Product Life Cycle

Product Life Cycle Marketing Strategies

To say that a product has a life cycle we must understand four things:

1. Products have a limited Life. 3. Products sales passes through distinct stages, giving different challenges, opportunities and problems to the seller. 5. Profits rise and fall at different stages of product life cycle. 7. Products require different marketing, financial, manufacturing and human resource strategies in each life cycle stage.

The Product Life Cycle Curve is typically divided into four stages:

1. Introduction: As the product is introduced in the market heavy expanses incurred with product introduction. This is a period of slow sales growth and profits are nonexistent. 3. Growth: Period of rapid market acceptance and substantial profit improvement. 5. Maturity: A period of slowdown in sales as product has achieved acceptance by most of the potential buyers. Profits also stabilize or decline because of increased competition. 7. Decline: The period when sales show downward drift and profits erode.

Marketing Strategies : Introduction Stage In Introduction stage the firm seeks to build product awareness & develop a market for product. Following are the impact on marketing mix in this stage. 3. Product branding and quality level is established, Patents and trade marks are obtained. 5. Pricing may be low penetration pricing to build market share rapidly, or high pricing to recover development cost. 7. Distribution is selective until consumer shows acceptance of the product. 9. Promotion is aimed at innovators and early adaptors (high income group). 11. Marketing Communication seeks to build product awareness to educate the potential consumers about the product.

Marketing Strategies : Growth Stage The growth stage is marked by rapid growth in sales, as additional consumers start buying product. Attracted by these opportunities new competitors enter in to the market. During this stage following strategies are used by firms: 3. It improves Product quality and adds new product features & improve styling. 4. It adds new models and flanker product (Different size, flavors etc.) 5. It enters New market segments. 6. It increases its distribution coverage and enters new distribution channels. 7. It shifts from product awareness advertising to product preference advertising. 8. It lowers price to attract the price sensitive buyers.

Marketing Strategies : Maturity Stage This stage normally lasts longer than the previous stages, and poses formidable challenges to marketing management. The maturity stage divided into three phases: growth, stable & decaying maturity. 3. Market Modification: The company might try to expand the market for its mature brand by working with the two factors that make up sales volume: Number of brand users 1. Converting nonusers. Ex. Airlines 2. Entering new market segments. Ex. Jonson & Jonson 3. Winning competitors customers Usage rate per user 1. Use of the product on more occasions 2. Use more of the product on each occasions. 3. Use the product in new ways

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Marketing Strategies : Maturity Stage

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2. Product Modification: Managers also try to stimulate sales by modifying the product’s characteristics through: •

Quality Improvement aims at increasing the product’s functional performance. Ex. Splendor Plus (Hero Honda)

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Feature Improvement aims at adding new features that expands the product’s versatility, safety or convenience. Ex. Self start in Splendor Plus

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Style Improvement aims at increasing the product’s aesthetic appeal. Ex. Maruti Alto Sports Edition.

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Marketing Strategies : Maturity Stage

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3. Marketing-Mix Modification: Managers also try to stimulate sales by modifying marketing –mix elements. They should ask the following questions: • Price: Would a price cut attract new buyers? • Distribution: Can more outlets be penetrated? Can company introduce product into new distribution channel? • Advertising: Should the advertising expanse be increased? Should the timing, frequency, or size of ads be changed? • Sales Promotion: Should the company set up sales promotion – Coupons, rebates, gifts, contest & warranties? • Personal selling: Should the sales territory be revised? Should the number or quality of sales force be increased? Should the sales force incentives be revised? • Services: Can company extend more credits? Can it speed up delivery? Can it extend more technical assistance to customers?

Marketing Strategies : Decline Stage

Sales Decline for number of reasons, including technological advances, shifts in consumer tastes, and increased competition. All leads to overcapacity, increased price cutting, and profit erosion. Following are the five strategies available to the firm: 3. Increasing the firms investment to dominate the market or strengthen the competitive position. 4. Maintaining the firm’s investment level until the uncertainties about the industry are resolved. 5. Decreasing the firm’s investment level selectively, by dropping unprofitable customer groups, and strengthening the firm’s investment in lucrative niche. 6. Harvesting the firm’s investments to recover the cash quickly 7. Divesting the business quickly by disposing its assets as advantageously as possible.

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