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Product life cycle

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Product Life Cycle - Stages and Marketing Strategies

Product Life Cycle - Stages and Marketing Strategies

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  • 1. Module 7 New Product Development and Product Life-Cycle Strategies Dinesh Kumar LBSIM- New Delhi
  • 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
  • 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
  • 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.
  • 5.
  • 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
  • 7. Product Life Cycle Dinesh Kumar Saurabh Verma Pankaj Goyal Harsh Pahuja
  • 8. 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:
      • Products have a limited life.
      • Products sales pass through distinct stages, each posing different challenges, opportunities and problems to the seller.
      • Profits rise and fall at different stages of the product life cycle.
      • Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life – cycle stages .
  • 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
  • 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. Product Life Cycle Time Product Develop- ment Introduction Profits Sales Growth Maturity Decline Sales and Profits Sales and Profits Over the Product’s Lifetime
  • 12. Three special categories of PLC
  • 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. Product Life-Cycle Strategies
    • 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 Stages
  • 15. Product Life-Cycle Strategies
    • PLC Stages
    • Product development
    • Introduction
    • Growth
    • Maturity
    • Decline
    • Low sales
    • High cost per customer acquired
    • Negative profits
    • Innovators are targeted
    • Little competition
  • 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
  • 17. Product Life-Cycle Strategies
    • Product development
    • Introduction
    • Growth
    • Maturity
    • Decline
    • Rapidly rising sales
    • Average cost per customer
    • Rising profits
    • Early adopters are targeted
    • Growing competition
    PLC Stages
  • 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
  • 19. Product Life-Cycle Strategies
    • Product development
    • Introduction
    • Growth
    • Maturity
    • Decline
    • Sales peak
    • Low cost per customer
    • High profits
    • Middle majority are targeted
    • Competition begins to decline
    PLC Stages
  • 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
  • 21. Product Life-Cycle Strategies
    • Product development
    • Introduction
    • Growth
    • Maturity
    • Decline
    • Declining sales
    • Low cost per customer
    • Declining profits
    • Laggards are targeted
    • Declining competition
    PLC Stages
  • 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
  • 23. Thank you