Product Life Cycle - Stages and Strategies
Product life cycle is the timeline of demand, sales and profit for the product from its initial stage of introduction.
Product life cycle can be defined as the life cycle of the product. It means the various stages a product sees in its complete life span.
Product Life Cycle (PLC) refers to the stages a product goes through from its introduction to the market to its eventual decline. Understanding these stages helps marketers develop appropriate strategies for each phase to maximize profitability and market share.
Product life cycle comprises of the following four stages −
Introduction
Growth
Maturity
Decline
1 Introduction stage
Introduction stage is life cycle stage in the product life -when the product is first distributed and made available for purchase..
* Promotion spending is high and profile are low or negative.
* The product may be launched at a high price and low promotion spending if the market size is limited.
* It may also be launched at low price and heavy promotion if the market size is large and consumers are price sensitive.
2 Growth Stage
Growth stage is the product life cycle stage at which the product's sales start climbing quickly.
* Early adopters continue to buy and later buyers follow.
* Competitors enter the market.
* Prices remain same or fall slightly.
* Product quality is improved, new features are added,
* new market segments and distributors are found.
* Aim of advertising shifts form building product awareness to building product conviction and purchase.
* Profits are high
3 Maturity Stage
* Maturity Stage: Is the stage in the product life cycle where sales growth slows or levels off.
* This stage lasts longer than previous stages.
* Competitors mark down prices, increase ad and promotion budgets, and weak competitors start dropping out.
* Product managers consider modifying the market, product, and marketing mix.
Market Modification:
The company looks for new users and market segments.
Finds ways to increase usage among present customers.
The brand is repositioned to appeal to a larger or faster-growing segment.
Product Modification:
Product managers can also change product characteristics.
Quality Improvement: For improving product performance, durability, reliability, speed & taste.
Feature Improvement:
For improving product usefulness, safety or convenience.
Style Improvement:
To increase the attractiveness of the product.
Marketing-Mix Modification:
Product managers can try to change one or more elements of the marketing mix.
4 Decline Stage
Sales drop to zero or decline to low levels.
Reasons may be technology change or shift in consumer tastes.
No promotional expenses: Due to saturation, advertising and sales promotion efforts lose their effectiveness. Therefore, many companies reduce their advertising budget. Distribution network is also reduced to the minimum. Only selected promotional expenses are incurred.
Management must decide whether to
1 Maintain the product.
2 Harvest the product.
3 Divest the product.
4 Drop the product.
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Many marketers consider PLC to have 5 stages. Another stage of 'Product Development is considered before Introduction phase. This can be understood by the above diagram.
Managing Product and Services Along PLC
There are different areas where product life cycle concept used:
1 For product pricing: Every firm and manufacturer have a different options regarding price of product like some firms follow high price and skim the market strategy, some follow low price strategy and aim at greater and more rapid market penetration.
2 For product planning: Every product is the total outcome of the research and development. It is necessary for product’s improvement, re-modeling or elimination.
3 For sales forecasting: One of the most important applications of product life cycle is in sales forecasting. It helps to know about future demand for product. If the demand will rise or fall.
4 For product control: It becomes an effective control tool for the multi-product firm. When a single firm offers different verieties of products then product life cycle is used by the company to know about the position of their product in market.
5 For advertisement of product: Product life cycle also tells about the type of advertising which should be done for the product at different stages. For e.g.:
At first stage, the advertising should tell about product availability
At second stage, it should inform the customer about product differentiation.
At third stage, it should inform the customer about product improvement
At fourth stage, it should inform the customer regarding the grand clearance sale.
Product Differentiation
Positioning consists of differentiating offering and delivering the promised quality or service. Positioning is what the marketer does to the mind of the consumer while differentiation is what is done with the product.
A company’s market offer (product or services) can be differentiated along the lines of product, service, personnel or image.
+ Product Differentiation
Product Differentiation can be on such attributes as
· Features
· Performance
· Style and design
· Consistency
· Durability
· Reliability or
· Repair-ability
+ Service Differentiation
Services offer differentiation can be can be on the basis of
· delivery,
· installation,
· repair
· customer training
· consulting services etc.
+ Personnel Differentiation
This can be created based on
· Competence,
· Courtesy,
· Credibility,
· reliability,
· responsivenes,
· communication.
+ Image differentiation
· By developing strong brands
Selecting the Right Competitive Advantages.
After discovering the available competitive advantages it must be decided how many differences to promote and which ones to promote.
Which differentiation to promote? The differentiation that is selected must have the following qualities.
1 Important
2 Distinctive
3 Superior
4 Communicable
5 Preemptive
6 Affordable
7 Profitable
