1. MANAGING PRODUCTS THROUGH PRODUCT LIFE CYCLE

2. Product Life Cycle
The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.

3. Product Life Cycle Sales Growth Stage Maturity Stage Decline Stage
Introductory
Stage
Growth
Stage
Maturity
Stage
Decline
Stage
Sales
Profits
Dollars
Time

4. Full-Scale Launch of New Products
Introductory Stage
Full-Scale Launch of New Products
High failure rates
Little competition
Frequent product modification
Limited distribution
High marketing and production costs
Negative profits
Promotion focuses on awareness and information
Intensive personal selling to channels
Notes:
During the introductory stage, sales normally increase slowly. Marketing costs are high due to higher dealer margins required to obtain adequate distribution and the cost of consumer incentives to try a product.
Production costs are high.
Promotion strategy focuses on developing product awareness and informing consumers about the product’s potential benefits. Intensive personal selling is often required.
Promotion of convenience products may require heavy consumer sampling and couponing. Shopping and specialty products demand educational advertising and personal selling to the final consumer.

5. Growth stage Increasing rate of sales Entrance of competitors
Offered in more
sizes, flavors, options
Increasing rate of sales
Entrance of competitors
Market consolidation
Initial healthy profits
Promotion emphasizes brand ads
Goal is wider distribution
Prices normally fall
Development costs are recovered
Notes:
In the growth stage, sales grow at an increasing rate, many competitors enter the market, and larger companies may acquire small pioneering firms.
Profits rise rapidly, peak, and begin declining as competition increases.
Aggressive brand advertising and communication of the differences between brands is the preferred promotion strategy.
Adequate distribution is a major key to establish a strong market position and product success.

6. Many consumer products are in
Maturity Stage
Many consumer products are in
Maturity Stage
Declining sales growth
Saturated markets
Extending product line
Stylistic product changes
Heavy promotions to dealers and consumers
Marginal competitors drop out
Prices and profits fall
Niche marketers emerge
On Line: McDonald’s
What is McDonald’s doing to successfully compete in the maturity stage?
Notes:
The maturity stage begins when sales increase at a decreasing rate, and the market approaches saturation. This is normally the longest stage of the PLC.
Annual models may appear during the maturity stage for shopping and specialty products. Product lines are lengthened to appeal to additional market segments.
Service and repair help manufacturers distinguish their products from others.
Heavy promotion is required to maintain market share. For example, consider the competitive “wars” between Coke and Pepsi, Budweiser and Miller, and McDonalds against Burger King and Wendy’s.
As prices and profits continue to fall, marginal competitors drop out of the market.
Niche marketers that target narrow, well-defined segments of a market emerge.

7. Rate of decline depends on adoption of substitute products
Decline Stage
Long-run drop in sales
Large inventories of unsold items
Elimination of all nonessential marketing expenses
Notes:
The rate of decline depends on how rapidly consumer tastes change or substitute products are adopted.
A strategy for declining products includes elimination of nonessential marketing expenses, and the eventual product withdrawal as sales decline.
Rate of decline depends on
change in tastes or
adoption of substitute products

8. Obsolescence Stage
Companies withdraw from product
manufacturing.
Stragglers eventually switch to an alternative
product.

9. How stages of the product life cycle relate to firm’s marketing objectives & marketing mix actions
INTRODUCTION
GROWTH
MATURITY
DECLINE
Product
Strategy
Limited models
Frequent
changes
More models
Frequent changes.
Large number of models.
Eliminate unprofitable models
Limited Wholesale/ retail distributors
Expanded dealers. Long-
term relations
Extensive.
Margins drop.
Shelf space
Phase out unprofitable outlets
Awareness.
Stimulate
demand.Sampling
Aggressive ads.
Stimulate demand
Advertise. Promote
heavily
Phase out promotion
Higher/recoup development costs
Fall as result of
competition & efficient produc-
tion.
Prices fall (usually).
Prices
stabilize at low level.
Distribution
Strategy
Promotion
Strategy
Pricing
Strategy

10. MANAGING THE PRODUCT LIFE CYCLE
Modifying the Product
Alter product quality
Enhance performance
Change appearance
Modifying the Market
Finding New Users
Increase use
Create new use situations

11. EXTENDING THE PRODUCT LIFE CYCLE- Repositioning
Reacting to a Competitor’s Position-never compete
head on
Catching a Rising Trend-baby aspirin is now low dose
aspirin to reduce heart attacks
Changing the Value Offered
Trading Up-add bells & whistles to raise price
Trading Down- remove bells & whistles to lower price
Downsizing-reduce contents but maintain price