Product life cycle & Marketing Strategies

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 Cycleproduct 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.

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-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

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, NaturefreshFeature 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.

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