PRODUCT LIFE CYCLE

Insight to PLC

A companys positioning & differentiation strategies must change as the product, market & competitors change over the PLC.

Deductions from the Insight

Products have a limited life Products sale passes through distinct stages , each posing different challenges, opportunities and problems. Profits rise n fall at different stages of PLC Products require different marketing, financial, manufacturing, purchasing & human resource strategies in each life

PLCs

Are all PLCs bell-shaped ??

If Not then what are the variations ??

Alternate patterns of PLC

EXAMPLES OF EACH ?

Style, Fashion & Fad cycles

Basic & distinctive mode of expression Can last for generations or can go in and out of vogue

Distinctiveness, emulation, mass fashion & decline Fashion fails because it represents purchase compromise & consumers start looking for missing

Are fashions that come quickly, adopted with great zeal, peak early & decline very fast e.g. Trivial pursuit

Unleashing the PLC

Marketing Strategies Introduction Stage

Profits are negative or low & promotional expenditures are at their highest ratio to sales because theres need to : Inform potential consumers Induce Product trial Secure distribution in retail outlets
Tingggggg Intro stage

Require speeding up of innovation time

Deduce the example Products that came six months late but on budget earned an average of 33% less profit in their first five years products that came out on time but 50 % over budget cut their profits by only 4%

Early innovators

Pioneer advantage 1. Economies of scale 2. Technological leadership 3. Patents 4. Ownership of scarce assets

Marketing Strategies Growth Stage

Improve product quality and add new product features and improved styling Add new models and flanker products Enter new market segments Increase distribution coverage and enter new distribution channels Shift from product-awareness advertising to productpreference advertising

Lower prices to attract next layer of price-sensitive buyers

Marketing Strategies Maturity Stage

It has three further stages : Growth sales starts declining ; no new distribution channel left to fill Stable sales flatten on per capita basis coz of market saturation Decaying maturity absolute level of sales starts declining & customers switch to other products.

Contd..
Market Modification
Expand number of brand users by:
1. Converting nonusers 2. Entering new market segments 3. Winning competitors customers

Convince current users to increase usage by:

1. Using the product on more occasions 2. Using more of the product on each occasion 3. Using the product in new ways

Product Modifications Modifying product characteristics through quality improvements, feature & style improvements. E.g. Grocery manufacturers call this Plus Launch like stronger, bigger, better. Feature improvements like size, weight, materials, additives etc Style improvements by enhancing aesthetic appeal of product.

Marketing Program Modifications

Prices would a cut in price attract new buyers? Distribution Can the co obtain more product support & display in existing outlets ? Advertising Should we increase ad expenditures ? Sales Promotion should we give trade deals, price-off coupons, rebates, warranties, gifts etc Personal selling Should we increase the number or quality of sales people ? Services can the co speed up delivery ?

Marketing Strategies Decline Stage

Increase firms investment (to dominate the market and strengthen its competitive position) Maintain the firms investment level until the uncertainties about the industry are resolved. Decrease the firms investment level selectively by dropping unprofitable customer groups, while simultaneously strengthening the firms investment in lucrative niches Harvesting (milking) the firms investment to recover cash quickly Divesting the business quickly by disposing of its assets as advantageously as possible.

Summarizing PLC
Introduction Characteristics Sales Costs Profits Customers Low sales High cost per customer Negative Few Rapidly rising sales Average cost per customer Rising profits Growing Number Peak sales Low cost per customer High profits Stable number beginning to decline Growth Maturity