PRODUCT LIFE CYCLE Santosh Kumar Gaur MBA 1st Year. Roll No.36
Flow of Presentation Introduction Stages Explanation Utility of PLC Marketing strategy Operation level Limitation
A product passes through certain distinct stages during its life these stages are called product life cycle. Normally it is represented as a sales curve spanning the product’s course from introduction to its exit. Introduction
THE FOUR DISTINCT STAGES IN PLC
At this stage there may not be ready market for product; sales are low; profits seem a remote possibility; demand has to be created and developed and product is prompted for use.
The duration of the stage depends on nature of product ,its price, its technological newness and consumer’s view.
crucial decision in this stage is pricing strategy and it decided on (1) market skimming and (2) market penetration.
Poor Design of the Product.
Launched at Wrong Time.
Price too High.
CAUSES OF FAILURE AT INTRODUCTION STAGE
In this stage sales will start climbing quickly; Attracted by the opportunities for profit ,new competitor will enter the market; Price remain same or fall slightly; Promotion spending is same or slightly higher level.
Customer- Early adopter of the product
The Market is shared among the various firm. Company has to reconsider its pricing strategies.
In this stage sales will slow down; Its normally lasts longer than previous stages; It posses strong challenges to marketing management.
The slowdown in sales growth results in many producers with many product to sell; prices becomes low; weak competitors start dropping out product.
Company looks for new users and market segment.
Sales declines due to technological advances, shifts in consumer tastes and increased domestic and foreign competition.
Some firms withdraw from the market, Those remaining reduce products offer, It might be slow or Rapid.
Characteristics of four distinct stage
Sales and Profits Over the Product’s Life From Introduction to Decline Sales and Profits ($) Sales Profits Time Product Develop- ment Introduction Growth Maturity Decline Losses/ Investments ($)
Utility of PLC Concept PLC concept lies in the fact that each stage is characterized by a typical market behavior and lends itself to the application of certain specific marketing strategy. Understand and managing it effectively can help in prolonging the profitable phase of product’s lifespan.
How PLC Concept help in formulating Marketing Strategies
Facilitate Pre-Planning the product launch
Facilitate Prolonging the Profitable Stage
Facilitate Investment Decision on the Product
Facilitate Choice of Appropriate Entry Strategies
Facilitate choice of right time to exit
Provides useful clues to managing customers
Presented by Upendra Kumar MBA 1stSem Roll-48
Facilitates pre-planning the product launch
PLC helps to foresee and predict the profile of the proposed product’s life
Helps in issues on pricing, channel and promotion.
It provides valuable lead time.
Used to predict when competitors are likely to enter the scene, in what area they would intimate the product.
Finding out new users for the product Finding out new uses for the product Popularizing more frequent use of the product Making the product more distinctive to the consumers Adding real and/or psychological value to the product. Facilitate Prolonging the Profitable Phase
It helps to assign investment to the right products and avoid committing heavy resources on wrong product It helps to formulate corporate strategy as well as marketing strategy in an effective manner. Facilitate Investment Decision on Product
Facilitate choice of appropriate entry strategy Entry as Innovator Entry as Early follower Entry as Segmenter Entry as me-too PLC facilitate choice of the right time to exit.
Managing consumer on the path of his experience in respect of the product
Used to make stronger ‘company-consumer relationship’
It also used for augmenting the product, improving service support and modifying the pricing approaches.
Provides useful clues to managing customers
The Product level
The Product sub-category level
The Brand level
PLC operates at three level
Limitation of PLC
The life cycle of Brand cannot be projected and studied independent of the product sub-category/product category to which it belongs.
PLC does not give actual life phase, it cannot be exactly predicted It not give any foolproof plans in advance.