MARKETING STRATEGIES OF PRODUCT LIFE CYCLE

Product Life Cycle Strategies INTRODUCTION STAGE GROWTH STAGE MATURITY STAGE

DECLINE STAGE

Contents

Product life cycle is the course of a product’s sales and profits over time.

Product life cycle(PLC) deals with the life of a product in the market with respect to business or commercial costs and sales measures

PRODUCT LIFE CYCLE

When we say that a product has a life cycle we assert four things:

Products have a limited life.

Products 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 stages.

Product Life-Cycle

TimeProductDevelop-ment

Introduction Growth Maturity Decline

Sales andProfits

Type of productLevel of competitionMarketing support of the productCustomer taste

The product life cycle depends on-

Four Introductory Marketing Strategies

Rapid-skimmingstrategy

Rapid-skimmingstrategy

Rapid-penetration

strategy

Rapid-penetration

strategy

Slow-penetration

strategy

Slow-penetration

strategy

Slow-skimmingstrategy

Slow-skimmingstrategy

Price

Low

High

PromotionHigh Low

The costs are very highlow sales volumes to startLittle or no competitionDemand has to be createdCustomers have to be prompted to try the

product

Introduction stage

The need for immediate profit is not a pressure.

The product is promoted to create awarenessHeavy expenditures to create trial for Sales

Promotion

Eg. Wikipedia may face competition from Citizendium

Introduction Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Low sales Low 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-plus Use 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

costs reduced due to economies of scalesales volume increases significantlyprofitability begins to risepublic awareness increasescompetition begins to increase with a few new

players in establishing marketincreased competition leads to price decreases• Sales Promotion – Reduce expenditures to take advantage of consumer demand

Growth stage

Improves product quality and adds new features and improved styling.

Adds new models and flanker products(i.e., products of different sizes, flavors, and so forth that protect the main product).

It enters new market segments It increases its distribution coverage and enters

new distribution channels. It shifts from product- awareness advertising to

product- preference advertising. It lowers price to attract the next layer of price –

sensitive buyers.

Eg: fair & handsome (promotion of a new product)

Growth Stage of the PLCGrowth Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Rapidly rising sales Rapidly rising sales

Average cost per customerAverage cost per customer

Rising profitsRising profits

Maximize market shareMaximize market share

Offer product extensions, service, warrantyOffer 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

costs are lowered as a result of production volumes increasing and experience curve effects

sales volume peaks and market saturation is reached

increase in competitors entering the marketprices tend to drop due to the proliferation of

competing productsbrand differentiation and feature diversification is

emphasized to maintain or increase market shareIndustrial profits go down

Maturity stage

–Profits continue to grow and stay positive throughout–Competition is most intense at this stage; many versions and brands–Strategies to prolong this stage:

• Modify the market• Modify the product• Modify the marketing mix

Marketing strategies for Maturity stageThree potentially useful ways to change the

course for a brand are market, product, and marketing program modification.

Product modification Trying to stimulate sales by modifying the product’s characteristics through

1.Quality improvement Eg: Aashirvaad, Annapurna,Nature fresh

2. Feature improvement Eg: Pulsar 180 to Pulsar 2203. Style improvement Eg; New car models, New Coke

Eg: bajaj

Maturity Stage of the PLC Maturity 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 competitorsPrice to match or best competitors

DistributionDistribution Build more intensive distributionBuild more intensive distribution

AdvertisingAdvertising Stress brand differences and benefitsStress brand differences and benefits

costs become counter-optimalsales volume decline or stabilizeprices, profitability diminish

Sales of the new product drop quickly as the target market(s) move on to other things

Profits decline as competitive pressures force lower prices and set promotional spending at a level that maintains the share

Decline stage

– Decisions about the product

• Maintain spending levels to fight it out for what is left• Harvest by cutting spending and riding it out.• Drop the product and move on to the next thing

Eg: Bajaj scooters

Eg. 5.25 Floppy disk

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 brandReduce expenditure and milk the brand

Phase out weak itemsPhase out weak items

Cut priceCut price

DistributionDistribution Go selective: phase out unprofitable outletsGo 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

10-26

INTRODUCTION GROWTH MATURITY DECLINE

Marketing management –Philip Kotler Kevin Keller Abraham Koshy Mithileshwar Jha

REFERENCE

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