Product life cycle & Marketing Strategies

1. Product life cycle & Marketing Strategies

2. Why a product life cycle? A company’s positioning and differentiation strategy must change as the product, market, and competitors change over the product life cycle(PLC) 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.

3. Product Life Cycle 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. The five stages of each product lifecycle are product development, introduction, growth, maturity and decline.

4. Product Life Cycle Sales and Profits Sales Profits Time Product Develop- ment Introduction Growth Maturity Decline Sales and Profits Over the Product’s Lifetime

5. Sales Low Costs High cost per customer Profits Negative Marketing Objectives Create product awareness and trial Product Offer a basic product Price Use cost-plus formula Distribution Build selective distribution Promotion Heavy to entice product trial Introduction Stage of the PLC Summary of Characteristics, Objectives, & Strategies

6. Sales Rapidly rising Costs Average cost per customer Profits Rising Marketing Objectives Maximize market share Product Offer extension, service, warranty Price Penetration strategy Distribution Build intensive distribution Promotion Reduce to take advantage of demand Growth Stage of the PLC Summary of Characteristics, Objectives, & Strategies

7. Sales Peak Costs Low cost per customer Profits High Maximize profits while defending market share Marketing Objectives Product Diversify brand and models Price Match or best competitors Distribution Build more intensive distribution Promotion Increase to encourage brand switching Maturity Stage of the PLC Summary of Characteristics, Objectives, & Strategies

8. Sales Declining Costs Low cost per customer Profits Declining Marketing Objectives Reduce expenditures and milk the brand Product Phase out weak items Price Cut price Distribution Selective: phase out unprofitable outlets Promotion Reduce to minimum level Decline Stage of the PLC Summary of Characteristics, Objectives, & Strategies

9. Three special categories of PLC

10. Continued… A Style is a basic and distinctive mode of expression appearing in a field of human endeavor. Styles appear in homes, clothing, art etc. A Fashion is a currently accepted or popular style in a given field. Fashion pass through four stages: Distinctiveness, emulation, mass fashion, decline. Fads are fashions that comes quickly into public view , are adopted with great zeal, peak early, and decline very fast.

11. Promotion High Low High Price Low Four IntroductoryMarketing Strategies Rapid- skimming strategy Slow- skimming strategy Rapid- penetration strategy Slow- penetration strategy

12. Marketing strategies for Growth stage During the growth stage, the firm uses several strategies to sustain rapid market growth. • 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.

13. Marketing strategies for Maturity stage Three potentially useful ways to change the course for a brand are market, product, and marketing program modification. Market Modification Sales volume = no. of brand users * usage rate per user. Expand the no. of brand users Convert nonusers Enter new market segments Attract competitors’ customers

14. Continued.. Increase the usage rate among users Have consumers use the product on more occasions. Have consumers use more of the product on each occasion Have consumers use the product in new ways. Product modification Trying to stimulate sales by modifying the product’s characteristics through

15. Continued.. Quality improvement: Aims at increasing the product’s functional performance. Eg: Aashirvaad, Annapoorna, Pillsbury, Naturefresh Feature improvement Aims at adding new features, such as size, weight, materials, additives, and accessories, that expand the product’s performance, versatility, safety, or convenience. Style improvement Aims at increasing the product’s esthetics appeal. Eg; New car models, New Coke

16. Decline Stage • Increase investment • Resolve uncertainties - stable investment • Selective niches • Harvesting • Divesting • To establish a system for identifying weak products. • Some firms’ abandon declining markets earlier than others.