product life cycle & marketing strategy

Product Life Cycle & Marketing Strategy

Hitesh Gupta 26th Sep ‘13

•Product is anything which is of value & is offered thro’ voluntary exchange

•A change in feature creates a new product

•Service : Set of activities, benefits or satisfaction offered for sale» Intangible» May not result in ownership

What is a product?

Goods and/or Services Are the Product

What is the demand for these products in 2013 compared to 1990?

» Fixed phone, land-line» Cell phones» Umbrella» Video cassette player» Diabetes Insulin injections

Demand for products

???

•New products meet needs better» Maruti 800 v/s Premier Padmini

• Technology changes» Video conference v/s air travel

• Substitutes replace a product» Telegrams v/s SMS, SMS v/s Mobile Chat

• Population moves to the next level in Maslow’s NH» Basic variant of a car to full loaded model

Why would demand change?

PLC Concept is Based on Four Premises

Products have a limited life.

Product sales pass throughdistinct stages, each with

different marketingimplications.

Profits from a product vary at different stages

in the life cycle.

Products require different strategies at different

life cycle stages.

Product Life-Cycle Strategies

• Product development• Introduction• Growth• Maturity• Decline

• Begins when the company develops a new-product idea

• Sales are zero• Investment costs are

high• Profits are negative

PLC Stages



• Slow sales growth – cell phones 15 yrs back, Hybrid cars today, Blu-Ray technology, HD TV

• Intensive promotions, communications

• Price uncertainty• Uncertain competition

reactions• Uncertain consumer

responses• Non-existent profits• Negative cash flow

PLC Stages



• Rapid sales growth – cell phones today, internet, LCD TV

• Market acceptance• Price stabilization• Features stabilization• Profits start coming in• Brand building starts• Competition starts building

PLC Stages



• Slow sales growth – Land lines, 100cc motorbikes, fountain pens

• Price reductions, promotions

• Features changes / reductions / new

• Profits go down• Competitors introduce new

products• Brand sustainability is

imperative in communication

PLC Stages



• Decline in sales – audio & video cassette players, pagers

• New products meet satisfaction

• Profits erode• Communication expenses

are stopped

PLC Stages

Varies with every product» Can be controlled by marketing efforts• Changes with technology introductions» Inventions» Disruptive innovations

PLC Duration

• Innovators –» “first on the block” buyers» Typically younger in age» They enjoy taking risks with new products» They are mostly well informed» Very small in numbers» Tolerate failures» They trigger the next level - Adopters

• Early adopters –» These wait for initial purchases to happen, productreviews» They enjoy novelty, higher incomes youth, educated,socially forward» Opinion leaders» They help spread the world

PLC and the Customer adoption process

•Majority -» Skepticism, senior in age, mixed levels of education» They build the sales volumes» Don’t like to take too much risk» Competitors enter the market when these come in» Careful buyers & choosers

•Laggards -» They avoid change» Rely on existing products until it outgrows completely» Form the last small section» They don’t need to much ad & communication

PLC Length and Shape

Sales Sales Sales

TimeTime Time

Style Fashion Fad

Introduction Growth Maturity Decline

Marketingobjectives

Create productawareness &trials

Gain market share,create strongpositions

Defend marketshare, createprofits

Reduce expensesmilk brands

Productstrategy

Offer basicProductsEg. Vodafone

Offer productextensions, buildservicedifferentiation

Diversify brands,items & modelsEg. Blackberry

Phase out weakproducts

Price Charge costPlus

Penetration pricepromotions, dealsEg Dominos in India

Match pricing tostrongcompetitors

Cut prices

Advertising &Communications

Chosen marketsegments areaddressed

Segmentawareness

Advertisedifferentiation

Reduce levels toretain loyalists

Place Build Selective DistributionEg. Hushpuppies

Build intensive distribution

Build more intensive distribution

Go Selective: Phase out unprofitable outlets

Marketing Strategies in the PLC

At the heart of a great brand is a great product

Thank you

product life cycle & marketing strategy

Business