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Product Life Cycle and Marketing Strategies

Srishti Shrestha

Westcliff University

BUS 510: Marketing Management

Krishna Khanal

October 4, 2022
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Product Life Cycle and Marketing Strategies

A product life cycle is an illustrative model which shows the phases of a product's

acceptance by the market (Kamthe & Verma, 2013). It shows the life span of the product from

the time it is introduced to the market until it is withdrawn from the market. The 4 distinct stages

of the product life cycle are introduction, growth, maturity, and decline (Bell & Smith, 2009).

Various factors such as consumer needs, competitors’ moves, innovative technologies,

etc. can affect the product’s life cycle (Kamthe & Verma, 2013). Therefore, marketing strategies

should be devised according to the need of each stage to increase the life span of the product.

Each stage has certain characteristics such as decline in sales and high competition

according to which the 7ps should be used to form the most effective marketing strategies. The

product life cycle can be used by marketers as a strategic framework to analyze the market,

monitor historical patterns, and identify future market conditions (Bell & Smith, 2009). Figure 1

below shows the sales trend of products throughout all 4 stages. It shows that sales increase

slowly in the introduction stage and start growing rapidly in the growth stage then peaks at the

maturity stage and finally start declining at the decline stage.

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Figure 1

Product Life Cycle

Note. From Product life cycle [Graph], by A. Sarders, 2021,

(https://www.thestreet.com/markets/commodities/product-life-cycle-14882534).

The marketing objectives, marketing strategies using 7ps of the marketing mix, level of

competition, and impact of the cultural context on each stage of the product life cycle of

Foodmandu are discussed below.

Introduction Stage

The product life cycle of a company starts with the introduction stage. In this stage a

company enters the market by launching a new product in the market, likewise, Foodmandu

entered the online food delivery industry by releasing its food delivery application on web and

mobile in the Nepalese market. The main attribute of this stage is low or negative profit, low

sales, and high production and marketing cost (Kamthe & Verma, 2013).

Marketing Objectives
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In this stage, the main marketing objective of Foodmandu is to build product awareness,

reach out to potential customers and establish a clear brand identity. The concept of online food

delivery was totally new in Nepal when Foodmandu launched, so they had a challenge to

convince the market to use their product ("Appetite for success," 2022). Hence, another

important objective of Foodmandu in the introduction stage is to create a market and educate

them.

Marketing Strategies

In the beginning stage, Foodmandu should use price, promotion, and distribution from

the marketing mix to create their strategy. Foodmandu being the pioneer (Foodmandu, 2019), has

a first mover advantage in the online food delivery industry, so they should use the price

skimming strategy to release the product at a high price while intensely promoting the product

side by side.

Foodmandu should be prepared for high expenditure on promotion because they have to

focus on advertising and marketing campaigns to gain as much customer awareness as possible.

Some of the platforms where Foodmandu should advertise are social media, banners, and

hoarding boards. By advertising and promoting their new product, Foodmandu will also be able

to educate potential customers by showing its benefit and how it adds value to their life.

Foodmandu’s promotional strategy should revolve around making the life of their customers

easier by providing hundreds of restaurant options on the tip of their finger and delivering their

orders right at their place.

Foodmandu should also establish brand identity through their logo, color, and

promotional posts by letting the customers know that they are dedicated towards serving quality.

The feed of Foodmandu’s Instagram, Facebook, and other social media should reflect this
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identity. They should also partner up with social media influencers to promote through them. For

example, a social media influencer gets a special promo code which they have to share with their

audience, and on the behalf of the audience using that code, the influencer gets a certain

commission.

In the distribution strategy, Foodmandu should limit its reach to one or two cities as they

do not have a well-established operational team yet.

Level of Competition

At this stage, the level of competition of Foodmandu was zero because no one else had

started this concept in Nepal. According to the founder of Foodmandu, they didn't have any

competition in the starting five years ("Appetite for success," 2022). Therefore, in the

introduction stage, Foodmandu won’t have to worry about competing and can focus on learning

the essentials of online food delivery. This also leaves a door open for them to make mistakes

and learn from their mistakes.

Growth Stage

The second stage of the product life cycle, i.e., the growth stage, shows a swift increase

in profits, sales and market share. Foodmandu should make strategies in such a way that it

maximizes these opportunities. In this stage, Foodmandu sees rapid increase in app downloads

and order rates as more and more people demand to use their app.

Marketing Objectives

In the growth stage, the competition level increases as more competitors develop similar

products to enter the industry. Foodmandu didn’t have competition in the first five years

("Appetite for success," 2022), but as it reached the growth stage, bhoj deals, foodmario, pathao

food, and other companies entered the market. Therefore, the main objectives of Foodmandu
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should be to increase market share, stay ahead of the competitive curve and generate brand

preference.

Marketing Strategies

Foodmandu should use price, promotion, distribution, people, process, and product from

the marketing mix to make strategies. They should create a unique value proposition to let the

customers know how they are different and why they are better than the competitors. A great

value proposition can influence the customers to choose your brand over others (Streissguth,

2021).

The promotional activities should not die down in this stage, Foodmandu should keep

engaging in advertising and marketing campaigns. However, these campaigns should focus on

product preference rather than product awareness.

With the objective to increase market share, Foodmandu should focus on competitive

pricing by slightly reducing delivery charges or offering promo codes and discount coupons

while still keeping the price relatively high to reap profits.

Foodmandu should increase its operation to more cities with potential customers like

Pokhara, Butwal, Bhairawa, and Chitwan. This allows them to enter and capture a wider market.

The quality of the service and the application should be improved. A customer’s one bad

encounter with the delivery person can ruin their whole experience, so the delivery personnel and

customer service personnel should be properly trained and regularly checked to ensure that the

service quality satisfies the customers. They should encourage customers to give feedback so that

they know where they need to improve. The UI/UX of the application should be constantly

upgraded to match the customers’ needs and expectations. The profits should be utilized to

reinvest in the product’s growth.

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Level of Competition

In the growth stage, the expanding online food delivery market and the potential of this

sector draws the attention of competitors, so more and more competitors start entering the

market. After standing alone in the industry for 5 years ("Appetite for success," 2022), Bhoj

deals joined the market to compete with Foodmandu, followed by many other companies.

Therefore, Foodmandu has to make strategies to stay on top of the competition level and be

different from the competitors.

Maturity Stage

In the maturity stage, companies see peak in sales and profit with stagnant growth. At this

point, demand for product is decreasing, and competition is high which makes it difficult for

companies to maximize profit margins, so they should establish an efficient organization

("Product life cycle," 2021). Foodmandu will also see peak in demand, sales, and profit curve.

This indicates that the online food delivery market has saturated, so Foodmandu needs to alter its

marketing strategies to extend its life in the product life cycle. For most companies, this stage of

the product life cycle is their longest phase (Kamthe & Verma, 2013).

Marketing Objective

The objective of Foodmandu in the maturity stage is to focus on product differentiation

and increase their lifespan in the market. For this, Foodmandu has to maintain and hold the

market share they built in the growth stage. In this stage, the competitors will be settled and

established (Marmullaku, 2015) so, Foodmandu should focus on setting their product/service

apart from their rivals and maintain their customer base in order to stay in the market for a long

time.

Marketing Strategies
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In this stage, competitors will start creating different versions of the same product and

more substitutes will be introduced ("Product life cycle," 2021). So, in order to survive the high

competition, Foodmandu should allocate its budget on research and development of their product

and diversify their product line by adding variety of categories to their app. For example,

Foodmandu can diversify their product line by adding home-cooked food where the food is

delivered from home-cooks. They can also include delivery services between B2B. For example,

Foodmandu delivering muffins and cakes from a bakery to a cafe shop. Foodmandu should also

expand their market segment. For example, Foodmandu adding a ride hailing section in their app

like Pathao. This allows Foodmandu to broaden their product’s appeal, by including wider

market segment in the hopes of prolonging sales.

Competitors in this stage will start to cut prices to gain market share ("Product life cycle,"

2021). So, Foodmandu should take the competitive pricing approach in which a company

selects the price for their product based on their competitor’s pricing to match or beat them.

("Competitive pricing strategy," 2021). If the price of Foodmandu is not attractive to their

customers, then Foodmandu has the risk of their customers switching to competitors.

In the maturity stage, Foodmandu should build more intensive distribution. They should

cover more cities by expanding their operations. They should also outsource riders like Pathao to

cover up their extensive distribution.

The promotion and advertising of Foodmandu should focus on highlighting the

differences and benefits that make them better than the competitors. These promotion strategies

will also help Foodmandu win over its competitor’s customers. They should also come up with

loyalty programs to prevent their existing customers from brand switching. They should engrain

brand loyalty to maximize profits from repeated purchases from existing customers.
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The physical evidence of Foodmandu such as the delivery personnel’s uniform and

delivery bag should be eye-catching enough to remind the public about their brand.

Level of Competition

The competitors in this stage are well established; those who didn’t capture enough

market share in the growth stage start to fall out of the market while only competent ones survive

("Product life cycle," 2021). Foodmandu will face high level of competition in this stage. There

might even be price wars between competitors to attract or maintain customers. Competitors start

to develop their products and add new features. In this case, Foodmandu should also strategize

their price according to competitors and add new features like their competitors to be able to

compete and stay relevant in the market.

Decline Stage

The decline stage is characterized by decrease of the product's sales and profit due to

changes in customer preference or better substitutes (Prasad et al., 2019). Companies lose their

competitive edge hence the decline. Since there is decline in profitability and growth and high

overheads (Prasad et al., 2019), Foodmandu will have to decide whether to continue in the

market or withdraw from it.

Marketing Objective

In this stage, the marketing objective of Foodmandu should be to survive and maximize

profit by harvesting the product before dropping out of the market. When the profit is no longer

seen, Foodmandu should discontinue their product or merge with another company.

Marketing Strategies
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Foodmandu should focus on reducing their budget for promotion or completely cut off

the budget. The distribution of Foodmandu should also be minimized. They should withdraw

from cities that are not profitable for them. Since the main objective here is survival, Foodmandu

should cut down their prices so that customers continue to use their product.

Only the profitable segments should be prioritized while discontinuing all the other

segments. For example, if in this stage food delivery doesn’t profit them, they should withdraw it

and focus on harvesting a better segment which could be ride-hailing as mentioned above.

According to Marmullaku (2015), the best idea in the decline stage is to find ways to make the

product last longer without investing in it. It is not fruitful to reestablish demand in an already

declining market where the customers are withdrawing from the market into substitute products.

So, any leftover profits should not be invested back into the product.

Here the main strategy for Foodmandu is to harvest the product until there is no profit

then discontinue it or merge with another company. Harvesting is a marketing strategy where a

company continues offering the product while cutting down any advertising or promotional

support costs (Shaw, 2021).

Level of Competition

In this stage, many competitors start to withdraw from the market until only a few

competent ones remain. Those who are remaining will also have a hard time sustaining in the

market. There will be introduction of better substitutes due to which customers will shift from

the market (Prasad et al., 2019). Within the remaining competitors, the level of competition is

perfect as every company utilizes strategies such as price cutdowns and adding new features to

get their product sold.

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Cultural Context and Marketing Strategies

Cultural values are the fundamental principles that underlie what is acceptable and

unacceptable within society (Hunt, 2019). Cultural values and norms can vary within groups

inside the country or within different countries.

Along the stages of the product life cycle of Foodmandu, they will have many

opportunities to enter a new market with a different and unique cultural context. This could be in

a new country or within Nepal. While developing a marketing strategy it is important to consider

the cultural values of the target group because consumers’ lifestyle is influenced by their culture

(Hunt, 2019).

Certain symbols have meanings in their own culture. Foodmandu should do research on

which symbols are acceptable and which are considered inappropriate in the culture of the

market they are entering. These symbols are more important in the introduction and growth stage

where Foodmandu is initially establishing its brand identity and engaging in intense promotion.

The logo, brand name or color they use should not offend the community.

Similarly, language can also affect how the company communicates with its customers.

Language will be important in the introduction, growth, and maturity stage, where companies

have to communicate with the customers for awareness, information, etc. So, Foodmandu should

also use appropriate language that suits the culture of their market. For example, in Japan formal

language is preferred as it shows respect while countries like USA prefer informal language to

build rapport.

A culture’s food, dress, and traditions should also be considered by Foodmandu. For

example, if they want to advertise Newari food targeting the Newari community, they should do

not fuse Newari dish in such a way that it offends the community.
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The product quality, price, and packaging that attracts one market may not appeal to

another market. This can affect how Foodmandu designs their UI/UX during the introduction

phase, and also while diversifying the product in the maturity stage.

Cultural rituals and festivals also play an important role in shaping marketing strategies.

Nepalese are rich in festivals which can be used to promote special offers and discounts and

influence the customers to order food as a mode of celebration. Also, most Nepalese families like

including liquors in their celebrations which is an opportunity for Foodmandu to promote the

beverage line.

In the decline stage, many customers start to move away from the market or shift to

substitutes. This can be due to a change in the lifestyle of customers who no longer see the need

for the product. Our lifestyle is more or less influenced by our culture (Hasa, 2021). These days

Nepalese are adopting a lot of the western cultures including breakfast and fashion styles. Back

in the days, rice was a staple breakfast for Nepalese families, whereas now many of them have

bread and cereal for breakfast.

Conclusion

A product life cycle includes 4 stages: introduction, growth, maturity, and decline. These

stages have certain characteristics like high profit and sales that are affected by factors like

competition and market need. Therefore, every company should develop the most effective

marketing objectives and strategies for each stage to lengthen their life span as much as possible

in the most profitable way.

A lot of customers' decision on whether or not to consume a product is influenced by

their cultural values and norms, so companies should consider the cultural context while

developing successful marketing strategies.

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