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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 Profits Profits Time Decline Sales

Product Development

Introduction

Growth

Maturity

Sales and Profits Over the Products Lifetime

Introduction Stage of the PLC


Summary of Characteristics, Objectives, & Strategies
Sale Co t Profit Marketing Objective Product Price Di tribution Promotion Low High co t per cu tomer Negative Create product awarene and trial

Offer a ba ic product U e co t-plu formula Build elective di tribution Heavy to entice product trial

Growth Stage of the PLC


Summary of Characteristics, Objectives, & Strategies
Sale Co t Profit Marketing Objective Product Price Di tribution Promotion Rapidly ri ing Average co t per cu tomer Ri ing Maximize market hare Offer exten ion, ervice, warranty Penetration trategy Build inten ive di tribution Reduce to take advantage of demand

Maturity Stage of the PLC


Summary of Characteristics, Objectives, & Strategies
Sale Co t Profit Marketing Objective Product Price Di tribution Promotion Peak Low co t per cu tomer High Maximize profit while defending market hare Diver ify brand and model Match or be t competitor Build more inten ive di tribution Increa e to encourage brand witching

Decline Stage of the PLC


Summary of Characteristics, Objectives, & Strategies
Sale Co t Profit Marketing Objective Product Price Di tribution Promotion Declining Low co t per cu tomer Declining
Reduce expenditure and milk the brand

Pha e out weak item Cut price


Selective: pha e out unprofitable outlet Reduce to minimum level

Three special categories of PLC

Continued
A Style is a basic and distinctive mode of expression appearing in a field of human endeavor. Styles appear in homes, clothing, art etc. A Fashion is a currently accepted or popular style in a given field. Fashion pass through four stages: Distinctiveness, emulation, mass fashion, decline. Fads are fashions that comes quickly into public view , are adopted with great zeal, peak early, and decline very fast.

Four Introductory Marketing Strategies


Promotion
High High RapidRapidskimming strategy Low SlowSlowskimming strategy

Price
Low RapidRapidpenetration strategy SlowSlowpenetration 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.

Marketing strategies for Maturity stage


Three potentially useful ways to change the course for a brand are market, product, and marketing program modification. Market Modification Sales volume = no. of brand users * usage rate per user. Expand the no. of brand users Convert nonusers Enter new market segments Attract competitors customers

Continued..
Increase the usage rate among users Have consumers use the product on more occasions. Have consumers use more of the product on each occasion Have consumers use the product in new ways. Product modification Trying to stimulate sales by modifying the products characteristics through

Continued..
Quality improvement: Aims at increasing the products functional performance. Eg: Aashirvaad, Annapoorna, Pillsbury, Naturefresh Feature improvement Aims at adding new features, such as size, weight, materials, additives, and accessories, that expand the products performance, versatility, safety, or convenience. Style improvement Aims at increasing the products esthetics appeal. Eg; New car models, New Coke

Decline Stage
Increase investment Resolve uncertainties - stable investment Selective niches Harvesting Divesting To establish a system for identifying weak products. Some firms abandon declining markets earlier than others.

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