The document discusses product life cycles and strategies. It describes the four stages of a product life cycle as introduction, growth, maturity, and decline. Marketing strategies are outlined for each stage, such as using rapid skimming or penetration pricing during introduction, improving the product and distribution during growth, market and product modification during maturity, and reducing promotional spending during decline. The Ansoff matrix and new product development process are also summarized.

1. PRODUCT LIFE CYCLE AND
STRATEGIES

2. What is a Product ?
Anything that can be offered to a market for
attention, acquisition, use or consumption
that might satisfy a want or need.

3. Product Life Cycles (PLC)
 The course of a product’s sale and profit over it
lifetime. It involves four distinct stages:
 Introduction
 Growth
 Maturity
 Decline.

4. Sales & Profit Life Cycles
Introduction Growth Maturity Decline
Time
Sales
&
profits

5. Product Life-Cycle Strategies
10- 4
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

6. Product Life-Cycle Strategies
10- 5
Product development
Introduction
Growth
Maturity
Decline
 The product life-cycle stage in
which the new product is first
distributed and made available
for purchase.
 Low sales
 High cost per customer
acquired
 Negative profits
 Innovators are targeted
 Little competition
PLC Stages

7. Marketing Strategies: Introduction
Stage
10- 6
 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

8. Four Introductory Marketing strategies
Rapid-
skimming
strategy
Rapid-
penetration
strategy
Slow-
penetration
strategy
Slow-
skimming
strategy
Price
Low
High
Promotion
High Low

9. Introduction Stage
Marketing strategies used in introduction stages include:
 rapid skimming - launching the product at a high price and
high promotional level
 slow skimming - launching the product at a high price and
low promotional level
 rapid penetration - launching the product at a low price with
significant promotion
 slow penetration - launching the product at a low price and
minimal promotion
10- 8

10. Product Life-Cycle Strategies
10- 9
Product development
Introduction
Growth
Maturity
Decline
 The product life-cycle stage in
which a product’s sales start
climbing quickly.
 Rapidly rising sales
 Average cost per customer
 Rising profits
 Early adopters are
targeted
 Growing competition
PLC Stages

11. Marketing Strategies:
Growth Stage
10- 10
 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

12. Growth Stage
Marketing strategies used in the growth stage mainly aim to
increase profits. Some of the common strategies to try are:
 improving product quality
 adding new product features or support services to grow your
market share
 enter new markets segments
 keep pricing as high as is reasonable to keep demand and profits
high
 increase distribution channels to cope with growing demand
 shifting marketing messages from product awareness to product
preference
 skimming product prices if your profits are too low.
10- 11

13. Product Life-Cycle Strategies
10- 12
Product development
Introduction
Growth
Maturity
Decline
 The stage in the product life
cycle in which sales growth
slows or levels off.
 Modify the market, the product,
and the marketing mix.
 Sales peak
 Low cost per customer
 High profits
 Middle majority are targeted
 Competition begins to decline
PLC Stages

14. Marketing Strategies:
Maturity Stage
10- 13
 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

15. Maturity Stage
 Common strategies that can help during this stage fall under
one of two categories:
 Market modification - this includes entering new market
segments, redefining target markets, winning over competitor’s
customers, converting non-users
 Product modification - for example, adjusting or improving
your product’s features, quality, pricing and differentiating it
from other products in the marking
 Marketing Mix modification- changing 7 P’s
10- 14

16. Product Life-Cycle Strategies
10- 15
Product development
Introduction
Growth
Maturity
Decline
 Declining sales and profits.
This can be caused by changes in
consumer preferences,
technological advances and
alternatives on the market.
 Low cost per customer
 Declining profits
 Declining competition
PLC Stages

17. Marketing Strategies: Decline
Stage
10- 16
 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

18. Decline Stage
 Strategies for decline stage:
 reduce your promotional expenditure on the products
 reduce the number of distribution outlets that sell them
 implement price cuts to get the customers to buy the product
 find another use for the product
 maintain the product and wait for competitors to withdraw
from the market first
 sell the brand to another business
 significantly reduce the price to get rid of all the inventory
10- 17

19. Example of the Product Life Cycle 2018
 Introduction – Self-driving cars. Self-driving cars are
still at the testing stage.
 Growth – Electric cars. For example the Tesla Model S
is in its growth phase. Electric cars still need to convince
people that it will work and be practical.
 Maturity – Ford Focus. The Ford Focus is a well-
established car. It has a good brand reputation and has
reached its peak level of market penetration.
 Decline – Diesel cars. Since governments have expressed
concern at the level of pollution from diesel cars. Some cities
have threatened to ban diesel cars within a few years. Sales
have fallen considerably and the market for diesel cars may be
in terminal decline.
10- 18

20. PLC: Strategies for each stage
10- 19

21. Ansoff Matrix
10- 20
 The Ansoff Matrix, also called the Product/Market
Expansion Grid, is a tool used by firms to analyze and plan
their strategies for growth.
 An analytical tool that helps managers to devise their product
and market growth strategies.
 It shows the various strategies that a business can take
depending on whether it wants to market new or existing
products or enter new or existing markets.

23. Market Penetration
 Low risk growth strategy
 Focus on selling existing goods in existing
markets
 Business focuses on products and markets it is
familiar with
 Market research is therefore minimized
 Reaction time of competitors is quick

24. Product Development
 Medium risk strategy
 Selling new products in existing market
 Apple iPhone and McDonalds are two companies (products)
that use this method
 Product extension strategies and new product
development
 Products may have reached the end of their useful life
 Reasons to acquire other companies

25. Market Development
 Medium risk growth strategy
 Selling existing products in new markets
 Using new distribution channels; changing the
price; appealing packaging
 The success of a product in one country does not
necessarily guarantee success in another

26. Diversification
 High risk growth strategy that involves marketing
new products in new markets
 Risk is spread over several products
 Virgin Group (includes Virgin Radio, Virgin Sports, Virgin Rail
Group,VirginTrains USA etc.)
 Development of larger controlling companies (parent
company)
 Business is usually not familiar with the product’s success
in different markets

27. New Product Development Process
10- 26

28. Stages in New product development
 Idea Generation:SWOT analysis
 Idea Screening
 Concept development and testing
 Market strategy development
 Business Analysis
 Test marketing
 Commercialization

29. Idea Screening
The screeners must ask these questions:
• Will the customer in the target market benefit from the product?
• What is the size and growth forecasts of the market
segment/target market?
• What is the current or expected competitive pressure for the
product idea?
• What are the industry sales and market trends the product idea is
based on?
• Is it technically feasible to manufacture the product?
• Will the product be profitable manufactured and delivered to the
customer at the target price?
10- 28

30.  Concept Testing presents the consumer with a proposed
product and measure attitudes and intention at this early
stage of development.
 Market Strategy Development: Includes development of
three part strategy plan
 Describe the market’s size, structure, and behaviour, the
planned product positioning, and the sales, market share, and
profit goals for first few years.
 Outlines the planned price, distribution strategy, and
marketing budget for the first year.
 Describes the long-run sales and profit goals and marketing-
mix strategy over time.
10- 29

31.  Business &financial Analysis:
 Estimate likely selling price based upon competition and customer
feedback
 Estimate sales volume based upon size of market
 Estimate profitability and breakeven point
 Test marketing involves placing a product for sale in one or
more selected areas and observing its actual performance under
the proposed marketing plans.
• Commercialization involves implementing a total marketing
plan and full production: It includes: Launching the product;
Advertisements & Promotions; Distribution; Critical Path Analysis
(identifying the amount of time necessary to finish each activity and the
dependencies of each activity on any others.)
10- 30

32. Key success factors in New Product Development
• Operating Philosophy
• Organization Structure
• The Experience Effect
• Each time cumulative volume doubles,value
added costs (including administration,
marketing,distribution,and manufacturing)
fall by a constant percentage.
• Management Style