New-Product Development and Product Life-Cycle Strategies 9 Principles of Marketing.
Product life cycle & marketing strategies
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Transcript of Product life cycle & marketing strategies
GOVT. POLY. KARAD
Product life cycle & Marketing Strategies
By-Amar M. ingale
t.y.m.e. (a)roll. No. 1930
Why a product life cycle?A company’s 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 product’s 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.
WHAT IS PLC?
TimeProductDevelop-ment
Introduction
Profits
Sales
Growth Maturity Decline
Sales andProfits
Sales and Profits Over the Product’s Lifetime
Product Life Cycle
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
LowLow
High cost per customerHigh cost per customer
NegativeNegative
Create product awareness and trialCreate product awareness and trial
Offer a basic productOffer a basic product
Use cost-plus formulaUse cost-plus formula
DistributionDistribution Build selective distributionBuild selective distribution
PromotionPromotion Heavy to entice product trialHeavy to entice product trial
Summary of Characteristics, Objectives, & Strategies
Introduction Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Rapidly risingRapidly rising
Average cost per customerAverage cost per customer
RisingRising
Maximize market shareMaximize market share
Offer extension, service, warrantyOffer extension, service, warranty
Penetration strategyPenetration strategy
DistributionDistribution Build intensive distributionBuild intensive distribution
PromotionPromotion Reduce to take advantage of demandReduce to take advantage of demand
Summary of Characteristics, Objectives, & Strategies
Growth Stage of the PLC
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 models Diversify 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
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
Three special categories of PLC
Continued…
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 IntroductoryMarketing Strategies
Rapid-skimmingstrategy
Rapid-skimmingstrategy
Rapid-penetrationstrategy
Rapid-penetrationstrategy
Slow-penetrationstrategy
Slow-penetrationstrategy
Slow-skimmingstrategy
Slow-skimmingstrategy
Price
Low
High
PromotionHigh 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 product’s characteristics through
Continued..Quality improvement:
Aims at increasing the product’s 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 product’s performance, versatility, safety, or convenience.
Style improvement
Aims at increasing the product’s 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.