Transcript The Product Life Cycle: Sales & Profits

Eight Lecture
On
Product Life Cycle
Physical Product : Core Components
New Product Strategy: Factors Demanding Changes
Case Studies: New product strategies
PLC: Objectives
Product Life-Cycle Model
PepsiCo India: Diversified product portfolio
What is a Product ?
Anything that can be offered to a market for attention,
acquisition, use or consumption and that might satisfy a want or
need.
Products includes:
 Physical objects (consumer products, industrial products, house hold goods, etc)
 Services( banking, insurance, advertising, media, catering, education etc)
 Events (IPL, fashion shows, exhibitions, etc)
 Places( tourists destinations, industrial/ residential plots, SEZ, etc)
 Ideas (lawyers, consultants, doctors, etc)
Physical Product : Core Components
Identify key core components
•Mineral water
•Perfumes
• Garments
•Cement/ steel
•Auto components
•Industrial machines
Services: Nature and Characteristics
New Product Strategy: Factors Demanding Changes
Profits,
ROI,
IRR.
Changes in
the technology
Emerging
Competitive
scenario
Economies
of scale
Changing
Customer
needs
New Product Development Process
Marketing
Strategy
Concept
Development
and Testing
Idea
Screening
Idea
Generation
Business
Analysis
Product
Development
Test
Marketing
Commercialization
Case Studies: New product strategies
1.
Revolution in the telephones and mobile phones over the last 10
years in India
2.
In cricket from test series to 50:50 and now 20:20
3.
Revolution in the television from black and white to color in
different sizes and the latest LCD/ plasma
4.
Revolution in the passenger cars from Fiat/ Ambassador to
Maruti(800) and now BMW,Benz, Honda, Volkswagen etc
5.
Introduction of Metro railways, Mono railways and state of the
aircrafts in the transport sectors
Case Studies: New product strategies
6.
Cement industry technological( from dry to wet) changes and
economies of scale( 0.5 million tons to 2 million tons)
7.
Technological changes from sheet glass to float glass used for
automobiles and commercial building (eco friendly, superior
product features, safety and globally used)
8.
Recycling of aluminum cans, glass bottles and plastic bottles, a
measure towards eco friendliness and energy saving
9.
Use of de inking technology for conversion of old news papers as
raw material for making newsprint/ paper( low investment, energy
saving and lower cost of production)
Ladies switching over from salwar kameez and sarees to
Jeans/tops
10.
PLC: Objectives
• Products have a limited life
• Product sales pass through distinct stages
• Profits rise and fall at different stages of the PLC
• Product require different strategies in each stage
of the PLC
The Product Life Cycle: Sales & Profits
Maturity
Decline
Growth
Sales curve
Introduction
Profit curve
Time
Introduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Low sales
Costs
High cost per customer
Profits
Negative
Marketing Objectives
Create product awareness
and trial
Product
Offer a basic product
Price
Use cost-plus
Distribution
Build selective distribution
Advertising
Build product awareness among early
adopters and dealers
Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Rapidly rising sales
Costs
Average cost per customer
Profits
Rising profits
Marketing Objectives
Maximize market share
Product
Offer product extensions, service,
warranty
Price
Price to penetrate market
Distribution
Build intensive distribution
Advertising
Build awareness and interest in the
mass market
Maturity Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits
Marketing Objectives
Maximize profit while defending
market share
Product
Diversify brand and models
Price
Price to match or best competitors
Distribution
Build more intensive distribution
Advertising
Stress brand differences and benefits
Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Declining sales
Costs
Low cost per customer
Profits
Declining profits
Marketing Objectives
Reduce expenditure and milk the brand
Product
Phase out weak items
Price
Cut price
Distribution
Go selective: phase out unprofitable
outlets
Advertising
Reduce to level needed to retain
hard-core loyal customers
PepsiCo India: Diversified product portfolio
( Distribution net work/ branding)
Global Chairman & CEO Indra Nooyi: India & China target growth markets
Global leader in soft drinks
Launching of fruit based drinks to supplement declining
soft drink market
Packaged drinking water for sharing over head expenses
and contribution to enhanced sales revenue
Gatorade value added product for elite consumers
Case studies of stages of PLC
1) Current PLC stage of Maruti 800
2) Current PLC stage of MacDonald in India & USA
3) Current PLC stage of luxury car segment in India(BMW, Benz,
Audi, etc)
4) Current PLC stage of LCD/ Plasma in India
5) Current PLC stage of energy saving lamps in India
6) Current PLC stage of medical tourism in India
BOOKS FOR REFERENCE
 Industrial Marketing: Analysis, planning &control
by Robert R Reeder, Edward G Brierty & Betty H. Reeder
 Industrial Marketing by Krishna K Havaldar
 Industrial Marketing by CGS Krisnamacharyulu & Lalitha
 Industrial Marketing by Dr. M Govindrajan
THANK YOU