The Product Life Cycle
The Product Life Cycle
The Product Life Cycle
The Product Life Cycle.
Prof : Mr. Vinayak. Gopal. Patil.
Product has a limited life.
Products sales passes through various stages, each posing different challenges, weaknesses, opportunities, strengths.
Profit falls & rises at different stages of the product life cycle.
Products always require different marketing, finanancial, manufacturing, purchasing & H.R strategies in each stage of their life cycle.
The P.L.C concept is best used to interpret the product and market dynamics. It also serves the better in various situations. As a planning tool in marketing area the product life cycle helps the manager to characterize the main marketing challenges in each stage of a product's life & also develop the major & most effective marketing strategies. While as a control tool, the product life cycle concept helps the company measure product performance against similar products launched in the past.
Let us see the stages & marketing strategies in brief.
Introduction stage :This is the first stage of PLC. Here, the sales growth takes place very slowly. Buzzle identified several causes for the slow growth. These causes are delay in expansion of product capacity, technical problems, delay in adequate distribution channel through retail outlet, customers' area hard to change the established behavior. In this stage the profit are negative or low because of low sales & heavy distribution on sales and promotional expenses. The marketer needs much money to attract distributors. The promotional expenditure is on highest level because of the need to :
1. Inform potential customers.
2. Induce the Products Trial.
3. Secure distribution in retail outlet.
In launching a new product, marketing management is free to set a high or low level for each marketing variables. These variables are; Product, Price, Promotion, Place.
By taking into a/c only price & promotion the management can consider one of the four strategies.
Rapid Skimming : Launching the new product at a high level & at high Promotional activity. This strategy is beneficial when large part of market is unaware of the product & those are aware they tries to have it at any asking price.
slow Skimming : A product launch at high price & low Promotional activity. This is possible when the market size is small or limited; most of the market is well aware of products ; buyers are willing to pay high price.
Rapid Penetration : Launching the products at low price and spending heavily on promotional activity.
Slow Penetration : launching the products at low price & spending low on promotional activity.
Growth Stage :Here, the sales boost up. As the customers come to know about the products in the market, they start to but it. New competitors enter, attracted by the promotional activities. The sales rise much faster the promotional expenditure causing a well come decline in the promotion sales ratio. The profit increases during this stage as a promotional cost is spread over the large volume and unit manufacturing cost fall fast. During this stage, the firm always uses several strategies to sustain rapid market growth as a long as possible;
It improves quality and adds new products features.
It enters into new market segment.
It increases its distribution coverage & enter distribution channel.
It shifts from products awareness advertising to product preference advertising.
Maturity Stage : Here, the rate of sales growth will be slow. And the products will enter into relatively maturity stage. This stage normally lat longer then the previous stage & passes formidable challenges to marketing management. In maturity stage, some companies abandon weaker products & concentrate on more profitable products & on new products. In this regard, the various activities like market modification 1.convert non user. 2. Enter new market segment.3. Win competitor customers.
Product Modification -The manager also try to stimulate sales by modifying the products feature through quality improvement , features improvement etc. .The quality improvement always aims at increasing products functional performance durability, reliability, taste while feature improvement aims at adding new features (Size, weight, materials, additive, and accessories) that expands the product versatility, safety. This strategy has several advantages. New feature build the company's image as an innovator & win the loyalty of market segment that values these features. Also they provide an opportunity for the free publicity & they generate sales force distribution system.
Decline stage : The decline might be slow. The sales decline due to various reasons, including technological advance, shift in consumer taste, increases in domestic & foreign competition. As sales & profit decline, some firms withdraw from the market.
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