Product Life Cycle

What is Product Life Cycle?

 What is PLC ?

A product’s life cycle can be divided

into several stages characterized by the
revenue generated and cost incurred
per unit over a period of time
 Important aspects of the P.L.C
1. Products have a limited life

2. Product sales pass through distinct stages, each posing different

challenges, opportunities, and problems to the seller

3. Product rise and fall at different stages of the product life cycle

4. Products require different marketing, financial, manufacturing,

purchasing, and human resource strategies in each life cycle stage
 PLM enables a firm to:
1. Foresee the future trends and adopt a long term approach
2. Decide the marketing mix
3. Anticipate factors which might affect sales
4. Plan for a timed sequence of conditional moves at every stage
 Stages in Product Life Cycle

Stage 1: Introduction (Market Development)

Stage 2: Market Growth

Stage 3: Market Maturity

Stage 4: Market Decline

Product Life Cycle Curve of a typical product
 Stage 1: Introduction (Market
Development)
 New Product is introduced
 Low or non-existent demand
 Low awareness
 High product development costs
 Losses on account of low sales

Reva – Electric Car

Product May substitute an existing product or satisfy a latent need

Price The firm may adopt Penetration Pricing or Skim Pricing

Place Selective and scattered distribution

Promotion Considerable effort towards building brand awareness

 Stage 2: Market Growth
 Product is a success
 Sales take-off
 Increased awareness
 Reduced costs due to economies
of scale
 Increased Profit
IPOD

Product New product features, better quality and packaging

Price Price Competition

Place Intensive distribution

Promotion Increased advertising to build ‘Brand Preference’

 Stage 3: Market Maturity
 Sales volume peaks
 Increased usage, new customers
drive sales, replacement demand
 Declining costs
 Increase in competitor’s offerings
 Profits Stabilize or decline

Television - CRT

Product Product features modified to differentiate from competitors

Price Prices reduced to counter competition

Place Efforts to retain shelf space of retailers and secure new channels

Promotion Emphasis on ‘brand differentiation’ and ‘brand loyalty’

 Stage 4: Market Decline
 Sales volumes & margins decline as
markets saturate
 Product has become obsolete
 Taste & preferences of customers
change
 Unit costs increase due to overcapacities
 Eventually no profit can be made

Ambassador Car – Hindustan Motors

Product Unviable products discontinued, Revitalizing surviving products

Price Aggressive price cuts to hasten the exit of competitors

Place Unprofitable channels discontinued, distribution becomes selective

Promotion Lower expenditure. Aimed at re-enforcing brand image

 Stages in the life cycle of a
Product and the Marketing Mix
 Product Strategy
Introduction Growth Maturity Decline

• Offer a basic • Offer product • Diversify • Phase out

product extensions, weak
service and performers
warranties
 Pricing Decisions

Skim Pricing Price reduced Price Aggressive

Penetration Pricing to counter competition pricing to
competition unavoidable eliminate rivals
 Distribution Decisions

Introduction Growth Maturity Decline

Display/ introduce the Secure wider coverage Retain shelf space in Maintain
products at retail for the product, retailer light of heightened distribution
outlets promotes the product competition efficiency
actively

Selective and
Scattered Intensive distribution New channels added and More selective
Distribution incentives provided to
retain shelf space
 Promotion

Promotion strategy for a pet food product – Dog Chow during the different stages of PLC
 Types of PLCs
1. Fashion
2. Fad
3. Style
4. Low learning product
5. High learning product
 PLC of Style

A style is a basic and distinctive mode of expression

appearing in a field of Human Endeavour.

For example, styles appear in homes and clothing. Once

a style is invented, it can last for generations, going in
and out of trend.
 PLC of Fashion

A fashion is a currently accepted or popular style in a given field.

Fashions pass through distinctiveness, emulation, mass fashion and

decline

Example: Jeans is a fashion in today's clothing.

 PLC of FAD

Fads are fashions that attract public attention and

awareness, are adopted with great speed, peak early and
decline very fast. They attract only limited following. They
have a novel aspect.

E.g. Body Piercing

A product which requires high learning takes
longer time before it is adopted
E.g. Computers, Laptops
A product which requires low learning takes
lesser time to become acceptable

E.g. Pocket calculators

Products in various stages of PLC

Introduction Growth Maturity Decline

Third generation mobile Portable DVD Personal

Typewriters
phones Players Computers

Handwritten
E-conferencing Email Faxes
letters
Creating Brand Equity
 What is a Brand?
A brand is a name, term, sign, symbol or design,
or a combination of them, intended to identify
the goods or services of one seller or group of
sellers and to differentiate them from those of
competitors.
 Kerala Tourism has successfully
branded the destination with a brand
name, logo, and the tagline “God’s
Own Country”
The Role of Brands

Identify the maker

Offer legal protection

Signify quality
The Role of Brands

Create barriers to entry

Serve as a competitive
advantage

Secure price premium

 What is Brand Equity?
Brand equity is the added value endowed on
products and services, which may be reflected in
the way consumers, think, feel, and act with
respect to the brand.
Advantages of Strong Brands

 Improved perceptions of product performance

 Greater loyalty
 Larger margins
 Increased marketing communications effectiveness
Apple is a Strong Brand
 What is a Brand Promise?
A brand promise is the marketer’s vision of
what the brand must be and do for consumers.
 Brand Elements
 Brand elements are those trademarkable devices
that identify and differentiate the brand
Brand Element Choice Criteria

 Memorable
 Meaningful
 Likeability
 Adaptable
 Transferable
 Memorable
 How easily is the brand element recalled and
recognized
 LUX, LG,TAJ
 Meaningful
 Is the brand element credible and suggestive of
the corresponding category? Does it suggest
something about a product ingredient or the
type of person who might use product?
 Fair & Lovely (Fairness Cream)
 Mother’s Recipe Pickles
 Likable
 How aesthetically appealing is the brand
element? It it likable visually, verbally, and in
other ways?
 Scorpio
 Splendor
 Transferable
 Can the brand elements be used to introduce
new products in the same or different
categories?
 Adaptable
 How adaptable and updatable is the brand
element.
 Lifebuoy
 Brand Elements
Brand
names

Slogans Logos
Elements

Symbols
 Slogans
 Like a good neighbor,  We try harder
State Farm is there  We’ll pick you up
 Just do it  Nextel – Done
 Nothing runs like a  Zoom Zoom
Deere  I’m lovin’ it
 Save 15% or more in 15  Innovation at work
minutes or less
 This Bud’s for you
 Always low prices
 Brand Valuation
 Brand valuation is the process of estimating the
total financial value of the brand
 The 10 Most Valuable Brands
Brand 2006 Brand Value (Billions)
Coca-Cola $67.00
Microsoft $56.93
IBM $56.20
GE $48.91
Intel $38.32
Nokia $30.13
Toyota $27.94
Disney $27.85
McDonald’s $27.50
Mercedes-Benz $22.13
 Brand Naming

Individual names

Blanket family names

Separate family names

Corporate name-individual
name combo
 Individual Names
 Procter & Gamble :
 Vicks
 Pantene
 Ariel & Tide
 Head & Shoulder
 Blanket Family Names
 Tata:
 Tata Salt
 Tata Tea
 Tata Automobile
 Tata Steel
 Separate Family Names for all
Products
 Aditya Birla Group
 Hindalco for Aluminum
 Ultra Tech for Cement
 Grasim for Suiting
Corporate Name Combined with
Individual Product Names
 Kellogg:
 Kellogg’s Raisin Bran
 Kellogg’s Corn Flakes
 Brand Portfolio
 Brand portfolio is the set of all brands and
brand lines a particular firm offers for sale in a
particular category or market segment
 Reasons for Brand Portfolios
 Attracting consumers seeking variety
 Yielding economies of scale in advertising, sales,
merchandising, and distribution
Brand Roles in a Brand
Portfolio

Flankers Cash Cows

Low-end High-end
Entry-level Prestige
 Flankers
 Flanker or Fighter brands are positioned with
respect to competitors brands so that more
important (and more profitable) flagship brands
can retain their desired positioning.
 P & G markets LUVS Diapers in a way that
flanks the more premium pampers
 Cash Cows
 Some brands may be kept around despite
declining sales because they still manage to hold
on to enough customers and maintain
profitability with no marketing support
 Gillette sells the older Trac II, Atra and Sensor
Brands
 Low- End Entry Level
 The role of a relatively low-priced brand in the
portfolio often may be to attract customers to
the brand franchise.
 BMW introduce certain models into its 3-series
automobiles
 High End Prestige
 The role of a relatively high priced brand often
is to add prestige and credibility to the entire
portfolio.
 Samsung offer high priced plasma television