Transcript Product Life-Cycle Marketing Strategies

Product Life-Cycle Marketing
Strategies
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To say that a product has a life cycle
asserts four things
1. Products have a limited life.
2. Product sales pass through distance
stages, each posing different challenges,
opportunities, and problems to the seller.
3. Profits rise and fall at different stages of
the product life cycle.
4. Products require different marketing,
financial, manufacturing, purchasing, and
human resource strategies in each lifecycle stage.
Product Life Cycle
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Introduction
Losses/
Investments ($)
Growth
Maturity
Decline
Product Life-Cycle Marketing
Strategies
Figure 11.4: Cost Product Life-Cycle Patterns
Product Life-Cycle Marketing
Strategies
Figure 11.5: Style, Fashion, and Fad Life Cycles
Introductory Stage
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Full-Scale Launch
High failure rates
of New Products
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 sizes,
flavors, options
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Increasing rate of sales
Entrance of competitors
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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Many consumer
Declining sales growth
products are in Maturity
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
Rate of decline depends on
change in tastes or
adoption of substitute products
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Long-run drop in sales
Large inventories of unsold items
Elimination of all nonessential marketing
expenses
Marketing Strategies for PLC
INTRODUCTION
Product
Strategy
Distribution
Strategy
Promotion
Strategy
Pricing
Strategy
Limited models
Frequent
changes
GROWTH
More models
Frequent
changes.
Limited
Expanded
Wholesale/
dealers. Longretail distributors term relations
MATURITY
Large number
Eliminate
of models.
unprofitable
models
Extensive.
Margins drop.
Shelf space
Awareness.
Aggressive ads. Advertise.
Stimulate
Stimulate Promote heavily
demand.Sampling
demand
Higher/recoup
development
costs
Fall as result of
competition &
efficient production.
DECLINE
Prices fall
(usually).
Phase out
unprofitable
outlets
Phase out
promotion
Prices
stabilize at
low level.
PLC -Critique
 Less
useful as forecasting tool
– Sales histories exhibit diverse patterns
– Stages vary in duration
 It
lacks fixed sequence of stages &
fixed length of each stage.
 Marketers can seldom tell what stage
the product is in