PRODUCT LIFE CYCLE AND PRODUCT LIFE CYCLE AND MANAGEMENT OF THE MARKETING MIXMANAGEMENT OF THE MARKETING MIX

1. Product life cycle- The process which a product passes through from birth (development) to

death (withdrawal).

- The changes that may take place in the health or the fortune of a product during the period it is on the market.

- This process is classically grouped into four stages – introduction, growth, maturity and decline. Before introduction, is a painstaking development process. 1

2. Stages in the Product Life Cycle(a) Introduction Stage A period of entry into the market. Unknown to its prospects so no

benefit appreciation. No image or personality of its own

except if under a known brand. No or low trial and no market share. Negative margins. Foundation laying – unappreciated efforts

since investments yield minimal sales

returns.2

(b) Growth Stage

Rapid market acceptance & sales growth Repeat patronage results in profit growth. Imagery & Goodwill build-up. Investment yields, more than

commensurate returns. Fierce competition from big players. Expansionist & penetration strategies. Risk taking approaches.

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(c) Maturity Stage

Peak awareness, patronage & sales Market share gain is on competitor

mistakes & expense. Care taking or maintenance rather than

risk taking or developmental efforts. No new reason for consumer patronage. Growth rate slows down & stagnates. Incremental returns on new investments

very low. Longest stage in a product life cycle. Returns run almost on inertial force. Vulnerable to competitive threat. 4

(d) Decline Stage:

Negative growth in sales and profit.

Negative returns on marketing investment.

Very low competitive capacity and possible

market decline.

Increased consumer switch-off

Low returns to the trade & slower off-take.

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3. VARIOUS PATTERNS OF

PRODUCT LIFE CYCLE

Important Factors

- Market Type

- Product Category

- Product

- Marketing Strategy

- Competitive Intensity

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Time

Sal

e V

ol.

IMPORTANT FACTORS AFFECTING PRODUCT LIFE CYCLE

MARKET TYPE

New or Existing

Growing, Mature or Declining

Single or variety of products

Well supplied or shortages

Key Factors for success

(a)

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Product Category

Type of product (cultural, I.T., Specialty appeal)

Homogeneity of products

New or Existing

Key Factors for success

Obsolescence factors & rate

(b)

8

Product

Level of differentiation

Image & Goodwill (owned or acquired)

Resources available

Other competitive advantage

(c)

9

Marketing Strategy

Level of marketing effort

Mix of marketing effort

Relevance to Key Success Factors

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Competitive Intensity

Number, Resources & Nature

Characteristics of Competing Products

Market Shares

Missions, Cultures and Strategies.

(e)

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4. Introduction Stage – Marketing Implication

Type of product being introducedimitativeimprovementinnovativebrand new

Objective for introductionreplacementcompetitive bolsteringcompetitive peckingmarket expansion or segmentation

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Overhead cost appointment.

Budget generosity & profitability

consideration.

Sales forecast (or projection) realism.

Non-sales performance evaluation criteria.

Complete understanding of the marketing

environment.

Focus on awareness & trail based on

benefits.13

Introduction Stage

4b. Managing the Introduction Timing of development and launch. (loud or silent placement)

Developing the distribution channel

- prospecting for channel members

(number, location, size, credit)

- independent or joint channel members

distribution concept – few mega

or many mini distributors

- fighting for visual market share.

identifying entire points through nicking.

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Communication strategies - benefits - rational & differentiating appeals - media mix and selection

Sales promotion - awareness - trial - distribution build-up Pricing - introductory – penetration or imagery - price stabilization & low margins

Missionary salesmanship is emphasized. 15

Managing the Introduction

Let Us Discuss Cowbell Milk Strategy

Important Factors

- Market Type

- Product Category

- Product

- Marketing Strategy

- Competitive Intensity

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5. Growth Stage – Marketing Implication

Distribution Expansion – roll outs &

retail development.

Increased penetration of households

Repeat purchase build up promotions

Strong order getting sales emphasis

Image enhancement

Intensive communication

Offensive competitive strategy

Price adjustment possibilities17

Let Us Discuss the G.S.M. Industry

Important Factors

- Market Type

- Product Category

- Product

- Marketing Strategy

- Competitive Intensity

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6. Maturity Stage – Marketing Implication Maintenance of existing patronage

through stable product quality and

customer service. Effective order taking and delivery

salesmanship. Ensuring efficient distribution

system to avoid stock outs and

shortages at retail ends. Product improvement, packaging

diversification to keep peripheral users. 19

Product repositioning and development

of varieties to expand user base and

ward off competitive deduction.

Communication to reassure consumers

of product modernity and relevance.

Sales promotions that encourage

loyalty of retailers and consumers.

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Maturity Stage

Let Us Discuss Omo Strategy

Important Factors

- Market Type

- Product Category

- Product

- Marketing Strategy

- Competitive Intensity

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Decline Stage – Marketing Implication

Milking the cow before death

Winding down on marketing &

distribution costs.

Rationalizing outlets, locations and

supply quantities.

Keeping channels loyal and open

through replacement products.

Converting consumers to replacement

by encouraging switching. 22

Let Us Discuss the I.T. or

Automobile Industry

Important Factors

- Market Type

- Product Category

- Product

- Marketing Strategy

- Competitive Intensity

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SUMMARY

Every product has a unique cycle.

management is therefore

customized rather than standardized.

The application of the marketing mix

elements should consider the

customization requirement.

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Imitative marketing effort in a

competitive environment is

therefore not usually recommended.

Withdrawal of non performing

products is not a marketing failure.

Replacements make for a rejuvenation

of the total offering to the consumer.

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Managing the Product Portfolio A good portfolio has products

at different stages of their life cycle.

The health of each product

must be monitored and

evaluated with its stage in life.

It makes sense to ensure

healthy products. Anyone that

is failing in health permanently

should be replaced.26