Product Life Cycles

Product Life Cycles

Instructor: Safaa S. Y. Dalloul

Principles of MarketingUnit 5

Elements of Lecturehttp://safaadalloul.wordpress.com

Marketing Strategies: Introduction Stage and the Pioneer Advantage

Marketing Strategies: Growth Stage

Marketing Strategies: Maturity Stage

Marketing Strategies: Decline Stage

The Product Life-Cycle Concept: Critique

Product Life Cycle PLC

Product Life-Cycle Marketing

Strategies

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Products Characteristics

Limited life.

Product sales pass through distinct stages

Profits rise and fall.

Products require different strategies.


Product Life Cyclehttp://safaadalloul.wordpress.com


Sales grow rapidly when the product is

first introduced and then fall to a

"petrified" level that is sustained by late

adopters buying the product for the first

time and early adopters replacing the

product.

For Example products of small kitchen

appliances such as handheld mixers and

bread makers.

Growth-Slump-Maturity


The pharmaceutical company aggressively

promotes its new drug, and this produces

the first cycle.

Later, sales start declining and the

company gives the drug another

promotion push, which produces a second

cycle (usually of smaller magnitude and

duration).

Cycle-Recycle


Sales pass through a succession of life

cycles based on the discovery of new-

product characteristics, uses, or users.

The sales of nylon, for example, show a

scalloped pattern because of the many

new uses parachutes, hosiery, shirts,

carpeting, boat sails, automobile tires—

that continue to be discovered over time.

Scalloped


Style, Fashion, and Fad

Product Life Cycle

Product Development


Product development begins when the company finds and

develops a new product idea. During product development,

sales are zero, and the company’s investment cost mount

Introduction Stage and the

Pioneer Advantage


Product Life Cycle

Introduction Stage


Why the sales in the introduction stage are slow?

Take time to roll out a new product

Work out the technical problems

Fill dealer pipelines

Gain consumer acceptance

Product Life Cycle

Introduction Stage


Highest Promotional expenditures to:

Inform potential consumers.

Induce product trial.

Secure distribution in retail outlets.

Product Life Cycle

Pioneer Advantage


To be first can be rewarding, but risky and expensive

Most studies indicate that the market pioneer gains the

most advantage.

Product Life Cycle

Introduction Stage


Sales

Costs

Profits

Customers

Competitors

Low sales

High cost per customer

Negative

Innovators

Few

Characteristics

Product Life Cycle

Introduction Stage


Marketing Objectives Create product awareness and trial

Marketing Objectives

Product Life Cycle

Introduction Stage


Product

Price

Offer a basic product

Use cost-plus

Distribution Build selective distribution

Advertising Build product awareness among early adopters and dealers

Strategies

Sales Promotion Use heavy sales promotion to entice trail

Growth Stage



Sales

Costs

Profits

Customers

Competitors

Rapidly rising sales

Average cost per customer

Rising profits

Early Adopters

Growing Number

Growth Stage

Characteristics


Marketing Objectives Maximize market share

Growth Stage



Product

Price

Offer product extensions, service, warranty

Price to penetrate market

Distribution Build intensive distribution

Advertising Build awareness and interest in the mass market

Growth Stage

Strategies

Sales Promotion Reduce to take advantage of heavy consumer demand

Product Life Cycle

Growth Stage


What are the several strategies that the firm uses to sustain

rapid market growth?

Improves product quality and adds new product features and

improved styling.

Enters new market segments.

Product Life Cycle

Growth Stage




Adds new models and flanker products (i.e., products of

different sizes, flavors, and so forth that protect the main

product).

Increases its distribution coverage and enters new

distribution channels.

Product Life Cycle

Growth Stage




Shifts from product-awareness advertising to product-

preference advertising.

Lowers prices to attract the next layer of price-sensitive buyers.

Maturity Stage


Product Life Cycle

Maturity Stage


3 Phases

Stable

Decaying

Growth

The sales growth

rate starts to

decline.

No new distribution

channels to fill.

Sales flatten.

Most potential consumers

have tried the product, and

future sales are governed

by population growth &

replacement demand. The level of sales

starts to decline

Customers begin

switching to other

products

Product Life Cycle

Maturity Stage


In maturity stage what happen when the sales

slowdown in the industry? And how the

competitors will act? Discuss

Product Life Cycle

Maturity Stage


Compare between quality, feature,

and style improvement?


Maturity Stage

Sales

Costs

Profits

Customers

Competitors

Peak sales

Low cost per customer

High profits

Middle majority

Stable number beginning to decline

Characteristics


Maturity Stage

Marketing Objectives Maximize profit while defending market share



Maturity Stage

Product

Price

Vary brand and models

Price to match or best competitors

Distribution Build more intensive distribution

Advertising Stress brand differences and benefits

Strategies

Sales Promotion Increase to encourage brand switching


Decline Stage


Decline Stage

Sales

Costs

Profits

Customers

Competitors

Declining sales

Low cost per customer

Declining profits

Laggards

Declining number

Characteristics


Decline Stage

Marketing Objectives Reduce expenditure and milk the brand



Decline Stage

Product

Price

Phase out weak items

Cut price

Distribution Go selective: phase out unprofitable outlets

Advertising Reduce to level needed to retain hard-core loyal customers

Sales Promotion Reduce to minimal level

Strategies


Product Life Cycle

Decline Stage

How the company can overcome the decline stage?

Product Life Cycle

Critique | Analysis


The PLC concept helps marketers

interpret product and market

dynamics.

It can be used for planning and

control, although it is useful as a

forecasting tool.

Advantages

Product Life Cycle

Critique | Analysis


Product-life-cycle patterns are too

variable in shape and duration.

Marketers can seldom tell what stage the

product is in a product may appear to be

mature when actually it has reached a

plateau prior to another upsurge.

Disadvantages

Note: Critics put those

disadvantages of PLC theory

Homework

List and define the steps in the new-product development process?

Coca-Cola has sustained success in the maturity stage of product life

cycle for many years. Visit Coca-Cola’s website and discuss how

coca-cola has evolved over the years. Identify ways that coca-Cola

can continue to evolve to meet changing consumer need and wants.

Product Life Cycles

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