MM2 Session 4
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Transcript of MM2 Session 4
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IMT-N-II-12-MM2Marketing Management 2
Session 4
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Learning Objectives
1. Product Life Cycle1. PLC- Applications
2. Product Life Cycle Stages
3. PLC- Aberrations
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4.1 Product Life Cycle : Concept & Application
Product Life Cycle shows the stages that products gothrough from development to withdrawal from the market
Product Life Cycle (PLC)
Each product may have a different life cyclePLC determines revenue earnedHelps the firm in being proactiveContributes to strategic marketing planningMay help the firm to identify when a productneeds support, redesign, revitalization, withdrawal, etc.May help in new product development planningMay help in forecasting and managing cash flow
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PLC Applications
Levels of PLCProduct Level Samsung Tablet PC
Category Level PC- Desktop, Laptop, Palmtop, Tablet PCBrand Level Sony, Samsung, Toshiba, Lenovo, Dell, HP
Products pass through certain stages during its lifespanWhat happens to product in each stage depends on market behavior By manipulating the market behavior, marketer can manipulate stagesof PLC
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4.2 Product Life Cycle Stages
Sales
Time
Development Introduction Growth Maturity Saturation Decline
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Product Life Cycle & Profits
Sales/Profits
Time
PLC and Profits
PLC
Losses
Break Even
Profits
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Product Life Cycle
Stages of the Product Life CycleDevelopmentIntroduction/LaunchGrowthMaturity/ SaturationDecline/ Withdrawal
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Product Life Cycle
The Development StageInitial Ideas possibly large number May come from any of the following
Market research
identifies gaps in the marketMonitoring competitorsPlanned research and development (R&D)Luck or intuition stumble across ideas?Creative thinking inventions, hunches?
Futures thinking what will people be using/wanting/needing5,10,20 years hence?
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PLC : Introduction Stage
Characteristics Advertising & promotion Campaigns to maximize publicityHigh costs- Low Sales- No ProfitsHighly priced product- Monitor initial sales
Innovators as few buyers, less competitionFirst mover, second mover & imitator Length of Time- Type of product
Strategies
Product- offer a basic productPrice- cost plus pricing/ skimming pricingPlace- selective distributionPromotion- heavy advertising & sales promotion
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PLC : Growth Stage
CharacteristicsRapidly rising sales due to increased consumer awarenessProfits appear due to scaled production & shared promotion costRevenue increases but prices may change
Early adopters & growing buyersCompetitors rising; getting fierce on product- promotion-place
StrategiesProduct- bring product extensions, warranty, service
Price- penetration pricingPlace- intensive distributionPromotion- reduce, invoke interest & sell through heavy consumer demand
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PLC: Maturity/ Saturation Stage
CharacteristicsPeak sales; rising & declining salesLow costs- High profits; with highest revenue to cost ratioMajority buyers make repeat purchase, Laggards join them
Decaying maturity- overcapacity, markdowns- flooded marketNew Competition/ innovation emergingMonitor- P. modifications, new growth strategies
Strategies
Product- diversify & improve productsPrice- competitive pricingPlace- intensive distributionPromotion- encourage brand switching by stressing benefits
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PLC : Decline/Withdrawal Stage
CharacteristicsDeclining sales- Laggards & Repeat purchases drivenCompetition giving way to innovation- foreign competitionProduct outlived its utility, Taste-fashion & Prf change
Withdrawals from segments & channels beginsHarvesting or divesting call for different strategies
StrategiesProduct- contraction of product extensions
Price- reduced pricesPlace- selective distribution by shutting loss making outletsPromotion- reducing to just necessary
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4.3 PLC Aberrations
Do all Product Life Cycles look alike??
Product Life Cycle
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Product Life Cycle& Product Modification
Sales
Time
Effects of ExtensionStrategies
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PLC & Diffusion of Innovation
Laggards
Late Majority
Early Majority
Early Adopters
Innovators
What dowe knowabout theprocess bywhichconsumers
adopt newproducts?
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Product Life Cycle & Diffusion of Innovations
Innovators
Early adopters
Early majorityLate majority
Laggards
Productlife cyclecurve
DiffusionCurve
Time-
Introduction Growth Maturity Decline
S a
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