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Product Life-Cycle Marketing Strategies To say that a product has a life cycle asserts four things 1. Products have a limited life. 2. Product sales pass through distance stages, each posing different challenges, opportunities, and problems to the seller. 3. Profits rise and fall at different stages of the product life cycle. 4. Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each lifecycle stage. Product Life Cycle Sales and Profits ($) Sales Profits Time Product Development Introduction Losses/ Investments ($) Growth Maturity Decline Product Life-Cycle Marketing Strategies Figure 11.4: Cost Product Life-Cycle Patterns Product Life-Cycle Marketing Strategies Figure 11.5: Style, Fashion, and Fad Life Cycles Introductory Stage Full-Scale Launch High failure rates of New Products Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits Promotion focuses on awareness and information Intensive personal selling to channels Growth Stage Offered in more sizes, flavors, options Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Promotion emphasizes brand ads Goal is wider distribution Prices normally fall Development costs are recovered Maturity Stage Many consumer Declining sales growth products are in Maturity Saturated markets Extending product line Stylistic product changes Heavy promotions to dealers and consumers Marginal competitors drop out Prices and profits fall Niche marketers emerge Decline Stage Rate of decline depends on change in tastes or adoption of substitute products Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses Marketing Strategies for PLC INTRODUCTION Product Strategy Distribution Strategy Promotion Strategy Pricing Strategy Limited models Frequent changes GROWTH More models Frequent changes. Limited Expanded Wholesale/ dealers. Longretail distributors term relations MATURITY Large number Eliminate of models. unprofitable models Extensive. Margins drop. Shelf space Awareness. Aggressive ads. Advertise. Stimulate Stimulate Promote heavily demand.Sampling demand Higher/recoup development costs Fall as result of competition & efficient production. DECLINE Prices fall (usually). Phase out unprofitable outlets Phase out promotion Prices stabilize at low level. PLC -Critique Less useful as forecasting tool – Sales histories exhibit diverse patterns – Stages vary in duration It lacks fixed sequence of stages & fixed length of each stage. Marketers can seldom tell what stage the product is in