2. 2
Product Life Cycle
To say that a product has a life cycle is to assert four
things:-
1. Product has a limited life
2. Product sales pass through distinct stages, each posing
different challenges, opportunities, and problems to the seller
3. Profits rise and fall at different stages of the product life cycle
4. Products require different marketing, financial, manufacturing,
purchasing and HR strategies in each stage
3. 3
Four stages of a product life
cycle
� Introduction: A period of slow sales growth as the
product is introduced in the market. Profits are non
existent at this stage because of the heavy expenses
done for the product introduction
� Growth: - period of rapid market acceptance and
substantial profit improvement
� Maturity:- period of slowdown in the sales growth
because the product has achieved acceptance by most
potential buyers. Profits decline or stabilize
� Decline:- Sales show a downward drift and profits erode
5. 5
PLC Different Stages and Its Characteristics
S.No Characteristics Introduction Growth Maturity Decline
1 Sales low Fast growth Slow growth Declining
2 Profits Negligible Peak Level Declining low
3 Cash Inflow Negative Moderate High low
4 Competitors Few Growing Many Declining
5 Customers Innovative Mass market Mass market Laggards
6. 6
Introduction Stage of PLCIntroduction Stage of PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Low salesLow sales
High cost per customerHigh cost per customer
NegativeNegative
Create product awareness
and trial
Create product awareness
and trial
Offer a basic productOffer a basic product
Use cost-plusUse cost-plus
DistributionDistribution Build selective distributionBuild selective distribution
AdvertisingAdvertising Build product awareness among
early adopters and dealers
Build product awareness among
early adopters and dealers
8. 8
Growth Stage of the PLCGrowth Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Rapidly rising salesRapidly rising sales
Average cost per customerAverage cost per customer
Rising profitsRising profits
Maximize market shareMaximize market share
Offer product extensions,
service, warranty
Offer product extensions,
service, warranty
Price to penetrate marketPrice to penetrate market
DistributionDistribution Build intensive distributionBuild intensive distribution
AdvertisingAdvertising Build awareness and interest in
the mass market
Build awareness and interest in
the mass market
9. 9
Marketing Strategies
Sustain rapid market growth through
1.Improves product quality.
2.Add new features.
3.Enter new segments.
4.Increase distribution coverage.
5.Lower price to attract buyers
10. 10
Maturity Stage of the PLCMaturity Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Peak salesPeak sales
Low cost per customerLow cost per customer
High profitsHigh profits
Maximize profit while defending
market share
Maximize profit while defending
market share
Diversify brand and modelsDiversify brand and models
Price to match or best
competitors
Price to match or best
competitors
DistributionDistribution Build more intensive distributionBuild more intensive distribution
AdvertisingAdvertising Stress brand differences and
benefits
Stress brand differences and
benefits
11. 11
Three sub stages in this stage:
Growth phase:
a. Sales growth rate starts to decline.
b. No new channels of distribution
Stable phase:
a. Sales flatten because of market saturation.
b. Future sales governed by replacement demand and
population growth only.
Maturity phase:
a. Absolute level of sales starts to decline
b.Customer start switching to new products and
substitutes.
12. 12
Marketing Strategies
The strategies for the managers to face
this situation is to adopt
A) Market modification
B) Product modification and
C) Marketing mix modification
13. 13
Market modification
Expand the number of brand users by
1.Trying to convert nonusers.
2.Enter new market segments.
3.Win competitors customers.
Expand Volume by
1.Get the new customers to increase the usage.
2.Interest users to use more of the product on each
occasion.
3.Try to discover new product uses and then convince
people to use them
15. 15
C) Marketing mix modification
a) Prices:
Would a cut attract new customers?
Is it better to raise price to signal quality?
b) Distribution:
Can more outlets be penetrated?
Can the company obtain more market support?
c) Advertising:
Should the expenditures be increased?
Should the media mix be changed?
16. 16
C) Marketing mix modification
d) Sales promotion:
Should we set up sales promotion?
e) Personal selling:
Should the number or quality of sales people be
increased?
Can we improve sales planning?
f) Services:
Can the company speed up the sales delivery.
Can we extend more credit?
17. 17
Decline Stage of the PLCDecline Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Declining salesDeclining sales
Low cost per customerLow cost per customer
Declining profitsDeclining profits
Reduce expenditure and milk the
brand
Reduce expenditure and milk the
brand
Phase out weak itemsPhase out weak items
Cut priceCut price
DistributionDistribution Go selective: phase out
unprofitable outlets
Go selective: phase out
unprofitable outlets
AdvertisingAdvertising Reduce to level needed to retain
hard-core loyal customers
Reduce to level needed to retain
hard-core loyal customers
18. 18
Marketing Strategies
1. Increase firm’s investment (to dominate market).
2. Maintain the firms investment level until the uncertainties are
resolved.
3. Decrease firm’s investment level selectively, by dropping
unprofitable customer groups, while strengthening the firm’s
investment in lucrative business.
4. Harvesting the firms investment to recover cash quickly.
5. Divesting the business quickly by disposing off its assets as
advantageously as possible.
Example PLC .doc
