Group 8Santosh Bhagat PGP05012Budumajji Padmalatha PGP05013Naveen Gupta PGP05031Nisha Mittal PGP05032Rahul Unde PGP05049Jyotsna Chadha PGP05073

Forget the Product Life Cycle Concept!

CRUX OF THE CASEPRODUCT LIFE CYCLE IS NOT AN INEVETIBLE,

PREDETERMINED TRUTH

It is not predictiveIt can be altered by marketing effortsIt should not be used blindly for decision making

Traditional PLCThe stages through which the individual products develop over a period of time is known as Product Life Cycle

As for product form, it tends to exhibit less stability than does product class. Form is what most PLC advocates have in mind when they speak of a

generalized life cycle pattern for a “product” Theoretically, it presumes the existence of some rules indicating the

movement of the product from one stage to another However, when one studies actual case histories, it becomes clear that

no such rules can be objectively developed

Myths of Class and Form

Unpredictable Variations

Effects Introduction Growth Maturity DeclineCompetition Not important Few emulators Many rivals Very FewStrategy Market Estb.,

persuade early adopters

Market penetration, target mass

Defending brand position

Phasing out strategy

Profits Negligible Peak Level Reduced NegligiblePrices High High Avoid price wars LowDistribution Selective Intensive Intensive Selective

Advertising strategy

Focus on Early adopters

Awareness for mass market

Use for differentiation

Focus on low price

Advertising Emphasis

High (for awareness)

Moderate (for WoM)

Moderate Minimum

Sales and Promotion Expense

Heavy, entice people to try

Moderate, (create preference)

Heavy, (encourage switching)

Minimal

No lifecycle for brands When it comes to brands, the PLC model has even less validity Many potentially useful offerings die in the introductory stage

because of inadequate product development or unwise market planning, or both

PLC is a dependent variable which is determined by marketing actions; it is not an independent variable to which companies should adapt their marketing programs.

Marketing management itself can alter the shape and duration of a brand’s life cycle

When a brand passes “over the hill” in sales, no marketing strategies are effective anymore. Such a drop may be due to changes in consumer tastes and values, or to the fact that users have shifted their preference to a new and improved competitive product

Exception of non filter cigarettes, brands tend to have different sales patterns, and the product-form curves throw no light on what the sales would be in the future.

All that can be said is that if a product form (e.g., nonfilter cigarettes) is truly in a final declining stage, it is very difficult for a brand (e.g., Chesterfield) to reverse the trend.

However, with respect to the first three stages of the PLC, no firm conclusions can be drawn about brand behavior from the product-form curve

When brand is disconti

nued

•Not due to irreversible changes in consumer tastes

•But when management takes decision on the basis of PLC theory

•Management feels that brand has entered declining stage due to few bad years because of poor marketing or other factors.

New product

s launche

d without

plan

•Panic increases as management believes brand is in declining stage

•Fund is withdrawn from promotion budget and allocated to R & D in new items.

•New products are launched without proper testing.

•Most of the times, they fail due to low promotion budget and poor planning.

•For e.g. tooth paste IPANA

Blunders with PLC

Planning without PLC•PL

C is dependent varaible on various marketing efforts and not an independent variable.

•Because of imaginative marketing strategies , Dupont nylon could sustain the declining sales curve

•Other examples are: budweiser beer, colgate , seven up (uncola marketing), listerine antiseptic.

•Further, analysis of competitive brands shows that one went up while the other went down. If PLC holds, both should fall.

•Therefore, companies can use other models which take inputs like:•A

ttitudes, perception, brand image etc.

Should resources be diverted to new products?

Since products do not necessarily follow PLC, undue attention on new product development is perilous

Instead, focus on today’s products to leverage the built goodwill.

Avoid fragmenting the market with new product introductions

Effective System

Analyze positioning and foresee opportunities Getting Started:

• Segment the market: Identify the untapped segments• Market Research: To find consumer perception and how

it may vary across segments• New marketing campaign for the target market

Observed Issue: Decline in sales

Cause of decline

Macroeconomic factors

Change in consumer preferences

Operational issues

Brand Image and perception

Irreversible Negative Change

Traditional PLC approach: How to phase out the

product?

Phase out the brand and embark upon other profitable ventures

Modern approach: What is causing the decline?

(market research)

McKenzie’s Support for PLC

• According to McKenzie, PLC is greatly predictive: Initiation ends with the entry of a significant new

competitorGrowth ends by the entry of a cluster of new

competitorsDecline is heralded by overall decline in market size

• However, largely depends on management’s experience and understanding of the market place

The SolutionMarketing communications model (Suggested in case)• Attitude = f(Ad expense, WoM, Brand Share (t-1))• Intention to Buy = f(Attitude, price perception)• New Brand share = Intention to buy(t-1), Price Index, Ad expense

of competition)

Changing marketing communications• Repositioning• Integrated marketing communication

Discern the brand image• Perceptual Mapping

Learnings

PLC is an indicative tool, not to be used blindly for decision making

The phases cannot be decided based on short term changes The shape and length of each phase can be altered by

marketing efforts A decline in product class itself is a signal to phase out