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The Product Life Cycle (PLC) has Five Stages › Product Development, Introduction, Growth, Maturity, Decline › Not all products follow this cycle: Fads Styles Fashions 9-1 Goal 3: Know the stages of the product life cycle process The product life cycle concept can be applied to a: › Product class (soft drinks) › Product form (diet colas) › Brand (Diet Dr. Pepper) Using the PLC to forecast brand performance or to develop marketing strategies is problematic 9-2 Goal 3: Know the stages of the product life cycle process PLC Stages Product development Introduction Growth Maturity Decline Begins when the company develops a new-product idea Sales are zero Investment costs are high Profits are negative 9 - 3life cycle Goal 4: Realize how marketing strategies change during the product PLC Stages Product development Introduction Growth Maturity Decline Low sales High cost per customer acquired Negative profits Innovators are targeted Little competition 9 - 4life cycle Goal 4: Realize how marketing strategies change during the product Product – Offer a basic product Price – Use cost-plus basis to set Distribution – Build selective distribution Advertising – Build awareness among early adopters and dealers/resellers Sales Promotion – Heavy expenditures to create trial 9 - 5life cycle Goal 4: Realize how marketing strategies change during the product PLC Stages Product development Introduction Growth Maturity Decline Rapidly rising sales Average cost per customer Rising profits Early adopters are targeted Growing competition 9 - 6life cycle Goal 4: Realize how marketing strategies change during the product Product – Offer product extensions, service, warranty Price – Penetration pricing Distribution – Build intensive distribution Advertising – Build awareness and interest in the mass market Sales Promotion – Reduce expenditures to take advantage of consumer demand 9 - 7life cycle Goal 4: Realize how marketing strategies change during the product PLC Stages Product development Introduction Growth Maturity Decline Sales peak Low cost per customer High profits Middle majority are targeted Competition begins to decline 9 - 8life cycle Goal 4: Realize how marketing strategies change during the product Product – Diversify brand and models Price – Set to match or beat competition Distribution – Build more intensive distribution Advertising – Stress brand differences and benefits Sales Promotion – Increase to encourage brand switching 9 - 9life cycle Goal 4: Realize how marketing strategies change during the product PLC Stages Product development Introduction Growth Maturity Decline Declining sales Low cost per customer Declining profits Laggards are targeted Declining competition 910 Goal 4: Realize how marketing strategies change during the product life cycle Product – Phase out weak items Price – Cut price Distribution – Use selective distribution: phase out unprofitable outlets Advertising – Reduce to level needed to retain hard-core loyalists Sales Promotion – Reduce to minimal level 911 Goal 4: Realize how marketing strategies change during the product life cycle