Product Life Cycles Instructor: Safaa S. Y. Dalloul Principles of Marketing Unit 5

Elements of Lecture Marketing Strategies: Introduction Stage and the Pioneer Advantage Marketing Strategies: Growth Stage Marketing Strategies: Maturity Stage Marketing Strategies: Decline Stage The Product Life-Cycle Concept: Critique Product Life Cycle PLC

Product Life-Cycle Marketing Strategies

Products Characteristics  Limited life.  Product sales pass through distinct stages  Profits rise and fall.  Products require different strategies.

Product Life Cycle

Sales grow rapidly when the product is first introduced and then fall to a "petrified" level that is sustained by late adopters buying the product for the first time and early adopters replacing the product. For Example products of small kitchen appliances such as handheld mixers and bread makers. Growth-Slump-Maturity

The pharmaceutical company aggressively promotes its new drug, and this produces the first cycle. Later, sales start declining and the company gives the drug another promotion push, which produces a second cycle (usually of smaller magnitude and duration). Cycle-Recycle

Sales pass through a succession of life cycles based on the discovery of new- product characteristics, uses, or users. The sales of nylon, for example, show a scalloped pattern because of the many new uses parachutes, hosiery, shirts, carpeting, boat sails, automobile tires— that continue to be discovered over time. Scalloped

Style, Fashion, and Fad

Product Life Cycle  Product Development Product development begins when the company finds and develops a new product idea. During product development, sales are zero, and the company’s investment cost mount

Introduction Stage and the Pioneer Advantage

Product Life Cycle  Introduction Stage Why the sales in the introduction stage are slow?  Take time to roll out a new product  Work out the technical problems  Fill dealer pipelines  Gain consumer acceptance

Product Life Cycle  Introduction Stage Highest Promotional expenditures to:  Inform potential consumers.  Induce product trial.  Secure distribution in retail outlets.

Product Life Cycle  Pioneer Advantage To be first can be rewarding, but risky and expensive Most studies indicate that the market pioneer gains the most advantage.

Product Life Cycle  Introduction Stage Sales Costs Profits Customers Competitors Low sales High cost per customer Negative Innovators Few

Product Life Cycle  Introduction Stage Marketing Objectives Create product awareness and trial Create product awareness and trial

Product Life Cycle  Introduction Stage Product Price Offer a basic product Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers Sales Promotion Use heavy sales promotion to entice trail

Growth Stage

Product Life Cycle Sales Costs Profits Customers Competitors Rapidly rising sales Average cost per customer Rising profits Early Adopters Growing Number  Growth Stage

Product Life Cycle Marketing Objectives Maximize market share  Growth Stage

Product Life Cycle Product Price Offer product extensions, service, warranty Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market  Growth Stage Sales Promotion Reduce to take advantage of heavy consumer demand

Product Life Cycle  Growth Stage What are the several strategies that the firm uses to sustain rapid market growth? Improves product quality and adds new product features and improved styling. Enters new market segments.

Product Life Cycle  Growth Stage What are the several strategies that the firm uses to sustain rapid market growth? Adds new models and flanker products (i.e., products of different sizes, flavors, and so forth that protect the main product). Increases its distribution coverage and enters new distribution channels.

Product Life Cycle  Growth Stage What are the several strategies that the firm uses to sustain rapid market growth? Shifts from product-awareness advertising to product- preference advertising. Lowers prices to attract the next layer of price-sensitive buyers.

Maturity Stage

Product Life Cycle  Maturity Stage Stable Decaying Growth  The sales growth rate starts to decline.  No new distribution channels to fill.  Sales flatten.  Most potential consumers have tried the product, and future sales are governed by population growth & replacement demand.  The level of sales starts to decline  Customers begin switching to other products

Product Life Cycle  Maturity Stage

Product Life Cycle  Maturity Stage

Product Life Cycle  Maturity Stage Sales Costs Profits Customers Competitors Peak sales Low cost per customer High profits Middle majority Stable number beginning to decline

Product Life Cycle  Maturity Stage Marketing Objectives Maximize profit while defending market share Maximize profit while defending market share

Product Life Cycle  Maturity Stage Product Price Vary brand and models Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits Sales Promotion Increase to encourage brand switching

Decline Stage

Product Life Cycle  Decline Stage Sales Costs Profits Customers Competitors Declining sales Low cost per customer Declining profits Laggards Declining number

Product Life Cycle  Decline Stage Marketing Objectives Reduce expenditure and milk the brand

Product Life Cycle  Decline Stage Product Price Phase out weak items Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers Reduce to level needed to retain hard-core loyal customers Sales Promotion Reduce to minimal level

Product Life Cycle  Decline Stage How the company can deal with the decline stage? And Why?

Product Life Cycle  Critique | Analysis  The PLC concept helps marketers interpret product and market dynamics.  It can be used for planning and control, although it is useful as a forecasting tool. Advantages

Product Life Cycle  Critique | Analysis  Product-life-cycle patterns are too variable in shape and duration.  Marketers can seldom tell what stage the product is in a product may appear to be mature when actually it has reached a plateau prior to another upsurge. Disadvantages Note: Critics put those disadvantages of PLC theory

Homework  List and define the steps in the new-product development process?  Coca-Cola has sustained success in the maturity stage of product life cycle for many years. Visit Coca-Cola’s website and discuss how coca- cola has evolved over the years. Identify ways that coca-Cola can continue to evolve to meet changing consumer need and wants.  Explain the categories of innovativeness?