Product life cycle

Product life cycle

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  SUBJECT : MARKETINGMANAGEMENT TOPIC: PRODUCT LIFE CYCLE GUNAVATHI H D DOS in Commerce 1st M.com
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  CONTENTS 1. INTODUCTION 2. DEFINITION 3.STAGES OF PLC  INTRODUCTION  GROWTH  MATURITY  DECLINE 4. ASSUMPTIONS OF PLC 5. CONCLUSION
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  INTRODUCTION The product lifecycle concept suggests that a product passes through four stages of evolution from its initial introduction in the market through to its withdrawal. These stages are introduction, growth, maturity and decline. As a product evolves and passes through these four stages profit levels change and different strategies have to be employed to ensure product success.
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  DEFINITION According to PhilipKotler The product life cycle is an attempt to recognize the distinct stages in the sales history of the product. According to William J Stanton The product life cycle concept is the explanation of the product from its birth to death as a product exists in different stages and in different competitive environments.
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  PRODUCT LIFE CYCLE
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  INTRODUCTION STAGE OFTHE PLC Costs Profits Marketing Objectives Product Price Distributio n Advertisin g Low sales Sales High cost per customer Negative Offer a basic product Use cost-plus Build selective distribution Build product awareness among early adopters and dealers Create product awareness and trial
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  MARKETING STRATEGY USEDIN INTRODUCTION STAGES- Rapid Skimming- Launching the new product at high price and high promotional level. Slow skimming- Launching the new product at high price and low promotional level. Rapid Penetration- Launching of product at low price with heavy promotion. Slow penetration- Launching the new product at a low price and low level of promotion.
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  GROWTH STAGE OFPLC Sales Costs Profit Marketing Objectives Product Price Distribution Advertising Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty Price to penetrate market Build intensive distribution Build awareness and interest in the mass market Rapidly rising sales
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  MARKETING STRATEGY USEDIN GROWTH STAGE: Improved product quality and add new product features and styling. Add new models and products of different sizes, color, shapes etc. Enter new market segments. Increase distribution coverage enter new distribution channels. Shifts from product awareness to product preference advertising. Lower prices to attract next layer of price sensitive buyers. Examples-Hyundai-I10.
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  MATURITY STAGE OFTHE PLC Sales Costs Profits Marketing Objectives Product Price Distribution Peak sales Low cost per customer High profits Maximize profit while defending market share Diversify brand and models Price to match or best competitors Build more intensive distribution Stress brand differences and benefits Advertising
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  MARKETING STRATEGY USEDIN MATURITY STAGE: 1. Market Modification- Converting non users. Entering new market segments. Win competitors customers. Redefine target market. 2. Product Modification- Quality Improvement. Adopting advance technology. Product Differentiation.
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  DECLINE STAGE OFTHE PLC Sales Costs Profits Marketing Objectives Product Price Distribution Advertising Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items Cut price Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers
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  MARKETING STRATEGY USEDIN DECLINE STAGES Increase the given firms investment to dominate the market or strengthen its competitive position. Maintaining the given firms investment level until the uncertainties about the industry are resolved. Decrease the firms investment selectively, by dropping the unprofitable customers group, while simultaneously strengthening the firms investment niche segments. Harvesting the firms investment to recover cash quickly. Divesting the business quickly by dropping off its assets as advantageously as possible.
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  PLC CONCEPT ISBASED ON FOLLOWING ASSUMPTIONS- Not all product introduced in the market essentially pass through all stages of its life cycle. It is also possible that the product may attain introduction stage and then get phased out.  There is no definite line of demarcation between the various stages of product life cycle. At the same time, a product may be in different stages of its life cycle in different segment of the market. For example, the product concerned may be in the introduction stage in Asian market while facing decline in western countries. The time span of each stage in PLC in respect of each product may vary. Thus, a product may experience longer period in growth stage & relatively short period in maturity stage.
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  CONCLUSION The product lifecycle is a tremendous way of figuring out where a product lies in the market and how much life span it has. It accurately describes the process a product goes through in the market. Every product in the market has a life cycle and is currently in one of the four stages.