Product life cycle
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Transcript of Product life cycle
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Marketing management
Product life cycle
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Introduction A product is introduced among consumers, and if consumers perceive it as meeting their needs and want, it experiences a period of growth. Subsequently, it reaches the stage of maturity and when it loses its appeal, its decline starts and eventually is may be taken off the market (demise). The classical product life cycle curves are depicted as “S” shaped and generally divided in four stages: Introduction, growth, maturity, and decline.
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Common Product Life Curves
Sales
Sales Sales
Time Time Time (a) Growth-Decline l plateau
(b) Cycle-Recycle Pattern
(c) Innovative Maturity or Scalloped Pattern
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Introduction Growth Maturity Decline
(d) Classical Life Cycle Pattern
Time
Sales
Profits
Loss
Common Product Life Curves
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Introduction Stage
The introductory stage is viewed as fairly risky and quite expensive because large amounts of money is spent on advertising and other tools of marketing communications to create consumer awareness in sufficiently large numbers, and encourage trial.
3D Televisions: 3D may have been around for a few decades, but
only after considerable investment from broadcasters and
technology companies are 3D TVs available for the home,
providing a good example of a product that is in the Introduction
Stage.
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Introduction Stage of the PLC
SalesCostsProfits
Marketing Objectives
ProductPrice
Low sales
High cost per customer
NegativeCreate product awareness
and trialOffer a basic product
Use cost-plus
Distribution Build selective distribution
Advertising Build product awareness among early adopters and
dealers
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Growth Stage
The growth stage of life cycle is characterised by a sharp rise
in sales. Only a small percentage of new products introduced
survive to reach the growth stage.
Tablet PCs: There are a growing number of tablet PCs for
consumers to choose from, as this product passes through the
Growth stage of the cycle and more competitors start to come
into a market that really developed after the launch of Apple’s
iPad. Another example is NANO car.
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Growth Stage of the PLC
SalesCostsProfits
Marketing Objectives
ProductPrice
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market shareOffer product extensions,
service, warrantyPrice to penetrate market
Distribution Build intensive distributionAdvertising Build awareness and interest
in the mass market
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Maturity Stage
Most products after surviving competitive battles, winning
customer confidence and successful through growth phase enter
their maturity stage. The sales plateau, and this flattening of
sales usually lasts for some time because most products in the
category have reached their maturity stage, and there is stability
in terms of demand, technology, and competition.
Laptops: Laptop computers have been around for a number of
years, but more advanced components, as well as diverse
features that appeal to different segments of the market, will help
to sustain this product as it passes through the Maturity stage.
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Maturity Stage of the PLC
SalesCostsProfits
Marketing Objectives
ProductPrice
Peak sales
Low cost per customer
High profitsMaximize profit while defending
market shareDiversify brand and models
Price to match or best competitors
Distribution Build more intensive distribution
Advertising Stress brand differences and benefits
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Decline Stage
Decline stage sets in when customer preferences change due to the
availability of technologically superior products and consumers’ shift in
values, beliefs, and tastes to products offering more value.
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Decline Stage of the PLC
SalesCostsProfits
Marketing Objectives
ProductPrice
Declining sales
Low cost per customer
Declining profitsReduce expenditure and milk
the brandPhase out weak items
Cut price
DistributionGo selective: phase out
unprofitable outlets
Advertising Reduce to level needed to retain
hard-core loyal customers
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Implications and Limitations of Product Life Cycle Concept
Product life cycle concept shows a framework to spot the occurrence of opportunities and threats in a product market and the industry. This can help firms to reassess their objectives, strategies, and different elements of marketing programme.
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Introduction- HUL
Hindustan Unilever Limited (HUL) is India's
largest FMCG company, touching the lives of
two out of three Indians with over 20 distinct
categories in home & personal care products
and food & beverages.
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INTRODUCTION-LUX
1916LUX launched
in USA as Laundry soap
1929LUX
launched in India1925
LUX launched in USA as Toilet soap
1960LUX went
colored
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PRODUCT LIFE CYCLE
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Introduction (1929- 1950s)Company Objectives Actions
Sales Low
Cost of manufacturing HighProfits Negative
Marketing Objective Create product awareness in major cities
Product strategy Offer a basic productPrice strategy Higher than LifebuoyDistribution Created network in major
citiesAdvertising strategy Awareness among early
adopters.
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Growth- (1950s- 1990s)Company Objectives Actions
Sales Rising Sales
Cost of manufacturing Average cost reductionProfits Positively increasing
Marketing Objective Maximise market shareProduct strategy Offer variants
Price strategy To penetrate the marketDistribution Intensive network in the
entire countryAdvertising strategy Awareness an interest in
mass market
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Maturity-(1990s to till date )Company Objectives Actions
Sales Peak sales
Cost of manufacturing LowProfits High
Marketing Objective Maximize profit while defending market share
Product strategy Diversify brand Price strategy To match the nearest competitorDistribution More intensive focusing on rural
areaAdvertising strategy Multiple brand ambassadors for
different variants.
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Thank you