Product Life Cycle stages

&
Marketing Strategies
 Contents
• New product planning and development
• The product life cycle: Stages and marketing strategies
• Packaging and labeling
• Product-mix strategies; rending
 New Product Planning
and Development
• Firms can add products through acquisition or
development.
• Firms can successfully acquire products. At same point,
they need organic growth.
 Types of new products
• New products ranging from creating entirely new market
to minor improvements or revision of existing products.
• Fewer than 10% of all new products are truly innovative
and new to the world (cost & risk).
• Mostly launches are brand extensions. E.g. Tide, Gillette
• Blockbuster products.
• Continuous innovation can broaden the brand meaning
and also force competitors to play catch-up.
 Types of new products
• New products innovation affect bottom line initially, its
success can improve market image, create a sustainable
competitive advantage.
• To create innovation, the firm should:
• have strong R&D and marketing partnership
• have right corporate culture are for innovation.
• be ready for cannibalization of the existing product
• be ready for risk taking
• Techniques for estimating demand for innovative products.
• Focus groups
• Probe & learn approach based on observation. Feedback of early
users experience and other online chats with customers.
Challenge in new-product development
• Companies not developing new products gets vulnerable to
changing customer needs and tastes.
• Shortened product life cycles shortened increased
competition specially new technologies.
• Established companies focus on incremental innovation,
entering new markets by adjusting products for new
customers.
Success factors in Product
Development
• Unique, superior product (98% success rate)
• Carefully defines and assesses the target market, product
requirements and benefits.
• Marketing & technological synergies.
• Quality of execution in all stages
• Product designed
New-product failure
• Misinterpreted market research
• Overestimates of market size
• Poor advertising
Product Life Cycle
(PLC)
Product Life-Cycle
 Product Life-Cycle
Marketing Strategies
• A firm’s positioning & differentiation strategy must change
as its product, market, and competitors must change over
PLC.
1. Products have a limited life.
2. Each stage pose different challenges, opportunities, and
problems to the seller.
3. Profits rise and fall at different product life cycles.
4. Product require different marketing in each life-cycle stage.
Common Product Life-Cycle Patterns
Not all products exhibit a bell-shaped PLC. Three common
alternate patterns are:
 Marketing Strategies
Introduction stage
• Sales growth tends to be slow
• Profits are negative or low
• Promotional expenditures are at high ratio to sales
• To be the first in the market can be rewarding & risky.
• Coming late make sense if the company bring superior
technology, quality or brand strength to create a marketing
advantage.
 Marketing Strategies
Introduction stage (pioneering advantages)
• Market pioneer can get a great advantage
• (19 of 25 market leaders in 1923 were still the market leaders in 1983. e.g.
Coca cola, amazon sustained market dominance)
• Being first to the market provides a significant and
sustained market-share advantage over later entrants
• Early users will recall the pioneer’s brand name if the
product satisfies them.
• The pioneer’s brand also establishes the attributes the
product class should posses.
 Marketing Strategies
Introduction stage (pioneering drawbacks)
• Still, later entrants can succeed by adopting distinctive
positioning and marketing strategies. 
• Studies of 28 industries shows that imitators surpassed
the innovators. Found several weaknesses among the
failing pioneers including:
• New products were not properly positioned
• Appeared before there was a strong demand
• Lack of resources to compete against entering larger firms
• Managerial incompetency

Ref: * Steven Schnaars

Marketing Strategies
Introduction stage (pioneering drawbacks)
• First mover have to watch out for the second-mover
advantage.
• Apple’s the mouse, mp3 player.

• Apple has completely dominated the smartphone market,

overthrown BlackBerry as the biggest player.

• Matsushita over Sony (VCR), GE over EMI in CT scan

equipment, Google over yahoo in search.
 Marketing Strategies
Growth stage
• The growth stage is marked by a rapid climb in sales.
• Early adopters like the product and additional customers
start buying it.
• New competitors enter, and expand distribution.
• Company maintain marketing expenditure or slightly raise
them. To sustain rapid market growth, the firm:
• Improves product quality (features, styling, models, size, flavor)
• Enters new market segments
• Increases distribution coverage & enter new distribution channels
• Shifts from awareness communications to loyalty communications
• Lowers prices to attract the next layer of price sensitive buyers
Marketing Strategies
Maturity stage (1/3)
• Most products are in this stage of life cycle, which
normally lasts longer than the preceding ones.
• The maturity divides into three phases
• Growth: sales growth starts to slow, new competitive forces
emerge
• Stable: Most potential consumers have tried the product, and
future sales depends on population growth and replacement
demand.
• Decaying maturity: the absolute level of sales starts to
decline, customers begin to switching to other products.
Marketing Strategies
Maturity stage (2/3)
• The third phases poses the marketing challenge.
• Weaker competitors withdraw, a few giants dominates
(perhaps a quality leader, a service leader, and a cost leader
and they profit mainly through high volume and lower costs.
• Can the company achieve profits through high volume
and low cost or to pursue a niching strategy and profit
through low volume and high margins.
• Sometimes the market will divide into low and high-end
segments, and market shares of firms in the middle will
steadily erode.
 Marketing Strategies
Maturity stage (3/3)
• Some companies abandon weaker products to concentrate
on new and more profitable ones.
• They may be ignoring the high potential many mature
markets and old products still have.
• Three ways to change the course for a brand.
• Market modifications: Expand the number of brand users, and
usage rate per customer but competitors may match the strategy.
• Product modifications: Stimulate sales by improving quality,
feature, add size, material, that expands the product’s
performance versatility, safety or convenience.
• Marketing Program Modification: modify non-product elements
– Price, distribution, and communication in particular.
Marketing Strategies
Declining stage
• Sales declining reasons include technology advances, shifts in
consumer taste, rising competition, brand image.
• All can lead to overcapacity, increased price cutting, and profit
erosions.
• Decline might be slow (newspapers, sewing machines) or rapid
(floppy disks)
• Options: withdraw, reduce the number of products, exit smaller
segments, cut marketing budgets, reduce prices.
• Unless strong reason for retention, carrying a weak product is
often very costly.
 Marketing Strategies
Declining stage
• Eliminate weak products. Consumes management time and delays the
aggressive search for replacement products.
• Establish a system, policy for handling aging products.
• Gradually reduce a product or business’s cost while trying to maintain
sales (harvesting)
• 1st step to cut R&D cost and plant & equipment investment.
• Product quality cost, sales force size, advertisement cost, etc.
• Sell the product to another firm (divesting)