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Life Cycle Strategies

Introduction

A company would like, its product to continue selling forever


This however is not possible due to;

The customers needs and wants changing as already discussed in other chapters (challenges)
The competitors also getting wiser and capable of offering competitive products

Life Cycle Strategies

Introduction

PRODUCT LIFE CYCLE

Sales Introduction

Stage

Growth Stage

Maturity Stage

Decline Stage

TIME

Life Cycle Strategies

Introduction

Development stage When the company finds some new idea and starts developing the product.

In this stage only expenses are incurred and no revenue is generated, since the sales is zero.
Trial production and test marketing is also done in this phase. Introduction Stage In this stage the product is introduced in the market. This stage is normally after trial production and market testing is done as above. The sales is slow and is carefully watched and feedback is gathered so that in case of any defficiency, corrective steps be taken.

Since sales is low, and there are heavy expenses of development to recover, initial cost of marketing is very high, the profits are nonexistent, rather profits are negative.

Life Cycle Strategies

Introduction

Growth Stage In this phase the sales growth is rapid. The company starts making profits and profits start going up as well. The volumes as well as revenues go up. Maturity Stage In this stage the growth slows down because the product has been accepted by most of the potential customers. The customers also start feeling that they need something new or a product with some added features. Since the product also starts getting some competition, the company spends more on advertisement to keep the market share against the competition of same/similar products. The profits start declining.

Life Cycle Strategies

Introduction

Decline Stage This is the stage where the product sales decline regularly and profits drop substantially.

While most products die quickly, some products that stayed longer are; Coke Gillette etc. We can say that they are managed better

Life Cycle Strategies


MARKETING STRATEGIES:

Introduction

1.

Introduction stage: Offer a basic Product focus on customers Pricing to be cost plus, offer perceived value or value-in-use Build effective Distribution for the product Advertise to build awareness for early adopter customers, helping dealers and distributors for doing business confidently and heavy Sales Promotions may be used

2.

Growth stage: Offer Product Extensions, service support and penetration of markets

Revise Price (increase or decrease depending upon the acceptance by the customers) for good penetration and higher sales
Expand Distribution (intensive distribution) Advertise heavily to build awareness among mass markets and reduce Sales Promotion expenses

Life Cycle Strategies


3. Maturity stage:

Introduction

Diversify brand and models (make amendments / changes in the product due to competition. Innovate or do R & D to improve product, add features, technology, change in design etc.

Pricing to be competitive (match or beat competition)


Build more intensive Distribution for the product Advertise to stress brand differences and benefits of the product and offer higher Sales Promotions encouraging customers to switch brands from competitors to you

4.

Decline stage: Phase out weak Products - withdrawal Do cost analysis, to cut Prices, and study competition Go selective on-profitable Distribution channels Reduce Advertisement to minimum level needed to retain customers and also reduce Sales Promotion expenses to minimal levels