Product life cycle & Marketing Strategies By- Amar M. ingale t.y.m.e. (a) roll. No. 1930
Why a product life cycle?A company’s 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 Cycleproduct life cycle is the course of a product’s 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 Sales Profits Time Product Introduction Growth Maturity Decline Develop- mentSales and Profits Over the Product’s Lifetime
Introduction Stage of the PLCSummary of Characteristics, Objectives, & Strategies Sales Low Costs High cost per customer Profits NegativeMarketing Objectives Create product awareness and trial Product Offer a basic product Price Use cost-plus formula Distribution Build selective distribution Promotion Heavy to entice product trial
Growth Stage of the PLCSummary of Characteristics, Objectives, & Strategies Sales Rapidly rising Costs Average cost per customer Profits RisingMarketing Objectives Maximize market share Product Offer extension, service, warranty Price Penetration strategy Distribution Build intensive distribution Promotion Reduce to take advantage of demand
Maturity Stage of the PLCSummary of Characteristics, Objectives, & Strategies Sales Peak Costs Low cost per customer Profits HighMarketing Objectives Maximize profits while defending market share Product Diversify brand and models Price Match or best competitors Distribution Build more intensive distribution Promotion Increase to encourage brand switching
Decline Stage of the PLCSummary of Characteristics, Objectives, & Strategies Sales Declining Costs Low cost per customer Profits Declining Marketing Objectives Reduce expenditures and milk the brand Product Phase out weak items Price Cut price Distribution Selective: phase out unprofitable outlets Promotion Reduce to minimum level
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 Low Rapid- Slow- High skimming skimming strategy strategyPrice Rapid- Slow- Low penetration penetration strategy strategy
Marketing strategies for Growth stageDuring 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 product- preference advertising. It lowers price to attract the next layer of price – sensitive buyers.
Marketing strategies for Maturity stageThree 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 product’s characteristics through
Continued..Quality improvement: Aims at increasing the product’s functional performance. Eg: Aashirvaad, Annapoorna, Pillsbury, NaturefreshFeature improvement Aims at adding new features, such as size, weight, materials, additives, and accessories, that expand the product’s performance, versatility, safety, or convenience.Style improvement Aims at increasing the product’s 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.