PRODUCT LIFE CYCLE• Most product sales observed over long periods can be portrayed

as bell shaped curves – Product life cycle curves which can be typically divided into four stages: Introduction, Growth, Maturity and Decline.

• Product Life Cycle asserts four things.• 1. Products have limited life.• 2. Product Sales pass through distinct stages, each posing

different challenges, opportunities and problems to the seller. • 3. Profits rise and fall through different stages of the life cycle.• 4. Products require different marketing, financial, manufacturing,

purchasing and H.R. strategies in each life cycle stage. • Growth-Slump-Maturity pattern (small kitchen appliances)• Cycle Recycle Pattern • Scalloped Pattern (succession of PLC’s; eg: Nylon)

INTRODUCTION - STRATEGIES

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SLOW SKIMMING

SLOW PENETRATION

RAPID SKIMMING

RAPID PENETRATION

•Sales growth tends to be slow - Delays in production capacity expansion /technical problems; Distribution/retail chains being put up; sales expensive as conversion rates are lower (innovators).

•Promotion at the highest ratio to sales – inform customers, induce trial and secure distribution in retail outlets.

•Prices tend to be high as costs are higher.

PLC - GROWTH STAGE

• Introduction is followed by a stage marked by rapid climb in sales. Companies starts to eye for market share.

• Growth is a period of rapid market acceptance & substantial profit improvement.

• Innovators, early adaptors like the product and continue to buy the product while middle majority starts trying.

• New competition as sales and profits are growing. The stage where we see entry of competition in large numbers.

• Prices remain where they are or fall slightly to allow better penetration or for entry into other segments.

• Time noted for the introduction of variants/ brand extensions.• Companies maintain promotion at same or higher level.

Profits increase even with higher promotion costs as it gets spread over higher sales volume.

PLC - GROWTH STAGE

• MARKETING STRATEGIES• Firm improves product quality and adds new features and

models.• Enters new market segments.• Enters new distribution channel.• Advertising focus shifts from awareness / knowledge to

Interest/desire/conviction.• Prices should be reduced (or low priced variants launched)

at the right time to attract the next level of price sensitive customers.

• Faces tradeoff between high market share to high current profit.

• Firm that pursues market expansion strategy will improve its competitive position.

PLC - MATURITY STAGE• Many products which we see around us are in the maturity

stage of PLC.• A stage characterized by the slow down in the growth rate.• Most of practical Marketing management deals with a

mature product. Hence the most important phase in PLC.• Three Phases• 1. Growth Maturity: Sales growth starts to fall due to

distribution saturation. Growth predominantly due to trial by laggards.

• 2. Stable Maturity: Most potential customers have tried the product. Future sales governed by population growth and replacement demand.

• 3. Decaying Maturity: Absolute level of sales decline. • Slow down in sales growth causes over-capacity -----

Intensified competition ----- price wars ---- profit Erosion---- weak exit.

MATURITY STAGE STRATEGIES

• R&D spends are increased to find better versions.• Increased advertising spends.• More Consumer / Dealer cuts.• Three types of interventions are taken up by Marketers.• 1. Market Modification: • Company should not try to conserve but should try &

expand market for its Brand. • Sales vol. = No. of users X usage rate.• Try expand the no. of Brand Users by:• Convert non users: Attempts to convert non coffee drinkers

to try coffee.• Enter new market segments: Johnson & Johnson baby

shampoo for adults, Cerelac adapted for the senile. • Win competitors customers: Pepsi/Coke, NIIT/Apple.

MATURITY STAGE STRATEGIES

• Volume can also be increased by focusing on the Current Users – convincing them to use more.

• More frequent use: Biscuits an all time snack, Coke instead of coffee/tea, clinic shampoo, variety of SKU, vending machines.

• More usage per Occasion: Shampoo giving better results in two rinsing, more SKU’s.

• New more varied uses: Recipe route tried out by microwave oven manufacturers, Sachets by shampoo manufacturers for travelers, Arm & Hammer Baking soda as a refrigerator deodorant.

• 2. PRODUCT MODIFICATION• Stimulate sales by modifying the product’s characteristics

by improvements in quality, feature and style.

STRATEGIES FOR MATURE STAGE

• 2. PRODUCT MODIFICATION• Quality Improvement:• Functional performance improved- for cars, TV, white

goods - New Improved eg: Santro Xing, Indica V2. • Plus launch - from FMCG manufacturers --------- stronger,

bigger, better,– Lifebuoy Plus.• Aimed at triggering Brand switching• Style Improvement:• Aimed at increasing aesthetic appeal. • Periodic intro of color variants by auto manufacturers.• Consumer/packaged food bringing packaging /color

variants. • Advantages: Unique identity / can secure loyal customers.• Major disadvantage arises from the fact that it is difficult to

judge customer preferences --- risk of losing those who liked earlier version

STRATEGIES FOR MATURE STAGE (contd.)

• Advantages of feature improvements• Build progressive and leadership image for co. (Maruti)• New features can be made optional (adapted or dropped

easily).• Helps to win loyalty of some segments.• Cost effective publicity. • Can generate enthusiasm for sales force and dealers.• Main disadvantage is that many of these can be easily

imitated.• 3. Marketing Mix Modifications:• Product Manager should also try to stimulate sales by

modifying Mktg. Mix.• Price: Decision whether a price cut will attract new

customers.• Trying price specials, early bird discounts, easier credit

terms to retain loyal customers..

MATURITY STAGE STRATEGIES

• 3. Marketing Mix Modifications:• Advertising: Change message- copy, media- vehicle mix,

timing/frequency, to target new audience. • Build new brand identity / image.• Direct comparison Ads about competition.• Sales Promotion: Step up trade discount • Price offs, Rebates, warranties, festival offers, gifts etc.• Personal selling: should the quality of sales people or their

area of specialization need to be changed. • Questions on territory revisions; incentive plans; planning of

sales call etc.• Services: can the company speed up delivery. Extending

technical services.• Disadvantages: can be easily copied. Mass distribution and

penetration efforts may not help – can lead to profit erosion.

STRATEGIES FOR DECLINE STAGE

• Sales of most products/brands eventually decline –. • 1. Technological advancements in the product category. • 2. Consumer shifts in taste & perception.• 3. Increased domestic & foreign competition------ • price cutting/ over capacity/ profit erosion.

• Sales may plunge to zero or gradually fall for a long period.• As sales decline, profits fall. Some of the weaker firms

withdraw. • Those remaining drop smaller market segments & marginal

trade channels to conserve profits.• They may cut their promotion budgets and may reduce

prices further.• Unless strong reasons for retention exist, carrying a weak

product is very costly to the firm. • It can delay aggressive search for alternatives/replacement.

STRATEGIES FOR DECLINE STAGE

• MARKETING STRATEGIES:• 1. Increase firms investment (Dominate the market or to

strengthen its competitive position)• 2. Hold investment level until uncertainties about the

industry are resolved.• 3. Decreasing investment selectively. (Unprofitable target

groups/ markets/ products will have to be identified and instead look for strong niche’s.)

• 4. Harvesting: milking to recover cash quickly (Brands with high loyalty can continue longer without any investments).

• 5. Divest the business quickly by disposing off its assets as advantageously as possible.

• Drop Decision: • Sell/transfer to someone • Should drop slowly or fast.• Inventory/service level to be maintained.

P.L.C WEAKNESSES• No Uniform Shape: • An ‘S’ shaped curve describes only shape of PLC while most

of them vary or are unique.• Unpredictable Turning Points:• While most products do peak and then fall there is no

specific turning point. • Difficult to Decide the Stages: • A dormant sales (flat) pattern may denote the product has

reached maturity while it may be just that the product has touched a plateau before another growth period.

• Tendency to drop a product due to such readings can turn out to be fatal due to the risks involved in new product development.

P.L.C WEAKNESSES

• Unclear Implications: Growth phase may or may not be associated with high profit margin.

• Rapid growth can be associated with low profits and decline can be very profitable.

• Product Oriented: • Fails to understand the changes in the requirement

of customers / strategies of competitors, attractiveness of new market to competitors/ Emergence of technologies etc.

• Technologies, needs/ demands, product categories have different driving forces.