Download Lecture 24- Marketing Mix

MGT-519
STRATEGIC MARKETING
AAMER SIDDIQI
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LECTURE 24
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RECAP
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Product
Levels of Product
Introduction of a Product
Product form
Product line
Product depth
Differentiation of Product
New Product development
Product decision
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PRODUCT LIFE CYCLE
• A new Product progresses through a sequence of stages from
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Introduction
Growth
Maturity &
Decline
• Sequence is known as
PRODUCT LIFE CYCLE
• Associated with the changes
in the marketing situation
• Impacts the marketing strategy and the marketing mix
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PRODUCT LIFE CYCLE
• Every product has a life period, it is launched, it grows, and at
some point, may die.
• Most companies understand the different product life cycle
stages, and that the products they sell all have a limited lifespan
• Companies will invest heavily in new product development in
order to make sure that their businesses continue to grow.
• However some products may not phase out with time
• Clothes probably will not, in fact it is unlikely Jeans will die as
a product but they will change according to the evolving
market needs of the consumers. E.g recent emergence of
‘Jeggings’
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PRODUCT LIFE CYCLE STAGES
• The product life cycle has 4 very clearly defined stages
• Each with its own characteristics that mean different things
for business that are trying to manage the life cycle of their
particular products.
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Introduction
Growth
Maturity
Decline
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INTRODUCTION
• Introduction Stage
• The firms seeks to build product awareness and develop a
market for the product. Impact on the marketing mix is as
follows: • Product- branding and quality level is established
• Intellectual protection such as patents and trademarks are
obtained
• Price- low penetration pricing to build market share rapidly
• High skimming pricing to recover development costs
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INTRODUCTION (CONT’D)
• Place- is selective until consumers show acceptance of the
product
• Promotion: aimed at innovators and early adoptors
• Marketing communications seeks to build product awareness
• Educate consumers about the product
• This stage of the cycle could be the most expensive for a
company launching a new product.
• high, especially if it’s a competitive sector.
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INTRODUCTION (CONT’D)
• The size of the market for the product is small
• Sales are low, although they will be increasing.
• Cost of
– research and development,
– consumer testing, and
– marketing needed to launch the product can be very high
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GROWTH
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Growth Stage – the firm seeks to build brand preference
Increase market share
Product- quality is maintained
Additional features and support services are added
Price- is maintained as firm enjoys increasing demand with
little competition
• Place- channels are added as demand increases & customers
accept the product
• Promotion- aimed at broader audience
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GROWTH (CONT’D)
• The growth stage is typically characterized by a strong growth
in sales and profits
• As the company can start to benefit from economies of scale
in production, the profit margins, as well as the overall
amount of profit, will increase.
• This makes it possible for businesses to invest more money in
the promotional activity to maximize the potential of this
growth stage.
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MATURITY
• Maturity Stage – strong demand in sales diminished
• Competition may appear with similar products
• Primary objective is to defend market share & maximize
profits
• Product- features are enhanced to differentiate the product
from competitors
• Price- lowered because of new competition
• Place- distribution becomes intensive
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MATURITY
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Incentives are offered to encourage preference over competitors
Promotion- emphasizes product differentiation
During the maturity stage, the product is established
Aim for the manufacturer is now to maintain the market share
they have built up.
• This is probably the most competitive time for most products
• Businesses need to invest wisely in any marketing they
undertake.
• Also need to consider any product modifications or
improvements to the production process which might give them
a competitive advantage.
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DECLINE
• Decline Stage –Eventually, the market for a product will start
to shrink in the decline stage
• Shrinkage could be due to the market becoming saturated (i.e.
all the customers who will buy the product have already
purchased it)
• Or because the consumers are switching to a different type of
product.
• Decline is inevitable
• Possible for companies to make some profit by switching to
less-expensive production methods and cheaper markets
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DECLINE
• As sales decline, the firm has several options
– Maintain the product, rejuvenating by adding new features
– Finding new uses
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HARVEST THE PRODUCT- reduce costs
Continue to offer it
Possibly to a loyal niche segment
Discontinue the product,
Liquidate remaining inventory
Selling it to another firm willing to continue
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DECLINE
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MARKETING MIX decisions depend on the selected strategy
Product may be changed if rejuvenated or
Left unchanged if being harvested or liquidated
Price maintained if product is harvested
Drastically reduced if liquidated
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VARIATION IN LIFE SPAN
• "Branded product life cycles vary in length and shape.
• Product category and product form life cycles also possess
degrees of variability, depending on the type of product under
consideration.
• One extreme is the very short life cycle associated with the
product fad (A temporary fashion with a short life cycle)
• Fads move almost immediately into the growth stage of the
firm.
• Some fads possess significant residual markets that keep them
around for a while
• But even these products move fairly rapidly into and through
decline.
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VARIATION IN LIFE SPAN
• Some products can have extremely long maturity phases, but
others may have very long introductory phases.
• It may take some products a substantial amount of time to
catch on in the market before they enter their growth phases.
• These products have been referred to as "high learning
products."
– These products often are complex to understand or use
– may be extremely expensive,
– or may not be compatible with existing social values."[6]
(courcesunt.edu).
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IMPORTANCE OF PLC
• The idea of the product life cycle is an important principle
manufacturers need to understand in order to make a profit
and stay in business.
• However, the key to successful manufacturing is not just
understanding this life cycle but also proactively managing
products throughout their lifetime
• Applying the appropriate resources and sales and marketing
strategies depending on what stage products are at in the
cycle.
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Example: Introduction - 3D TVs
Growth - Blueray discs/DVR
Maturity - DVD
Decline - Video cassette
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SUMMARY
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PLC
Stages of PLC
Introduction
Growth
Maturity
Decline
Variation in life span
Importance of PLC
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THANKYOU
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