Download Product Life Cycle - Safaa-Dalloul

Principles of Marketing
Unit 5
Instructor: Safaa S. Y. Dalloul
Product Life Cycles
Elements of Lecture
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Product Life Cycle PLC
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
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Product Life-Cycle Marketing
Strategies
Products Characteristics
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 Limited life.
 Product sales pass through distinct stages
 Profits rise and fall.
 Products require different strategies.
Product Life Cycle
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Growth-Slump-Maturity
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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.
Cycle-Recycle
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The pharmaceutical company aggressively
promotes its new drug, and this produces
the first cycle.
Later,
sales
company
start
gives
declining
the
drug
and
the
another
promotion push, which produces a second
cycle (usually of smaller magnitude and
duration).
Scalloped
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Sales pass through a succession of life
cycles based on the discovery of newproduct 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.
Style, Fashion, and Fad
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Product Life Cycle
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 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
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Introduction Stage and the
Pioneer Advantage
Product Life Cycle
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 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
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 Introduction Stage
Highest Promotional expenditures to:
Inform potential consumers.
 Induce product trial.
 Secure distribution in retail outlets.
Product Life Cycle
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 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
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 Introduction Stage
Sales
Low sales
Costs
High cost per customer
Profits
Negative
Customers
Innovators
Competitors
Few
Product Life Cycle
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 Introduction Stage
Marketing Objectives
Create product awareness
and trial
Product Life Cycle
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 Introduction Stage
Product
Offer a basic product
Price
Use cost-plus
Distribution
Build selective distribution
Advertising
Build product awareness among early
adopters and dealers
Sales Promotion
Use heavy sales promotion to entice trail
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Growth Stage
Product Life Cycle
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 Growth Stage
Sales
Rapidly rising sales
Costs
Average cost per customer
Profits
Rising profits
Customers
Early Adopters
Competitors
Growing Number
Product Life Cycle
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 Growth Stage
Marketing Objectives
Maximize market share
Product Life Cycle
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 Growth Stage
Product
Offer product extensions, service, warranty
Price
Price to penetrate market
Distribution
Build intensive distribution
Advertising
Build awareness and interest in the mass
market
Sales Promotion
Reduce to take advantage of heavy
consumer demand
Product Life Cycle
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 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
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 Growth Stage
What are the several strategies that the firm uses to sustain
rapid market growth?
 Adds new models and flanker products (i.e., products of
different sizes, flavors, and so forth that protect the main
product).
 Increases
its
distribution
distribution channels.
coverage
and
enters
new
Product Life Cycle
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 Growth Stage
What are the several strategies that the firm uses to sustain
rapid market growth?
Shifts
from
product-awareness
advertising
to
product-
preference advertising.
Lowers prices to attract the next layer of price-sensitive buyers.
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Maturity Stage
Product Life Cycle
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 Maturity Stage
Stable
Sales flatten.
Most potential consumers
Growth
The sales growth
have tried the product, and
future sales are governed
by
population
growth
rate starts to decline.
No new distribution
channels to fill.
Decaying
&
The level of sales
replacement demand.
starts to decline
Customers
begin
switching
other
products
to
Product Life Cycle
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 Maturity Stage
Product Life Cycle
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 Maturity Stage
Product Life Cycle
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 Maturity Stage
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits
Customers
Middle majority
Competitors
Stable number beginning to decline
Product Life Cycle
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 Maturity Stage
Marketing Objectives
Maximize profit while defending
market share
Product Life Cycle
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 Maturity Stage
Product
Vary brand and models
Price
Price to match or best competitors
Distribution
Build more intensive distribution
Advertising
Stress brand differences and benefits
Sales Promotion
Increase to encourage brand switching
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Decline Stage
Product Life Cycle
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 Decline Stage
Sales
Declining sales
Costs
Low cost per customer
Profits
Declining profits
Customers
Laggards
Competitors
Declining number
Product Life Cycle
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 Decline Stage
Marketing Objectives
Reduce expenditure and milk the brand
Product Life Cycle
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 Decline Stage
Product
Phase out weak items
Price
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
Product Life Cycle
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 Decline Stage
How the company can deal with
the decline stage? And Why?
Product Life Cycle
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 Critique | Analysis
The PLC concept helps marketers
interpret product and market dynamics.
Advantages
It can be used for planning and
control, although it is useful as a
forecasting tool.
Product Life Cycle
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 Critique | Analysis
Product-life-cycle
patterns
are
too
variable in shape and duration.
Disadvantages
Note: Critics
put those
disadvantages
of PLC theory
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.
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 cocacola has evolved over the years. Identify ways that coca-Cola can
continue to evolve to meet changing consumer need and wants.
Explain the categories of innovativeness?
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