Transcript Product Life Cycle

MANAGING
PRODUCTS
THROUGH
PRODUCT LIFE
CYCLE
Product Life Cycle
The product life cycle describes the
stages a new product goes through in the
marketplace: introduction, growth,
maturity, and decline.
Product Life Cycle
Introductory
Stage
Growth
Stage
Maturity
Stage
Decline
Stage
Sales
Profits
Dollars
0
Time
Introductory Stage
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Full-Scale Launch
of New Products
High failure rates
Little competition
Frequent product modification
Limited distribution
High marketing and production
costs
Negative profits
Promotion focuses on awareness
and information
Intensive personal selling to
channels
Growth stage
•
•
•
•
•
•
•
•
Offered in more
Increasing rate of sales
sizes,
Entrance of competitors
flavors, options
Market consolidation
Initial healthy profits
Promotion emphasizes brand ads
Goal is wider distribution
Prices normally fall
Development costs are recovered
Maturity Stage
•
•
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•
•
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Many consumer
products are in
Maturity Stage
Declining sales growth
Saturated markets
Extending product line
Stylistic product changes
Heavy promotions to dealers and consumers
Marginal competitors drop out
Prices and profits fall
Niche marketers emerge
Decline Stage
• Long-run drop in sales
• Large inventories of
unsold items
• Elimination of all nonessential
marketing expenses
Rate of decline depends on
change in tastes or
adoption of substitute products
Obsolescence Stage
• Companies withdraw from product
manufacturing.
• Stragglers eventually switch to an alternative
product.
How stages of the product life cycle relate to firm’s
marketing objectives & marketing mix actions
INTRODUCTION
Product
Strategy
Limited models
Frequent
changes
GROWTH
MATURITY
DECLINE
More models
Frequent
changes.
Large number
of models.
Eliminate
unprofitable
models
Distribution
Strategy
Limited
Expanded
Wholesale/
dealers. Longretail distributors term relations
Extensive.
Margins drop.
Shelf space
Phase out
unprofitable
outlets
Promotion
Strategy
Awareness.
Aggressive ads.
Stimulate
Stimulate
demand.Sampling
demand
Pricing
Strategy
Higher/recoup
development
costs
Fall as result of
competition &
efficient production.
Advertise.
Promote
heavily
Prices fall
(usually).
Phase out
promotion
Prices
stabilize at
low level.
MANAGING THE PRODUCT LIFE CYCLE
• Modifying the Product
Alter product quality
Enhance performance
Change appearance
• Modifying the Market
 Finding New Users
 Increase use
 Create new use situations
EXTENDING THE PRODUCT LIFE CYCLERepositioning
 Reacting to a Competitor’s Position-never compete
head on
 Catching a Rising Trend-baby aspirin is now low dose
aspirin to reduce heart attacks
 Changing the Value Offered
• Trading Up-add bells & whistles to raise price
• Trading Down- remove bells & whistles to lower price
• Downsizing-reduce contents but maintain price