Some conceptual dope on product life cycle

1. Some Dope On Product Life Cycle
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2. Product Life Cycle
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3. Product Life Cycle
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• A PLC consists of four stages:
– Introduction—most risky and expensive.
– Growth—both sales and profits rise, often
rapidly.
– Maturity—sales increase at a decreasing rate
and profits decline.
– Decline—demand drops, often because of
another product development.

4. Product Life Cycle
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Time
Dollars
Product
Category
Profits
Product
Category
Sales
Introductory
Stage
Growth
Stage
Maturity
Stage
Decline
Stage
0

5. Product Life Cycle - Concept
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 Concept describes sales and profit margin of a
given product category over a prolonged
period .
 Concept holds that a product’s sales and
profits change over time in a predictable
manner - in four stages of introduction ,
growth , maturity and decline.

6. PLC Concept Implications
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 Firms must generate new products or enter new
markets to sustain its profitability over time.
 Objectives and strategy for a given product change
as it passes through various life cycle stages.
 Opportunities and threats in each stage are
sufficiently well known to aid in the formulation of
the most appropriate marketing mix for each stage.

7. PLC - Applications
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• To suggest appropriate functional area
emphasis by stages of life cycle
• To suggest appropriate grand strategy
alternatives
• To time strategy changes
• To assess the balance of a corporate portfolio
of SBU’s to ensure that developing products
are introduced as others pass through growth
to maturity

8. Introduction - Market Development
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• This is when a new product is first brought to market ,
before there is a proven demand for it.
• Technical capability in all respects is still not
established.
• How long this stage lasts depend on :-
-product’s complexity
-its degree of newness in market
-its fit into consumer needs
-presence of competitive substitutes.

9. Introduction - Characteristics
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Market growth : slow growth
Technological change : high
 Profits : negative
 Cash flow : low
 Customers : innovators
(limited)
 Competition : limited

10. Introduction - Responses
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 Strategic focus : build awareness
 Marketing expenditures: very high
 Marketing emphasis : create primary
demand
 Product : limited standardized
version
 Price : low/ high
 Distribution : limited
 Promotion : educate on basic
features of product

11. Market Growth
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• Demand begins to accelerate and size of total
market expands rapidly.
• It is the “Takeoff Stage”.
• Potential competitors jump in to the fray. Some
join with carbon copies of originals and others
with improved versions.
• Product and brand differentiations begin to
develop at this stage.
• Instead of seeking ways to get customers to try
the product the originator has to establish his
brand identity

12. Product Life Cycle: Growth
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• Sales increase at accelerating
rate
• Profits increase
• Competition increases
• Strategies: Invest in product
improvements, promotion.

13. Growth Stage - Characteristics
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 Market growth : fast growth
 Technological change : moderate
 Profits : peak levels
 Cash flow : moderate
 Customers : mass markets
 Competition : growing

14. Growth - Responses
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 Strategic focus : market penetration
 Marketing expenditures: high ( declining
%)
 Marketing emphasis : brand preference
 Product : improved versions
 Price : lower
 Distribution : intensive
 Promotion : focus on brand
building

15. Maturity Stage
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• Evidence of market saturation.
• Over capacity becomes apparent.
• Sales now grow about on a par with
population.
• Major focus is on creation of brand loyalty
and holding on to brand preference.
• Emphasis on competing more effectively.

16. Product Life Cycle: Maturity
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• Sales slow down
• Profits level off
• Competition intense

17. Maturity Stage - Characteristics
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 Market growth : slow growth
 Technological change : limited
 Profits : substantial but
declining %
 Cash flow : high
 Customers : mass markets
 Competition : intense

18. Maturity - Responses
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 Strategic focus : defend share
 Marketing expenditures : declining
 Marketing emphasis : brand loyalty
 Product : highly differentiated
 Price : lowest
 Distribution : intensive
 Promotion : focus on brand
preference by
emphasis on product
tangibles or intangibles

19. Decline Stage
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• Market decline triggered by industry
transformation.
• Over capacity becomes endemic.
• Few companies weather the storm well
while others voluntarily / or forcibly quit
the market.

20. Product Life Cycle: Decline
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• Lose market acceptance.
• Diminished popularity,
obsolete technology, or
market saturation.

21. Decline Stage - Characteristics
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 Market growth : decline
 Technological change : limited
 Profits : low to negative
 Cash flow : low
 Customers : laggards
 Competition : declining
number

22. Decline - Responses
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 Strategic focus : productivity
 Marketing expenditures: low
 Marketing emphasis : focused segments/
markets
 Product : Rationalized
 Price : raise with increased
features
 Distribution : selective
 Promotion : selective promotion
only to attractive
segments

23. The PLC, Marketing Objectives and
Marketing Mix
Marketing
objective
Gain
Awareness
Stress
differentiation
Maintain
brand loyalty
Harvesting,
deletion
Competition None Growing Many Reduced
Stage of the product life cycle
Salesrevenue
orprofit
Introduction Growth Maturity Decline
+
0
–
Total industry
sales revenue
Total industry profit
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24. Marketing Strategies for PLC
INTRODUCTION GROWTH MATURITY DECLINE
Product
Strategy
Distribution
Strategy
Promotion
Strategy
Pricing
Strategy
Limited models
Frequent
changes
More models
Frequent
changes.
Large number
of models.
Eliminate
unprofitable
models
Limited
Wholesale/
retail distributors
Expanded
dealers. Long-
term relations
Extensive.
Margins drop.
Shelf space
Phase out
unprofitable
outlets
Awareness.
Stimulate
demand.Sampling
Aggressive ads.
Stimulate
demand
Advertise.
Promote heavily
Phase out
promotion
Higher/recoup
development
costs
Fall as result of
competition &
efficient produc-
tion.
Prices fall
(usually).
Prices
stabilize at
low level.
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25. Extending the PLC
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• Change product
• Change product use
• Change product image
• Change product positioning

26. PLC Length Depends on …..
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• Needs the product satisfies
• Changes in market conditions
• Competitive activity
• Marketing strategy of company

27. Diffusion Process and PLC Curve
Innovators
Early adopters
Early majority
Late majority
Laggards
Product
life cycle
curve
Diffusion
curve
Introduction Growth Maturity Decline
Sales
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28. Innovators
Early
Adopters
Early
Majority
Late
Majority Laggards
Adoption and Diffusion
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29. Innovators
• First adopters of a new product
• Venturesome
• Risk-taking
• 2.5% of all adopters
Innovators
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30. Early Adopters
 Second adopters of a new product
 Self-confident
 Opinion leaders
 13.5% of all adopters
Early adopters
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31. Early Majority
 Third adopters of a new product
 Middle-class consumers
 Cautious with new products
 34% of all adopters
Early Majority
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32. Late Majority
 Fourth adopters of a new product
 Older, more conservative
 Skeptical of new products
 34% of all adopters
Late Majority
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33. Laggards
 Last adopters of a new product
 Innovations not welcome
 Resist change
 16% of all adopters
Laggards
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