Download Consumer Behavior: People in the Marketplace

The Product Life Cycle
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Copyright © 2003 Prentice-Hall, Inc.
Product Life-Cycle

To say that a product has a life cycle asserts four
things
1.
2.
Products have a limited life.
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 life-cycle stage.
PLC can be used to analyze product category (Fabric washing
product) , a product form ( washing detergent, SUV’s ) , a
product (liquid Detergent) or a Brand ( Godrej Ezee, Ford)
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Product Life-Cycle
Figure : Style, Fashion, and Fad Life Cycles
Style is a distinctive mode of expression
appearing in the field Of human Endeavour
Home , clothing , Art
Fashion is a popular style in a given
field – Distinctiveness, emulation ,
mass fashion and decline
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Fads are fashions that come quickly
and decline very fast
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Figure : Sales and Profit Life Cycles
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Product Life-Cycle
 Introduction Stage
 Growth tends to be slow
Delay in expansion , Delay in adequate distribution , Customer
reluctance , sales of expensive new products.
 Profits are negative or low
Low sales, heavy distribution and promotion expenses
- need to inform potential consumers
- induce product trial
-secure distribution in retail outlets
 Prices are high
Costs are high due to technological problems
High required margins to support a heavy promotional expend.
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Product Life-Cycle Marketing
Strategies
 Skimming Strategy
 Penetration strategy
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Growth stage
 Demand for the product increases and size of the market
grows
 Early adopters like the product and additional consumers
start buying it
 New competitors attracted by opportunities
 They introduce new product features and expand
distribution
 Price remains same or fall slightly
 Promotion remain same or slightly increase to meet
competition
 Sales rise much faster than promotional expenses causing
welcome decline in promotion-sales ratio
 Profit increases as unit manufacturing cost fall because of
large volume
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Product Life-Cycle Marketing
Strategies
 Marketing Strategies: Growth Stage
 Improve product quality and add new product
features and improved styling – Coffee Café’s
 Add new models and flanker products – Maruti-800 ,
Zen , Maruti Omni
 Enter new market segments – J&J , Mc Donalds , Femina
 Increase distribution coverage and enter new
distribution channels – Amway , Avon , Tupper ware
 Shift from product-awareness advertising to
product-preference advertising – Comparative Ads
 Lower prices to attract next layer of price-sensitive
buyers – Coke vs Pepsi , surf , cars
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Maturity Stage
 At some point of time the rate of sales growth will slow
and the product will enter the stage of maturity
 This stage lasts longer than previous stages
 Most products are at maturity stage of product life cycle and
most marketing managers cope with this problem of
marketing the mature product
 Only the giant firms will survive perhaps the quality leader ,
service leader and cost leader that serves the whole market
and makes profit through high volume
Bajaj managing product and Brand in a mature stage
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Product Life-Cycle Marketing
Strategies

Marketing Strategies: Maturity Stage

Market Modification

Expand number of brand users by:
1. Converting nonusers – Shampoo Sachets
2. Entering new market segments- J&J , Pears pink for kids, Garnier
3. Winning competitors’ customers – PepsiCo. Surf Vs Ariel

Convince current users to increase usage by:
1. Using the product on more occasions – Heinz Vinegar to clean windows ,
Cadbury for all celebration occasions , Juices morning and evening., Milkmaid (
Nestle) , Mithaimate (Amul) for variety of dessert preparations at home , Monaco
2. Using more of the product on each occasion - Priyagold juices –
Ab Koi Pani Nahi Mangega, Drink larger glass of juice ,
3. Using the product in new ways – Dettol , Use Asprin daily for reducing
chances of stroke , Chocolates prevents heart srokes, Wine good for heart.
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Product Life-Cycle Marketing
Strategies
 Product modification
 Quality improvement – “Plus launch”, stronger , bigger , better WIMCO’s
safety matches which included Carburization of match sticks and a new wrapper
for wholesale packing., Chakki fresh Atta by Piilsbury

but be aware : Coca Cola Story in 1985
 Feature improvement- size , weight , accessories that expand product’s
versatility , safety and convenience
 e.g Pan Parag adding new ingredients to the product like Zarda or Tobacco ,
changing its packaging like Sachet from Tin can containing 100gms of Masala,
Pfizer-Listerine’s Pocketpak oral care strips
 Marketing-Mix Modification
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Prices
Distribution
Advertising
Sales promotion
Personal selling
Services
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Michael Boneham, President and Managing Director, Ford India, with
the new Figo in Mumbai on Monday. Photo: Shashi Ashiwal
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Decline stage
 The sale of most products and brands decline
 The decline might be slow or rapid
 Sales may plunge to 0 or may reach a lower level
•
Technological advances
•
shift in consumer taste and preferences : Maggie
Example
•
domestic and foreign competition – some
firms withdraw from market or reduce no.
of products they offer
Ambassador , Dalda , Pagers , Mopeds , Scooters
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Product Life-Cycle Marketing
Strategies

Marketing Strategies: Decline Stage
•
•
More attention to aging products
Identify aging product by regularly reviewing sales ,
market shares , costs and profit trends.
Maintain : Reposition or rejuvenate the brand e.g
Ambassador cars
Harvest : reducing various costs (plant and equipment ,
maintenance, R&D, Advertising, Sales force )
Drop : Liquidate its salvage value. P&G – Crisco oil ,
Comet cleanser , Sure Deodorant , duncan Hines Cakes
•
•
•
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Life-cycle critique
 Life-cycle patterns are too variable in the shape and
duration
 It lacks any fixed sequence of stages
 Marketers can seldom tell that what stage the product is
in
 PLC pattern is the result of marketing strategy rather
than the course that sales must follow
 It is dependent variable
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