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POM SESSION-7,8 PRODUCT LIFE CYCLE ECE AND EEE PRODUCT • It is anything that can be offered in the market for attention, acquisition, use or consumption. • It helps in satisfying a need or a demand 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) Product life cycle states 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. 4 Stages of Product Life Cycle • Introduction • Growth • Maturity • Decline Introduction Stage of the PLC 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 Growth Stage of the PLC 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 Maturity Stage of the PLC Sales Peak Costs Low cost per customer Profits High Marketing Objectives Maximize profits while defending market share Product Diversify brand and models Price Match or best competitors Distribution Build more intensive distribution Promotion Increase to encourage brand switching Decline Stage of the PLC 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