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MANAGING PRODUCTS THROUGH PRODUCT LIFE CYCLE Product Life Cycle The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline. Product Life Cycle Introductory Stage Growth Stage Maturity Stage Decline Stage Sales Profits Dollars 0 Time Introductory Stage • • • • • • • • Full-Scale Launch of New Products High failure rates 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 Increasing rate of sales sizes, Entrance of competitors flavors, options Market consolidation Initial healthy profits Promotion emphasizes brand ads Goal is wider distribution Prices normally fall Development costs are recovered Maturity Stage • • • • • • • • Many consumer products are in Maturity Stage Declining sales growth 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 • Long-run drop in sales • Large inventories of unsold items • Elimination of all nonessential marketing expenses Rate of decline depends on change in tastes or adoption of substitute products Obsolescence Stage • Companies withdraw from product manufacturing. • Stragglers eventually switch to an alternative product. How stages of the product life cycle relate to firm’s marketing objectives & marketing mix actions INTRODUCTION Product Strategy Limited models Frequent changes GROWTH MATURITY DECLINE More models Frequent changes. Large number of models. Eliminate unprofitable models Distribution Strategy Limited Expanded Wholesale/ dealers. Longretail distributors term relations Extensive. Margins drop. Shelf space Phase out unprofitable outlets Promotion Strategy Awareness. Aggressive ads. Stimulate Stimulate demand.Sampling demand Pricing Strategy Higher/recoup development costs Fall as result of competition & efficient production. Advertise. Promote heavily Prices fall (usually). Phase out promotion Prices stabilize at low level. MANAGING THE PRODUCT LIFE CYCLE • Modifying the Product Alter product quality Enhance performance Change appearance • Modifying the Market Finding New Users Increase use Create new use situations EXTENDING THE PRODUCT LIFE CYCLERepositioning Reacting to a Competitor’s Position-never compete head on Catching a Rising Trend-baby aspirin is now low dose aspirin to reduce heart attacks Changing the Value Offered • Trading Up-add bells & whistles to raise price • Trading Down- remove bells & whistles to lower price • Downsizing-reduce contents but maintain price