Product life cycle

Product life cycle of a product

1. PRODUCT LIFE CYCLE ANJALI DAS V.M MBA RAJADHANI BUSINESS SCHOOL

2. WHAT IS PRODUCT LIFE CYCLE? Every human being have life cycle. A child is born, grow, attain maturity & then die. Likewise every product have life cycle starting from its introduction stage till decline of the product. This can be called as Product Life Cycle (PLC).

3. STAGES IN THE PLC INTRODUCTION GROWTH MATURITY DECLINE

4. 1. INTRODUCTION STAGE Product is just introduced in the market. Profits are negative or low. Slow sales growth. Use either price skimming or penetration pricing strategy.

5. PRICE SKIMMING STRATEGY High price during introduction and then reduce the price after branding the product. We can use this strategy for a new innovative product which do not have much competition. Eg: apple products always use this strategy because of their innovation.

6. PRICE PENETRATION STRATEGY Low price during introduction then increase the price after capturing the market. We can use this strategy if the product is not new and have huge competitors. Eg: Reliance Jio use this strategy.

7. MARKETING STRATEGIES IN THE INTRODUCTION STAGE SLOW PENETRATION STRATEGY SLOW SKIMMING STRATEGY RAPID PENETRATION STRATEGY RAPID SKIMMING STRATEGY PROMOTION HIGH LOW PRICE HIGH LOW

8. RAPID SKIMMING STRATEGY Launching a new product at a high price & a high promotion level. High price to recover as much gross profit. Spends heavily on promotion to convince the market about the product’s merit even at high price.

9. SLOW SKIMMING STRATEGY Launching the product at high price and low promotion. Low level promotion keeps marketing expenses down. This strategy is used when the market is limited & aware about the product.

10. RAPID PENETRATION STRATEGY Launching the product at a low price & spending heavily on promotion. Brings about the fastest market penetration & the largest market share. Used when the market is large & it is unaware of the product. Used when strong potential competition is present.

11. SLOW PENENTRATION STRATEGY Launching the new product at a low price & low level of promotion. Low price will encourage rapid product acceptance. Company believes that market demand is highly price elastic but minimally promotion elastic. Market is highly aware about the product.

12. 2. GROWTH STAGE Rapid climb in sales. New competitors enter the market & they introduce new product features. Price will remain constant or slightly reduce. Promotional expenditure will remain constant or slightly increase. Profits increase.

13. MARKETING STRATEGIES IN THE GROWTH STAGE At this stage firm will increase product quality & new features. Enters new market segments. Increase the distribution coverage & enters new distribution channels. Provide product-preference advertising. Lowers the price to attract price sensitive customers.

14. 3. MATURITY STAGE Rate of sales of product will slow down. Lasts longer than another stages. Divided into 3 phases. => Growth maturity => Stable maturity => Decaying maturity

15. GROWTH MATURITY Sales growth rate starts to decline. No new distribution channels to fill. Some laggard buyers still enter the market.

16. STABLE MATURITY Sales flatten on a per capita basis. Most customers have tried the product. Future sales are governed by population growth & replacement demand.

17. DECAYING MATURITY Level of sales starts to decline. Customers start switching to other products & substitutes.

18. MARKETING STRATEGIES IN THE MATURITY STAGE Companies may abandon their weaker products. Some may concentrate on more profitable products. Some companies may introduce new products.

19. MARKETING STRATEGIES IN THE MATURITY STAGE (cntd..) MARKET MODIFICATION PRODUCT MODIFICATION MARKETING-MIX MODIFICATION Marketers can use strategies of:

20. MARKET MODIFICATION Company try to expand the market. 2 factors contribute to increase the sales volume. They are NUMBER OF BRAND USERS USAGE RATE PER USER Volume= number of brand users X usage rate per user

21. COMPANY EXPAND THE NUMBER OF BRAND USERS IN 3 WAYS Attract nonusers to the product. Enter new market segments- geographic, demographic etc. eg: Johnson & Johnson promoted its baby shampoo to adult users. Attract competitor’s customers.

22. INCREASE USAGE OF THE BRAND IN 3 WAYS Company can try to get customers to use the product more frequently. Company convince the customers to use the product more on each occasion. Discover new uses for the product. eg: Pepsi is also used by people to wash the tires of bikes.

23. PRODUCT MODIFICATION Product can be improved by:- QUALITY IMPROVEMENT FEATURE IMPROVEMENT STYLE IMPROVEMENT

24. QUALITY IMPROVEMENT Increasing the functional performance of the product- DURABILITY RELIABILITY SPEED TASTE

25. FEATURE IMPROVEMENT Adding new features- SIZE WEIGHT MATERIALS ADDITIVES ACCESSORIES

26. STYLE IMPROVEMENT Increasing the aesthetic appeal of the product. Car models prefer style improvement. Difficult to predict whether the people like & which people like the new style.

27. MARKETING-MIX MODIFICATION PRICES DISTRIBUTION ADVERTISING SALES PROMOTION PERSONAL SELLING SERVICES

28. 4. DECLINE STAGE Sales & profit decline. It must be slow or rapid. Sales may plunge to zero or may go to lower level.

29. REASONS FOR DECLINE STAGE TECHNOLOGICAL ADVANCES TASTES & PREFERENCES OF CONSUMERS INCREASED COMPETITION

30. MARKETING STRATEGIES IN THE DECLINE STAGE Company faces a number of tasks & decisions to handle its aging products. IDENTIFYING THE WEAK PRODUCTS. DETERMINING MARKETING STRATEGIES DROP DECISION

31. CONCLUSION PLC is an important concept in marketing. PLC is used by marketing manager to interpret product & market dynamics. It provides information about a product’s competitive dynamics.

32. REFERENCE Marketing management by Philip Kotler. Marketing research by Malhotra.

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