Product life cycle


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Product Life Cycle - Stages and Marketing Strategies

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Product life cycle

  1. 1. Module 7 New Product Development and Product Life-Cycle Strategies 1 Dinesh Kumar LBSIM- New Delhi
  2. 2. New Product Development Strategy and Process • It can be defined as strategy which aims at bringing a new product or service to market. Which involves the following steps. ▫ Idea Generation & Screening ▫ Concept Development & Testing ▫ Business Analysis ▫ Beta Testing ▫ Technical Implementation ▫ Commercialization ▫ New Product Pricing 2
  3. 3. Brief Explanation to Steps of Product Development Strategy • Idea Generation & Screening • continuous systematic search for new product opportunities • Concept Development and Testing – • Testing the product on the parameter of utility, features, reaction of potential customer based on sample questions and the production cost • Business Analysis • Estimating selling price, sales volume and profitability • Beta Testing • Producing a physical prototype, test it and make the changes, try selling in the test market area to determine the customer acceptance • Technical Implementation • Finalizing the Quality Mgt System, resource estimation, Department Scheduling, Supplier Collaboration, plan for Contingencies – what if planning. • Commercialization • Launching the product, produce and plan advertisement and other promotional activities, Critical path analysis is most useful at this stage 3
  4. 4. Disruptive Innovation • Disruptive innovation, a term of art coined by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves ‘up market’, eventually displacing established competitors. 4
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  6. 6. Disruptive Innovation Theory Explained There is a simple, important principle at the core of the disruptive innovation theory: companies innovate faster than customers' lives change. Because of this, most organizations end up producing products that are too good, too expensive, and too inconvenient for many customers. By only pursuing these “sustaining innovations," companies unwittingly open the door to entrants that can offer simpler, more convenient and lower-cost products to those customers who have no need to keep up with the accelerated pace of innovative change. Micromax Mobile is one of the example of Disruptive Innovation 6
  7. 7. Product Life Cycle 7 Dinesh Kumar Saurabh Verma Pankaj Goyal Harsh Pahuja
  8. 8. 8 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. Why a product life cycle?
  9. 9. Product Life-Cycle Strategies • The Product Life Cycle (PLC) has Five Stages ▫ Product Development, ▫ Introduction, ▫ Growth, ▫ Maturity, Decline ▫ Not all products follow this cycle:  Fads  Styles  Fashions 9
  10. 10. 10 Product Life Cycle ……is the course of a product’s sales and profits over time. ………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.
  11. 11. Time Product Develop- ment Introduction Profits Sales Growth Maturity Decline Sales and Profits Sales and Profits Over the Product’s Lifetime Product Life Cycle
  12. 12. Three special categories of PLC
  13. 13. 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.
  14. 14. Product Life-Cycle Strategies 14 Product development Introduction Growth Maturity Decline Begins when the company develops a new-product idea Sales are zero Investment costs are high Profits are negative PLC StagesPLC Stages
  15. 15. Product Life-Cycle Strategies PLC StagesPLC Stages 15 Product development Introduction Growth Maturity Decline Low sales High cost per customer acquired Negative profits Innovators are targeted Little competition
  16. 16. Marketing Strategies: Introduction Stage  Product – Offer a basic product  Price – Use cost-plus basis to set  Distribution – Build selective distribution  Advertising – Build awareness among early adopters and dealers/resellers  Sales Promotion – Heavy expenditures to create trial 16
  17. 17. Product Life-Cycle Strategies 17 Product development Introduction Growth Maturity Decline Rapidly rising sales Average cost per customer Rising profits Early adopters are targeted Growing competition PLC StagesPLC Stages
  18. 18. Marketing Strategies: Growth Stage • Product – Offer product extensions, service, warranty • Price – Penetration pricing • Distribution – Build intensive distribution • Advertising – Build awareness and interest in the mass market • Sales Promotion – Reduce expenditures to take advantage of consumer demand 18
  19. 19. Product Life-Cycle Strategies 19 Product development Introduction Growth Maturity Decline Sales peak Low cost per customer High profits Middle majority are targeted Competition begins to decline PLC StagesPLC Stages
  20. 20. Marketing Strategies: Maturity Stage • Product – Diversify brand and models • Price – Set to match or beat competition • Distribution – Build more intensive distribution • Advertising – Stress brand differences and benefits • Sales Promotion – Increase to encourage brand switching 20
  21. 21. Product Life-Cycle Strategies 21 Product development Introduction Growth Maturity Decline Declining sales Low cost per customer Declining profits Laggards are targeted Declining competition PLC StagesPLC Stages
  22. 22. Marketing Strategies: Decline Stage • Product – Phase out weak items • Price – Cut price • Distribution – Use selective distribution: phase out unprofitable outlets • Advertising – Reduce to level needed to retain hard-core loyalists • Sales Promotion – Reduce to minimal level 22
  23. 23. Thank you 23