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PRODUCT LIFECYCLE If we plot a graph of sales volume versus time for a product, generally, the PLC represents a bell- shaped or s-shaped curve. The product life cycle concept is derived from the fact that a given product’s volume and revenue follow a typical pattern of four –phases cycle. This life cycle is the representative fact of the existence of every product.2. DEFINITION“ The stages through which the individual products develop over a period of time is known as product life cycle.”
DeclineMaturityGrowthIntroduction3. THE FOUR STAGES OF PRODUCT LIFECYCLE
4. PRODUCT LIFE CYCLESales andProfits ($) Sales Profits Time Product Introduction Growth Maturity Decline DevelopmentLosses/Investments ($)
5. INTRODUCTION STAGE OF THEPLC Sales Low sales Costs High cost per customer Profits Negative Create product awareness Marketing Objectives and trial Product Offer a basic product Price Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers
Slow penetration- Launching the new product at a low price and low level of promotion. Rapid Penetration-Launching of product at low price with heavy promotion. Slow skimming- Launching the new product at high price and low promotional level. Rapid Skimming- Launching the new product at high price and high promotional level. Example- 3rd generation Mobile Phones. Marketing Strategy used in Introduction Stages-6.
Mar ket Modification-10. service. Marketing Strategy Used in Maturity Stage:2. Lower prices to attract next layer of price sensitive buyers. Maturity Stage of the PLC Sales Peak sales Costs Low cost per customer Profits High profits Marketing Objectives Maximize profit while defending market share Product Diversify brand and models Price Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits Product Differentiation. Enter new market segments. Converting non users. Quality Improvement. Improved product quality and add new product features and styling. 7. Add new models and products of different sizes. 9. shapes etc. Growth Stage of the PLC Sales Rapidly rising sales Costs Average cost per customer Profits Rising profits Marketing Objectives Maximize market share Offer product extensions. Redefine target market.2. Decline Stage of the PLC Sales Declining sales Costs Low cost per customer Profits Declining profits Marketing Objectives Reduce expenditure and milk the brand Product Phase out weak . color. Adopting advance technology. Entering new market segments.Hyundai-I10. Product warranty Price Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market Examples. Increase distribution coverage enter new distribution channels. Product Modification- Win competitors customers. Marketing Strategy Used in Growth Stage:8. 11. Shifts from product awareness to product preference advertising.
12. Harvesting the firms investment to recover cash quickly.13. At the same time. For example. There is no definite line of demarcation between the various stages of product life cycle. Decrease the firms investment selectively. Increase the given firms investment to dominate the market or strengthen its competitive position. Not all product introduced in the market essentially pass through all stages of its life cycle. . while simultaneously strengthening the firms investment niche segments. a product may be in different stages of its life cycle in different segment of the market. PLC CONCEPT IS BASED ON FOLLOWINGASSUMPTIONS- Strategies for the differing stages of the Product Life Cycle. Maintaining the given firms investment level until the uncertainties about the industry are resolved. Thus. the product concerned may be in the introduction stage in Asian market while facing decline in western countries. by dropping the unprofitable customers group.items Price Cut price Go selective: phase out unprofitable Distribution outlets Advertising Reduce to level needed to retain hard-core loyal customers Divesting the business quickly by dropping off its assets as advantageously as possible. MARKETING STRATEGY USED IN DECLINESTAGES The time span of each stage in product life cycle in respect of each product may vary. a product may experience longer period in growth stage and relatively short period in maturity stage. It is also possible that the product may attain introduction stage and then get phased out. Introduction.
The decisions of marketers can change the stage. Competitors are attracted into the market with very similar offerings. Use it to inform your gut feeling. The length of each stage varies enormously. At this point there is a downturn in the market. Producers attempt to differentiate products and brands are key to this. Some go from introduction to decline. joint ventures and take each other over. If the product has no or few competitors. Profits can be improved by reducing marketing spend and cost cutting. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Remember that PLC is like all other tools. Limited numbers of product are available in few channels of distribution. In reality very few products follow such a prescriptive cycle. Not all products go through each stage. Advertising spend is high and focuses upon building brand. Sales grow at a decreasing rate and then stabilise. It describes the stages a product goes through from when it was first thought of until it finally is . Maturity. The product is promoted to create awareness.The need for immediate profit is not a pressure. Promotion becomes more widespread and use a greater variety of media. Problems with Product Life Cycle. At this point the market reaches saturation. Decline. Producers begin to leave the market due to poor margins. Those products that survive the earlier stages tend to spend longest in this phase. The product life cycle is an important concept in marketing. a skimming price strategy is employed. Market share tends to stabilise. It is not easy to tell which stage the product is in. Price wars and intense competition occur. Products become more profitable and companies form alliances. Growth. for example from maturity to decline by price-cutting.
video messaging on mobile phones Explore new markets – try selling abroad New packaging – brightening up old packaging.g. because the product is being constantly improved and advertised. when sales begin to fall This can be illustrated by looking at the sales during the time period of the product. but on creating awareness about the product.removed from the market. Examples of the techniques are: Advertising – try to gain a new audience or remind the current audience Price reduction – more attractive to customers Adding value – add new features to the current product. The product has no. e. The stress is not on immediate profits. new competitors in market or saturation Decline – final stage of the cycle. but the rate of growth is slowing down.g. Some continue to grow and others rise and fall. Again businesses use marketing techniques to improve sales. or subtle changes such as putting crisps in foil packets or Seventies music compilations Introduction: It is a stage when the product is totally new to the market. The main stages of the product life cycle are: Introduction – researching. such as Microsoft. Not all products reach this final stage. or very few competitors. developing and then launching the product Growth – when sales are increasing at their fastest rate Maturity – sales are near their highest. e. A price skimming strategy is employed. A branded good can enjoy continuous growth. Extension strategies extend the life of the product before it goes into decline. and maintains a strong brand loyalty. .
Growth Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions. Each product may have a different life cycle PLC determines revenue earned Contributes to strategic marketing planning May help the firm to identify when a product needs support. Pepsi also spends a lot of money advertising the new flavor creating awareness. withdrawal. All products need not go through all these stages. For example. The stress is on advertising and brand building. Stage 2: Market Growth Customers . Example: New Flavor of Pepsi Stage 1: Market Introduction Pepsi bottles the new flavored product and places it on the market for consumers. Maturity: The survivors of the earlier stages tend to stay longest in this stage. Maturity Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Peak sales Low cost per customer High profits Maximize profit while defending market share Diversify brand and models Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits 6. Sales grow negatively. redesign. Product Life Cycle (PLC): The Product Life Cycle (PLC) is based upon the biological life cycle. Sales grow at declining rates. There are products which go from introduction to decline. it begins to sprout (growth). warranty Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market 5. Profits are ensured by cost cutting and reduced marketing spend.ment Introduction Profits Sales Growth Maturity Decline Losses/ Investments ($) Sales and Profits ($) 3. Introduction Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Low sales High cost per customer Negative Create product awareness and trial Offer a basic product Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers 4. They begin offering similar products. Sales promotion and price wars are rampant and find prominant part in this stage. Decline Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers 7. The length of each stage also varies enormously. Decline: This stage marks the downturn of the market. The decisions of the marketers also change the stage. a seed is planted (introduction). it shoots out leaves and puts down roots as it becomes an adult (maturity). Product becomes more profitable. or a shift from decline to maturity can be experienced by a price cut. after a long period as an adult the plant begins to shrink and die out (decline). reinvigorating. Market share starts stabilising. For example a steep price rise can take the product from growth to decline. Producers leave the market because of poor margins. Many products are withdrawn from the market. product life cycle Time Product Develop. etc. Growth: Competitors are attracted into the market. May help in new product development planning May help in forecasting and managing cash flow 2. service.
purchasing strategies at each stage . financial. Stage 4: Sales Decline Customers have moved on to the next new flavor. 8. Stage 3: Market Maturity More competitors enter the market taking some of Pepsi’s profits. Some loyal fans stay behind. opportunities n problems to the seller Profits rise n fall at different stages PRODUCTS require different marketing. Coke introduces their competing flavor. PRODUCT LIFE CYCLE: PRODUCT LIFE CYCLE What is a Product?: What is a Product? A PRODUCT is anything that can be offered to a market usually to satisfy a want or need Slide 3: There are 4 general categories of ‘products’ that r marketed: Goods Services Places Persons Can you think of an example for each category? Goods: Goods Services: Services Places: Places Persons: Persons Product Life Cycle : Product Life Cycle Every PRODUCT has a life cycle and asserts four things about a PRODUCT : PRODUCTS have a limited life PRODUCT sales pass through different stages each posing different challenges. like the flavor and begin to make routine purchases.
.... Slow-penetration strategy (low price/low promotion).....: Product Life Cycle.: Product Life Cycle....... Slowskimming strategy (high price/low promotion).. Maturity Phase : Usually lasts longer than previous stages Divided into three phases: Growth-sales growth rate starts to decline Stable-sales flatten becoz of market saturation Decaying maturity-the absolute level of sales begin to decline and customers start switching to other products Product Life Cycle.. Decline Phase : Sales and profits decline Some companies withdraw their products from market Those remaining reduce number of products High prices on spare parts Focuses on cost reduction Marketing strategy-Introduction Phase: Marketing strategy-Introduction Phase Rapid-skimming strategy (high price/high promotion). Introduction Phase: Low sales Prices tend to be high becoz costs r high Negative profits Innovators are targeted Little competition Product Life Cycle..........: Product Life Cycle.. Growth : Sales rapidly rise Prices remain where they r ....: Product Life Cycle...... Marketing strategy-Growth Phase: Marketing strategy-Growth Phase Improve service quality and add new service features and elements Enter new market segments Use new channels of distribution Lower prices to attract more price-sensitive customers Shift from product awareness advertising to product-preference advertising ... or fall slightly Rising profits Promotional expenditure may increase or decrease depends upon competition New customers also start buying Growing competition Product Life Cycle... No of sales Time line Research & Development (R&D) Launch / Introduction Growth Maturity Saturation Decline Product Life Cycle... Rapid-penetration strategy (low price/high promotion).. Research n Development Phase: Begins when the company develops a newproduct idea Sales are zero Investment costs are high Profits are negative Product Life Cycle.........Slide 9: Product Life Cycle.....: Product Life Cycle.
Marketing strategy-Maturity Phase: Marketing strategy-Maturity Phase Market-modification strategy Increase frequency use by current consumers Look for new target market Product-modification strategy Quality improvement Feature improvement Marketing strategy-Decline Phase: Marketing strategy-Decline Phase Reduce cost Reduce price Phase out weak items Include special offers .
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