also
involves marketing activities such as Product Portfolio Management (PPM), particularly
with regards to New product introduction (NPI).
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Phase 1: Conceive
Imagine, specify, plan, innovate
The first stage in idea is the definition of its requirements based on customer, company,
market and regulatory bodies¶ viewpoints. From this specification of the products major
technical parameters can be defined. Parallel to the requirements specification the initial
concept design work is carried out defining the visual aesthetics of the product together
with its main functional aspects. For the Industrial Design, Styling, work many different
media are used from pencil and paper, clay models to 3D CAID Computer-aided industrial
design software.
Phase 2: Design
Describe, define, develop, test, analyze and validate
This is where the detailed design and development of the product¶s form starts,
progressing to prototype testing, through pilot release to full product launch. It can also
involve redesign and ramp for improvement to existing products as well as planned
obsolescence. The main tool used for design and development is CAD Computer-aided
design. This can be simple 2D Drawing / Drafting or 3D Parametric Feature Based
Solid/Surface Modeling. Such software includes technology such as Hybrid
Modeling, Reverse Engineering, KBE (Knowledge-Based Engineering), NDT
(Nondestructive testing), Assembly construction.
This step covers many engineering disciplines including: Mechanical, Electrical,
Electronic, Software (embedded), and domain-specific, such as Architectural, Aerospace,
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Phase 4: Service
Use, operate, maintain, support, sustain, phase-out, retire, recycle and disposal
The final phase of the lifecycle involves managing of in service information. Providing
customers and service engineers with support information for repair and maintenance, as
well as waste management/recycling information. This involves using such tools as
Maintenance, Repair and Operations Management (MRO) software.
All phases: product lifecycle
Communicate, manage and collaborate
None of the above phases can be seen in isolation. In reality a project does not run
sequentially or in isolation of other product development projects. Information is flowing
between different people and systems. A major part of PLM is the co-ordination of and
management of product definition data. This includes managing engineering changes and
release status of components; configuration product variations; document management;
planning project resources and timescale and risk assessment.
For these tasks graphical, text and metadata such as product bills of materials (BOMs)
needs to be managed. At the engineering departments level this is the domain of PDM ±
(Product Data Management) software, at the corporate level EDM (Enterprise Data
Management) software, these two definitions tend to blur however but it is typical to see
two or more data management systems within an organization. These systems are also
linked to other corporate systems such as SCM, CRM, and ERP. Associated with this
system are Project Systems for Project/Program Planning.
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This central role is covered by numerous Collaborative Product Development tools which
run throughout the whole lifecycle and across organizations. This requires many
technology tools in the areas of Conferencing, Data Sharing and Data Translation. The
field being Product visualization which includes technologies such as DMU (Digital
Mock-Up), Immersive Virtual Digital Prototyping (virtual reality) and Photo realistic
Imaging.
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PRODUCT LIFE CYCLE AS AN EFFECTIVE TOOL IN MANAGING
CUSTOMERS.
Customer¶s experience with the company changes as the product passes through its
product life cycle; as such PLC can be effective tool managing customers. When a product
is moving through the various phases of its life cycle, the customers of the product is also
moving in a certain path in relation to his experience of the product. Though this change is
represented by shifts in the nature of the demand in the PLC stages it is essential for the
marketing man to know what actually happens to the consumers has some implication for
the´ company-consumer relationship´ and consequently, knowledge of this change would
help effective management of customers.
Buyers of various products, especially hi-tech products, evolve from stage of
inexperienced generalist to experienced specialist. As the experience level of customer¶s
changes, the benefits they seek from the company also keep changing. Companies who
can sense and anticipate this customer experience factor can be ready with suitable
strategies to keep the customers with them.
The seller of the product has to understand when and how a transition is taking place in
the experience level of the customer, as his product moves along its life cycle. The
changing expectations and the demands of the customers can be handled through different
strategy routes- strengthening the company- customer relationship, augmenting the
product, improving service support or modifying the pricing approaches.
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PRODUCT LIFE CYCLE OF MAGGI NOODLES:
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INTRODUCTION:
Maggi noodles are a brand of instant noodles manufactured by Nestlé. The brand is
popular in India, South Africa, Brazil, Nepal, New Zealand, Australia, Malaysia,
Singapore, Sri Lanka , Bangladesh, Pakistan and the Philippines; in several countries it is
also known as "maggi mee" (mee is Indonesian/Malaysian for noodles). Maggi noodles
are part of the Maggi family, a Nestlé brand of instant soups, stocks and noodles. In
Malaysia, there are fried noodles made from maggi noodles known as Maggi goreng.
Maggi noodles recently introduced a new variety of its noodles, to cater for the health
conscious like 'No MSG', 'Less Salt' and 'No Tran¶s fat'. Wholewheat flour based noodle
variation marketed by the name "Vegetable Atta Noodles" has been introduced in India
(Atta flour is used in preparing most forms of wheat based breads in India) and caters to
health conscious buyers wary of the refined flour used in the regular Maggi noodles. This
move helps the brand in India as suburban mothers, who feed the noodles to children as an
afterschool snack, are the primary customers of the brand. Recently a line of Rice noodles
and Whole wheat with pulses, carrots, beans and onions has also been introduced in India.
In fact, "Maggi" has become a genericized name for instant noodles in India and Malaysia.
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In mid 2008, New Zealand supermarkets introduced replacement formulations for its Beef,
Oriental and Curry flavours. A new feature is an extra sachet containing dehydrated
vegetables. Maggi claims the new range contains 88% less total fat and 86% less saturated
fat than the average of top-three (unnamed) 2-minute-noodle competitors. The new Maggi
range also has considerably lower fat than its own previous formulation. However, the salt
content has been increased by 31 percent. Consumers have not reacted well to the new
formulations, complaining that they want the original chicken flavour back.
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Preparation
Maggi noodles take around 2 minutes to cook, hence the name "2 minute noodles". The
Maggi noodle cake and seasoning is added into boiling water for two minutes and it is
ready for consumption. Egg, seaweed or lemon can also be added to the noodles for a
better flavour.
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Flavours and Variety
Maggi Noodles are available in a large assortment of different flavours. They are:
y Original Flavour
y Chicken
y Curry (a healthier alternative is also sold in supermarkets)
y Kari Letup (Extremely Spicy Curry) in Malaysia
y Laksa Lemak (discontinued)
y Tom yam
y Chicken & Corn
y Beef
y Oriental
y Masala
y Prawn
y Dal Sambar (whole wheat noodles)
y Asam Laksa
y Cheese
y Pizza (only in Saudi Arabia, was available for a period of time in Australia)
y Sup Tulang (bone soup) (in Malaysia)
y Chatpata
y Tomato
y Vegetable Atta Noodles (whole wheat noodles) mostly in India
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ISSUES
� Different phase¶s product life cycle of maggi.
� Why Atta noodle was a failure?
� Strategies taken to establish new product category
� What measures NIL should take to sustain the image of a popular brand image.
� Stage at which maggi is in the product life cycle.
Introductory Stage
� High failure rates
� No competition
� Frequent product modification
� Limited distribution
� High marketing and production costs
� Promotion focuses on awareness and information
Nestlé India Ltd. (NIL), the Indian subsidiary of the global FMCG major, Nestlé SA,
introduced the Maggi brand in India in 1982, with its launch of Maggi 2 Minute Noodles,
an instant noodles product.With the launch of Maggi noodles, NIL created an entirely new
food category - instant noodles - in the Indian packaged food market.
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Maturity Stage:
Many consumer products are in Maturity Stage
� Declining sales growth
� Saturated markets
� Extending product line
� Stylistic product changes
� Heavy promotions to dealers and consumers
� Prices and profits fall
� In 2003 Hindustan Lever Ltd was all set to take on Nestle's bestselling Maggi 2-minute
noodles by launching a new category of liquid snacks under its food brand, Knorr
Annapurna.
� The new product, called Knorr Annapurna Soupy Snax, was priced aggressively at Rs 5
and had four variants: two chicken options and two vegetarian.
� Like Maggi, Soupy Snax will be an in-between-meals snack and will be targeted at all
age groups, particularly office-goers.
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Decline Stage if no product innovation brought:
Rate of decline depends on change in tastes or adoption of substitute products
� Long-run drop in sales
� Large inventories of unsold items
� Elimination of all nonessential marketing expenses.
Extending the PLC
� Change product
� Change product use
� Change product image
� Change product positioning.
Analysis (why Atta Noodles Failed?)
� In 2005 Nestlé India launched MAGGI Vegetable Atta Noodles.
� Based on consumer needs and evolving trends for more whole grain based products.
� Extensive Research and Development expertise to develop Maggie Vegetable Atta
Noodles.
� Maggi Vegetable Atta Noodles will provide the dietary fiber of whole wheat to
facilitate good.
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FAILURE CAUSES
1. Indian psyche- The basic problem the brand faced is the Indian Psyche. Indian Palate
is not too adventurous in terms of trying new tastes. So a new product with a new taste
that too from a different culture will have difficulty in appealing to Indian market.
2. Price- The price of atta noodle was little more than maggi 2 minutes noodle
3. False claims- In October 2008, Nestle mistakenly aired an advert that noodle "help to
build strong muscles and bone". The British Advertising Standards Authority said that it
was a false claim.
4. Not purely vegetarian- Maggi Noodles also contains the additives E150d and
E627.E627 is partly prepared from fish,and is thus not suitable for vegetarians.
5. Lack of essential nutrients- The new maggi atta noodles as can be seen from the fig.
lacked essential vitamins A, C,also the fat content was more then carbohydrates
6. Targeted health conscious people.
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Suggestive Promotional Strategies
1. They should conduct test marketing before launching new product.
2. Focus on creating distinctive image, based on twin benefits of ³INSTANT´ and
³HEALTHY´.
3. Conduct promotional campaigns at schools in small towns with population more than
10,000.
4. Strengthen the distribution channel of the rural areas within 100 KM of all the metros.
Current Scenario of Maggi
Leading Brand in India as well as World.
Current Sales: Approx.
± 90000 boxes
± Rs. 4, 79, 49,000 in Mumbai
± 10, 00,000 boxes
± 55 cr. in India Reasonable competitive pricing.
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BIBLIOGRAPHY
Book s referred:
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Mark eting Management
Productivity Quality Mgmt.
Inf ormation has been collected f rom the below websites:
www.en.wik ipedia.org
www.maggi.com.my/en/home.htm
www.managementparadise.com
www.google.co.in
www.indianmba.com
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www.ask .com