Product line decisions & Product Life Cycle

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Includes Product line decisions along with their relative importance. The concept of product life cycle is also depicted using apt examples.

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Product line decisions & Product Life Cycle

  1. 1. Product Line Decisions & Product Life cycle Seminar Presentation
  2. 2. What is a Product Line? A product line is that combination of products which;  Belongs to a single manufacturer  Shares similar Attributes  Serves the common general purpose but;  Targets different market segments
  3. 3. Samsung
  4. 4. Why Product line decisions?  Provides better market access  Involves huge investment/disinvestment  Products have close mutual influence
  5. 5. Product Line Strategies
  6. 6. Expansion of product line  Process of adding more products to the line  Valid only if; a) There is a well established brand arena & customers are accustomed to switch. b) Competitor lacks a comparable product c) Competitor have already expanded to the proposed area.
  7. 7. Contraction of the product line  Dropping a product from the line.  The reasons behind a drop may be; a) Fine tuning the market performance b) Eliminating a poor performing product c) Uplifting a product with more potential • This is a much difficult task since much money is already been invested and hence products are allowed to linger on until they become a loss.
  8. 8. Alteration of the existing products  An alteration may be in; a. Design b. Size c. Colour d. Texture e. Flavour f. Packaging g. Advertising appeal
  9. 9. Developing new use for the existing products  This is intended to attract a new category of customers to the manufacturer without forming a new product.  Investments in R&D and Advertisement is required.
  10. 10. Trading Up  Adding a high priced prestigious product to the line so as to increase the sales of the existing low priced product.
  11. 11. Trading Down  Introducing a low priced product to the prestigious line so as to cater increased demand.
  12. 12. Factors influencing Product Line Decisions
  13. 13. Changes in market demand Competitive action and reaction Marketing Influences Product influences Financial Influences
  14. 14. Changes in market demand
  15. 15. Competitive action and reaction
  16. 16. Marketing Influences
  17. 17. Financial Influences
  18. 18. Product Influences
  19. 19. Concept of Product Life Cycle
  20. 20. The concept  Every product has a life cycle, just as in case of human beings.  A Product after being introduced in to the market, goes through different stages which is categorised on the basis of product, profit, competition and market behaviours.  It is rather a managerial tool for forecasting & strategic planning.
  21. 21. Stages of Life Cycle 1. Introduction 2. Growth 3. Maturity 4. Saturation & 5. Decline
  22. 22. Introduction stage  Product is Introduced in the market for the first time.  Slow growth rate  Negative or low profits  Huge marketing expenses  No competition  Highly volatile in nature
  23. 23. Growth Stage  Sales rises at an increasing rate  Profitable returns from the market  Reduced promotional expenses  Hard work for the firm to establish dealerships & distribution outlets  Competitors starts to explore the market
  24. 24. Maturity Stage  Sales are still increasing, but at a decreasing rate.  Severe competition  Profits fall in line with falling prices, which is unavoidable to retain market share.  Investments in promotional measures to differentiate the product  New distribution strategies & alliances
  25. 25. Saturation Stage  Sales are stable  Profits fall drastically  Competition is at the peak  Continued need for promotion to maintain sales  Firm has to plan product modifications
  26. 26. The old TV is getting replaced by..
  27. 27. Decline  Characterised by falling sales for the whole industry.  Prize cutting is continued and profit is at zero level.  Firm has to take a major strategic decision whether to continue with the product or abandon it.
  28. 28. This old roofing tile industry is now switching to...
  29. 29. More examples for product replacement
  30. 30. The PLC Graph
  31. 31. Graph with Profit curve
  32. 32. An old PLC Curve!!
  33. 33. Conclusion  Every product has got a life cycle and every product will pass through the stage of decline someday.  But, through effective product line decisions and other strategies, we can extend its profitability period much longer to our benefits.
  34. 34. Thank You!!

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