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product life cycle


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the ppt contains detailed stages of product life cycle with their specific strategy requirements and examples in Indian context, limitations, uses and significance along with special cases of PLC

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product life cycle

  1. 1.  It is the life of a product in the market with respect to business/commercial costs and sales measures. To say that a product has a life cycle is to assert four things: Product has a limited life. Product 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 stage. Four main stages:
  2. 2. Break even Losses
  3. 3.  Slow sales growth; offering of basic product Limited distribution Negative or low profits Little or no competition Customers have to be prompted to try the product (awareness creation) Intensive personal selling to channel members. Promotional expenditures are at their highest ratio to sales. Prices tend to be high because costs are high. Firms focus on those buyers who are most ready to buy. Speeding up innovation time is essential in an age of shortening PLCs. To be first can be rewarding, but risky and expensive. Concept of pioneer’s advantage. First movers also have to watch out for ‘second mover advantage’.
  4. 4. • High price RAPID SKIMMING • High promotion • Large market unaware of product • High price and low promotion SLOW SKIMMING • Market aware of product • Competition non intense • Low price intense competitionRAPID PENETRATION • High promotion price sensitivity • Large market unaware customer • Low priceSLOW PENETRATION • Low promotion • Large market, aware customers, price sensitive
  5. 5.  Rapid climb in sales; brand building Purchase by early adopters Increase in public awareness; intensive distribution Bringing product extensions, warranty and service New competitors enter, attracted by the opportunities Prices fall slightly or remain as it is, depending on demand increase and increased competition. Promotional expenditure maintained the same or at slightly increased level to meet competition and to educate the market. Decline in the promotion-sales ratio Increase in profits because of economies of scale and learning effect Possibility of a trade-off between high market share and high current profit.
  6. 6. Focus shifts towards brand buildingBringing product extensions, warranty & servicesAdding new features and improving quality/style/lookEntering new market segmentsIncreasing distribution coveragePrice reduction to attract new buyersIncreased advertisingExample- Hyundai- i10 car
  7. 7. Maggi noodles Washing powders Axe deodorants
  8. 8.  Sales volume peaks and market saturation is reached at some point Costs reduced but prices also tend to drop because of competition This stage normally lasts longer than the previous stages and poses big challenges to marketing management as profits go down. Majority buyers make repeat purchases, laggards join them Can be divided into three phases: growth, stable & decaying maturity Growth phase- sales growth rates start to decline, no new distribution channels to fill, new competitive forces emerge. Stable phase- sales flatten on a per capita basis because of market saturation, future sales governed by population growth & replacement demand. Decaying phase- the absolute level of sales start to decline, customers begin switching to other products, intensified competition.
  9. 9. • Quality improvements (durability, reliability, etc.) • Feature improvements (utility, safety, convenience, versatility, etc.) Product • Style improvements (aesthetic value)modification • Converting non-users and winning competitor’s customers • Entering new market segments Market • Encouraging usage rate (more frequent use, more usage per time)modification • Changes in price and distribution of product Marketing • Changes in sales promotion and personal selling mix • Changes in services (delivery, maintenance, technology assistance)modification
  10. 10. Nokia Symbian OS CRT monitors2G moblie technology CD Players
  11. 11.  Decline in sales because of technological changes, shift in consumer tastes, and increased competition Laggards and repeat purchases driven sales Costs become counter-optimal Overcapacity, increased price cutting, reduced promotion & profit erosion Most of the product class usually die at this stage Withdrawal from market or reduction in number of products offered It is also possible to extend the life of the product by various means
  12. 12.  Appropriate strategy depends upon the exit barrier, industry’s relative attractiveness, product category, and the company’s competitive strength Different strategies used: HARVESTING DIVESTING LIQUIDATING • Gradually • Selling the • Bringing the reducing a product to product to an product or another firm if end & business it has strong dropping off costs while distribution & the assets trying to residual maintain sales goodwill
  13. 13. Polo t-shirt Armani cap t-shirt Being Human t-shirt
  14. 14.  STYLE: a basic & distinctive mode of expression appearing in a field of human endeavor (homes, clothing, and art). A style can last for generations and go in & out of vogue. FASHION: a currently accepted or popular style in a given field. Fashions pass through 4 stages- distinctiveness, emulation, mass fashion, and decline. The length of a fashion cycle is hard to predict. FAD: a fashion that comes quickly into public view, is adopted with great zeal, peaks early, and declines very fast. The acceptance cycle is short Fads tend to attract only a limited following who are in search of excitement and distinctiveness Fail to survive because they don’t normally satisfy a strong need
  15. 15.  Most product life cycle curves are portrayed as bell shaped. However, three common alternate patterns are also noted many-a-times:
  16. 16.  Most product life cycle curves are portrayed as bell shaped. However, three common alternate patterns are also noted many-a-times: Growth-slump-maturity pattern: sales grow rapidly just after introduction and then fall to a petrified level that is sustained by late adopters buying the product for the first time and early adopters replacing it. Often characteristics of small kitchen appliances. Cycle-recycle pattern: often describes the sales of new drugs. Aggressive promotion of new drugs produces the first cycle. Later, sales start declining and another promotion push produces a second cycle (usually of smaller magnitude and duration). Scalloped pattern: sales pass through a succession of life cycles based on the discovery of new-product characteristics, uses, or users. Eg.- sales of nylon: In thread, in parachute, etc.
  17. 17.  When a product reaches the maturity stage, following strategies can be adopted to extend the life of the product: Price reductions Repackaging and redesigning (to make them seem new and attract new attention) Launch in new markets Revised promotion (to gain new audience and remind the current ones) Direct selling Adding value (new features to the current product)
  18. 18. There are three levels of PLC: Product level (eg. Dell XPS 15 laptop) Category level (eg. Desktop, laptop, netbook, tablet PC) Brand level (HP, Lenovo, Dell, Acer, Apple, Sony) Determines the revenue earned Helps the firm in being proactive Contributes to strategic marketing planning May help the firm to identify when a product needs support, redesign, revitalization, withdrawal, etc. May help in new product development planning or creating a marketing mix for success of a brand/product.
  19. 19.  Product planning Maintaining a proper balance of product at different stages of PLC Preventing cannibalization Pre-planning product launch Making investment decisions on products Choosing appropriate entry and exit strategy Prolonging the profitable phase (by highlighting new uses, adding new users, etc.) Shortening the product development time Customer management
  20. 20.  PLC patterns are too variable in shape and duration to be generalized Marketers can seldom tell which stage their product is in. For specific products, the duration of each PLC stage is unpredictable. A product may appear to be mature when actually it has reached a plateau prior to another upsurge. The PLC pattern is the self-fulfilling result of marketing strategies and that skillful marketing can in fact lead to continued growth. Use of PLC may lead to inappropriate actions sometimes. Because of these limitations, strict adherence to PLC can lead a company to misleading objectives and strategy prescriptions.