Product Life Cycle

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PLC and Marketing Strategies

Product Life Cycle

The progression of a product through four stages: introduction, growth, maturity, and decline. MP3s DVDs CDs Cassettes LP records
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The Four Stages of the PLC

FIGURE 10.2
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PLC
Product life cycle for the fax machine: 1970-2010

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PLC

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Style Fashion - Fad

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Claims of Product Life Cycles

Products have a limited life Product sales pass through distinct stages each with different challenges and opportunities Profits rise and fall at different stages Products require different strategies in each life cycle stage

Which stage these products are?

Wrist Watch Camera TV Car Bicycle

Yoga Vegan Single Parenthood

Length of stages/ Geography/ Variation/ Attitudes

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Resurrection of valve amplifiers as audiophile systems

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What stage these products are?

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The Product Life Cycle

Introduction
The initial stage of a products life cycleits first appearance in the marketplacewhen sales start at zero and profits are negative Why new products fail
Lack of resources, knowledge, and marketing skills to successfully launch the product High pricing to recoup research and development costs

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Product Life Cycle

Strategies at various stages of PLC
Introduction
Build sales by expanding market for the product Heavy expenditure on promotion Stimulate trial Attract distribution channel partners

Prices high or low depending on imminent competition

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The Product Life Cycle

Growth
The stage of a products life cycle when sales rise rapidly and profits reach a peak and then start to decline
More competitors enter the market Product pricing is aggressive Brand loyalty becomes important Gaps in market coverage are filled Promotion expenditures moderate Production efficiencies lower costs
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Product Life Cycle

Growth
Customers aware of the product Build sales and market share by building brand preference
Segmentation emerges Product redesigned to create differentiation Promotion lays stress on the benefits of the differentiated product Focused competitors emerge Distribution will be widened to serve new segments. Product made available in different retail formats as customers of different segments buy differently
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Product Life Cycle

Maturity
The stage of a products life cycle when the sales curve peaks and starts to decline and profits continue to fall Intense competition Emphasis on improvements and differences in competitors products Weaker competitors lose interest and exit the market Advertising and dealer-oriented promotions predominate Distribution sometimes expands to the global market
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Product Life Cycle

Maturity Strategic objectives for maturity stage Generate cash flow Maintain market share Increase share of customer

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Decline
The stage of a products life cycle when sales fall rapidly
Pruning items from the product line Cutting promotion expenditures Eliminating marginal distributors Planning to phase out the product

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Decline
Strategic choices
Harvesting the products remaining value Divesting the product when losses are sustained and a return to profitability is unlikely Anticipate the impending decline in sales Analyze changing customer requirements Exit immediately / gradual withdrawal / Exploit brand loyalty
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Product Life Cycle

Uses of PLC
Emphasizes the need for product planning Planning for competition Products have limited life cycle Plan for the future as growth phase will end Adapt marketing strategies as market and competitive conditions change
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Limitations of PLC
Not all products follow the classic S-shaped PLC curve PLC is the result of marketing activities, and is not the cause of variability in sales Duration of PLC stages is unpredictable

Strict adherence to PLC can lead a company to misleading objectives and strategy prescriptions
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BASS Model of Diffusion

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q = coefficient of imitation p = coefficient of innovation

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Bass Model Parameters from a Cross Section of Categories

Cable TV Camcorder Cellular Radio Home PC Hybrid Corn Tractors Ultrasound Dishwasher Microwave VCR 0.100 0.060 0.044 0.304 0.008 0.421 0.027 0.435 0.121 0.281 0.000 0.797 0.000 0.234 0.000 0.534 0.000 0.179 0.002 0.357 0.025 0.603

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Thank You
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