3. Product Life Cycle
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• A PLC consists of four stages:
– Introduction—most risky and expensive.
– Growth—both sales and profits rise, often
rapidly.
– Maturity—sales increase at a decreasing rate
and profits decline.
– Decline—demand drops, often because of
another product development.
5. Product Life Cycle - Concept
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Concept describes sales and profit margin of a
given product category over a prolonged
period .
Concept holds that a product’s sales and
profits change over time in a predictable
manner - in four stages of introduction ,
growth , maturity and decline.
6. PLC Concept Implications
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Firms must generate new products or enter new
markets to sustain its profitability over time.
Objectives and strategy for a given product change
as it passes through various life cycle stages.
Opportunities and threats in each stage are
sufficiently well known to aid in the formulation of
the most appropriate marketing mix for each stage.
7. PLC - Applications
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• To suggest appropriate functional area
emphasis by stages of life cycle
• To suggest appropriate grand strategy
alternatives
• To time strategy changes
• To assess the balance of a corporate portfolio
of SBU’s to ensure that developing products
are introduced as others pass through growth
to maturity
8. Introduction - Market Development
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• This is when a new product is first brought to market ,
before there is a proven demand for it.
• Technical capability in all respects is still not
established.
• How long this stage lasts depend on :-
-product’s complexity
-its degree of newness in market
-its fit into consumer needs
-presence of competitive substitutes.
10. Introduction - Responses
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Strategic focus : build awareness
Marketing expenditures: very high
Marketing emphasis : create primary
demand
Product : limited standardized
version
Price : low/ high
Distribution : limited
Promotion : educate on basic
features of product
11. Market Growth
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• Demand begins to accelerate and size of total
market expands rapidly.
• It is the “Takeoff Stage”.
• Potential competitors jump in to the fray. Some
join with carbon copies of originals and others
with improved versions.
• Product and brand differentiations begin to
develop at this stage.
• Instead of seeking ways to get customers to try
the product the originator has to establish his
brand identity
12. Product Life Cycle: Growth
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• Sales increase at accelerating
rate
• Profits increase
• Competition increases
• Strategies: Invest in product
improvements, promotion.
15. Maturity Stage
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• Evidence of market saturation.
• Over capacity becomes apparent.
• Sales now grow about on a par with
population.
• Major focus is on creation of brand loyalty
and holding on to brand preference.
• Emphasis on competing more effectively.
16. Product Life Cycle: Maturity
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• Sales slow down
• Profits level off
• Competition intense
18. Maturity - Responses
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Strategic focus : defend share
Marketing expenditures : declining
Marketing emphasis : brand loyalty
Product : highly differentiated
Price : lowest
Distribution : intensive
Promotion : focus on brand
preference by
emphasis on product
tangibles or intangibles
19. Decline Stage
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• Market decline triggered by industry
transformation.
• Over capacity becomes endemic.
• Few companies weather the storm well
while others voluntarily / or forcibly quit
the market.
20. Product Life Cycle: Decline
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• Lose market acceptance.
• Diminished popularity,
obsolete technology, or
market saturation.
22. Decline - Responses
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Strategic focus : productivity
Marketing expenditures: low
Marketing emphasis : focused segments/
markets
Product : Rationalized
Price : raise with increased
features
Distribution : selective
Promotion : selective promotion
only to attractive
segments
23. The PLC, Marketing Objectives and
Marketing Mix
Marketing
objective
Gain
Awareness
Stress
differentiation
Maintain
brand loyalty
Harvesting,
deletion
Competition None Growing Many Reduced
Stage of the product life cycle
Salesrevenue
orprofit
Introduction Growth Maturity Decline
+
0
–
Total industry
sales revenue
Total industry profit
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24. Marketing Strategies for PLC
INTRODUCTION GROWTH MATURITY DECLINE
Product
Strategy
Distribution
Strategy
Promotion
Strategy
Pricing
Strategy
Limited models
Frequent
changes
More models
Frequent
changes.
Large number
of models.
Eliminate
unprofitable
models
Limited
Wholesale/
retail distributors
Expanded
dealers. Long-
term relations
Extensive.
Margins drop.
Shelf space
Phase out
unprofitable
outlets
Awareness.
Stimulate
demand.Sampling
Aggressive ads.
Stimulate
demand
Advertise.
Promote heavily
Phase out
promotion
Higher/recoup
development
costs
Fall as result of
competition &
efficient produc-
tion.
Prices fall
(usually).
Prices
stabilize at
low level.
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26. PLC Length Depends on …..
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• Needs the product satisfies
• Changes in market conditions
• Competitive activity
• Marketing strategy of company
27. Diffusion Process and PLC Curve
Innovators
Early adopters
Early majority
Late majority
Laggards
Product
life cycle
curve
Diffusion
curve
Introduction Growth Maturity Decline
Sales
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29. Innovators
• First adopters of a new product
• Venturesome
• Risk-taking
• 2.5% of all adopters
Innovators
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30. Early Adopters
Second adopters of a new product
Self-confident
Opinion leaders
13.5% of all adopters
Early adopters
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31. Early Majority
Third adopters of a new product
Middle-class consumers
Cautious with new products
34% of all adopters
Early Majority
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32. Late Majority
Fourth adopters of a new product
Older, more conservative
Skeptical of new products
34% of all adopters
Late Majority
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33. Laggards
Last adopters of a new product
Innovations not welcome
Resist change
16% of all adopters
Laggards
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