Marketing Strategy and the Product Life

Why a product life cycle?

A companys 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 Cycle

product life cycle is the course of a products 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.

Product Life Cycle

Sales and Consulting Group matrix Boston Profits Sales

Brands or products are classified according to Profits whether each has a strong or weak market share and slow or growing market
Time Decline

Dog: low share, low growth Product Introduction Growth Maturity Star: high share, high growth Development Cash cow: high share, low growth Question mark: low share, high growth

Sales and Profits Over the Products Lifetime

Introduction Stage of the PLC

Summary of Characteristics, Objectives, & Strategies
Sales Costs Profits Marketing Objectives Low High cost per customer Negative Create product awareness and trial

Product
Price Distribution

Offer a basic product

Use cost-plus formula Build selective distribution Heavy to entice product trial

Promotion

Growth Stage of the PLC

Summary of Characteristics, Objectives, & Strategies
Sales Costs Profits Marketing Objectives Rapidly rising Average cost per customer Rising Maximize market share

Product
Price Distribution Promotion

Offer extension, service, warranty

Penetration strategy Build intensive distribution

Reduce to take advantage of demand

Maturity Stage of the PLC

Summary of Characteristics, Objectives, & Strategies
Sales Costs Profits Marketing Objectives Product Price Distribution Promotion Peak Low cost per customer High Maximize profits while defending market share Diversify brand and models Match or best competitors Build more intensive distribution Increase to encourage brand switching

Decline Stage of the PLC

Summary of Characteristics, Objectives, & Strategies
Sales Costs Profits Marketing Objectives Product Price Distribution Promotion Declining Low cost per customer Declining
Reduce expenditures and milk the brand

Phase out weak items Cut price

Selective: phase out unprofitable outlets Reduce to minimum level

Marketing Strategies
Promotion
High Low Slowskimming strategy Rapidskimming strategy

High

Price
Low Rapidpenetration strategy Slowpenetration strategy

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 productpreference advertising. It lowers price to attract the next layer of price sensitive buyers.

How to Increase Profitability

Dashboard
Indicator of a companys success
Some measures will confirm advantages over competitors

Others can serve as a diagnostic in identifying problems

Discussion Question
What story does the dashboard tell?

Example: Metrics

Goals
Lets make more money Lets delight our customers Lets redefine our position Goals about broader concerns

Lets Make More Money

State sales objectives in terms of
Currency Market share Units Change from last year or quarter Region Investments made toward current sales
ROI, ROE, ROM (marketing), ROQ (quality)

Growth

Lets Delight Our Customers

Enhance customer satisfaction Increase loyalty Reward influential customers Spread word of mouth Offer personalization Increase customer lifetime values

Lets Redefine Our Position

Product
Build new product sales Build product category Build brand equity
Awareness Positive brand associations Brand preference Trial Repeat Brand loyalty Brand love

Lets Redefine Our Position

Promotion
Spend ad dollars more wisely Determine most appropriate media Determine most appropriate frequency Determine most appropriate message, etc.

Lets Redefine Our Position

Channels (Place)
Determine appropriate channels Determine multichannels Determine lower cost channel interactions Determine whether to outsource functions to channel partners, etc.

Price
Determine high price or low price

Goals about Broader Concerns

Goals that go beyond marketing
Human resource, finance, production, etc. Societal concerns
Charitable or community contributions Boosting stability of local employment Demonstrating leadership in environmentally friendly business practices, etc.

Goals
Goals can be complex, numerous, interconnected and overwhelming Focus on most important goals first Consider the time frame and the financial support need to achieve the goals

Basic Strategies
Do nothing
Let the brand sink or swim on its own

Do nothing differently
Maintain business as usual

Take action
Do something different Marketers have control over STP and 4Ps