EXPLOIT THE PRODUCT LIFE CYCLE

By,
Aditi Agarwal(008) Rahul Rajora (128) Ramya (129) Riya Majumdar (138) Shekar Singh(151) Shilpa Singh (153)

STAGES OF LIFE CYCLE

Market Development Sales are low

Market Growth TAKEOFF STAGE Demand increases Size of total market expands

Market Maturity Demand levels off and grows

Market Decline Decline in sales. Loss of Consumer Appeal

DEVELOPMENT STAGE
Risks, unknowns, costs and uncertainties Create Demand Factors Involved
Products complexity Degree of newness of the product Products fit into the consumer needs Competitive substitutes

Used Apple Policy

GROWTH STAGE
Gradual rise in the sales curve Entry of potential competitors Product and Brand Differentiation Testing of Strategies Increase in the Rate of Consumer acceptance

MATURITY STAGE
Market Saturation Customers already own it or use it Sales grow proportionately with population Intense Price competition Finer Differentiation Retailer basically displayers or order takers

DECLINE STAGE
Industry is transformed Demand declines Prices and margins at all time low Competitors wind up Mergers and Buy outs

FAILURE POSSIBILITIES
Complexity of Product or its newness People influencing buying decision More costly to sustain for innovator

SUCCESS CHANCES
New Product: First experience Special Visibility Pricing Rate of acceptance Patents

Business Management : An ART

ORIGINATORS BURDEN
The Originating company bears the maximum costs and risk in launching an entirely new product

Competitive pressure
In Stage 1, the Originator represents the entire industry In Stage 2, the Originator shares the industry with many competitors Imitators rush in if solid demand exists during the market development stage The originators sales between year 1 and 2 rises rapidly Rate of growth & sales of the originator gets restricted after year 2.

PROFIT SQUEEZE
Originator encounters a serious squeeze on the profit margins Market development stage
Per unit profits are negative Sales volume too low at existing prices

Market growth stage

Unit profits boom as output rises Industry sales might be rising but the originators profit per unit takes a downward trend Originators sales flatten out at the year 3 with units profits approaching zero. Rate of industry demand growth slowed down and competitors slash down prices

PROFIT SQUEEZE
Maturity stage
Lasts as long as there are no competitive substitutes No drastic shifts in influential value systems No major changes in dominant fashions No change in demand for primary products No changes in the rate of obsolescence of the product No change in the character or introductory rate of product modifications Can last for a lifetime or never be attained

STAGE RECOGNITION
The characteristics of stages helps to recognize the stage a product is at given time Better assess the state of the present Looking ahead to understand the continuum of competitive time and events Knowledge of future more functional for an effective capitalization of the present

SEQUENTIAL ACTIONS
To avoid severe discipline imposed by an early profit squeeze of the originator
Advance planning should be done to extend the life of

a product
Will help in sustaining the growth and profitability

STRATEGIES TO EXPAND SALES - NYLON

1. Promote Frequency of Usage
Reiterate the Social necessity of Wearing Stockings Sales-building action Difficult and exceedingly costly

2. Introduce varied usage

Fashion smartness of Tinted Hose Patterned and highly textured hosiery From Neutral Accessory to a central ingredient of fashion

STRATEGIES TO EXPAND SALES - NYLON

3. Create new users
Promoting among the early teenagers and subteenagers

4. Find new uses

New uses such as rugs tyres and bearings etc.. New uses the cause of spectacularly rising consumption curve Extended and stretched the products life

OTHER EXAMPLES
Strategy Jell-O 3M

Frequency of Usage

Increased flavors to 12

Variety of handy scotch tape dispensers

Colored, patterned, waterproof, invisible, write-on scotch tapes

Varied Usage

Base for salads with vegetable flavored Jell-Os

New Users

Fashion-oriented weight control appeal

Completely favored Jell-O

Rocket Tape

New Uses

Double coated Tape

EXTENSION STRATEGIES
Planning at Pre-introduction stage Active product policy
Long-term rather than being a stop gap response Judging the moves likely to be made by the competitors, consumer reactions to a product etc..

Appropriate Long-Term Plan

Relationship between two products or the timing Example : Hair Colors and tints, Gelatin as a salad base

EXTENSION STRATEGIES
Planning at Pre-introduction stage Adoption of wider view of the companys business
Jell-O in the Dessert Technology business 3M Bonding two things together technology

CONCLUSION
New product strategy Plan for a timed sequence of conditional moves Helps in avoiding pitfalls Helps in research for the product Example : Kitchen Salt Shaker 1st Year : Expand among current users 2nd Year : Expand to new users 3rd Year : Find new uses Plan future expansions and requirements systematically Rational determination of priorities