Falling prices reduce profit margins. Thus new firms start coming in the market with their products. Advertising: Reduce to the level needed to retain hardcore loyal customers. Every product has these stages. These examples illustrate these … Marketer here must try to develop new and alternative uses of product. There is a decrease in demand and sales of the product. Penetration pricing strategy – Here the marketer charges a low price for the product so as to penetrate the market. As the PLC indicates, the period of rapid market growth eventually subsides and the product then enters the Cash Cow box. If we consider the pre-introduction stage, then there will be 5 stages of PLC. This is the stage where competitors appear along with substitute products in large numbers. During the end stages of your product, you will see declining sales and profits. This gives birth to “Creative Sales.”. The product life cycle stages are explained in depth along with advantages and disadvantages of the product life cycle, extension strategies and the uses. 2. Product life cycle for stylish products • A style is the manner in which a product is presented and certain styles come and go. (ii) Incentive schemes may be offered to stimulate more people to try the product. During this stage each of the characteristics mentioned under different stages is intensified. Channels that no longer are profitable are phased out. Growth stage is marked by rapid increment in sales and profits. The introduction/ introductory stage is the first of the product life cycle stages. This is because the company or the marketers don’t know … The company should always take a cue from it and formulate its marketing strategy. The product life cycle consists of 4 stages. Product life cycle is important in various ways. Sometimes, major improvements also take place in the product during this stage. Some are cycled back into the growth stage after reaching the decline stage through strong promotion or repositioning. (iv) Channels of distribution are strengthened so that the product is easily available wherever required. For example – if sales peak and then decline, managers may conclude that the product is in the decline phase and therefore cut the advertising budget, thus precipitating a further decline. The Boston Matrix was developed by the Boston Consulting Group and its founder Bruce Henderson, and was introduced to the business world in the early 1970s. Brand extension can also help in getting to a new category, through the same brand image. In the decline stage, the company needs to reduce the expenditure and milk the brand. Increasing competition leads to pressure on price and price starts falling, iii. 3. ii. Every firm starts presenting its brand and trademark. The three most widely known and important of these are the Ansoff Matrix, the Boston Matrix and the Directional Policy Matrix. The measure of market share is not absolute market share, but is relative to the largest competitor. During the decline phase, the firm generally has three options: (a) Maintain the product in hopes that competitors will exit. Increasing competition due to increasing public awareness about the product. New products are introduced in the market by competitors. Again, it is a simple four box matrix. (iii) ‘Price off’ as an introductory offer, i.e., introducing the product at a discount to attract the people. (ii) The warranty period may be extended. At the end of the stage, the company struggles to keep its market share intact. However, the cut-off point for high, as opposed to low, market growth is often seen as 10 per cent. The device was originally released in 2001, and now, only one model - iPod Touch - is still in production. By developing our product range and thus augmenting our product benefits, we can build on established customer relationships and buying patterns. Disclaimer 8. The product life cycle (PLC) is a series of phases that a product will go through in its “lifetime” in relation to the profits and sales that it will collect. The product enters into maturity stage as competition intensifies further and market gets saturated. (d) Promotion – Expenditures are lower and aimed at reinforcing the brand image for continued products. In a few years, the product moved from its introduction into the growth stage, and now it is moving toward maturity. Strategies during Product Development Stage: a. (vii) There is greater emphasis on customer service. New Product - New Concept - Not Easy to Copy The iPad is a good example of a New Product, with a New Concept, but Not Easy to Copy. Nokia is considered a favorite example whenever the concept of product life cycle is discussed. Some marketing experts speak of a fifth state, which is more developmental in nature. This is a stage when product is introduced or launched in the market. Harvest for current profitability or divest. Copyright 10. While the PLC is an effective aid to understanding how products behave in markets, it is not without drawbacks. This is the last stage of product life cycle. Product differentiation, identification of new segments and product improvement are emphasised during this stage. Essays, Research Papers and Articles on Business Management, Pricing over Product Life Cycle | Business Marketing, Branding: Definition, Importance, Types, Functions, Decisions and Strategies [with examples]. It was originally introduced as a 3×3 matrix, rather than the more conventional 2×2 structure, and is today used in either format. In this stage, the product achieves considerable and wide spread approval in the market, the demand and sales improves very rapidly due to promotional efforts. The production goes on increasing and the competitors try to capture the market. Its entire Product Life Cycle lasted one year. 2. Then, it leads to maximizing market share in the growth stage. Sometimes, a product grows rapidly, reaches its peak and then fell to a petrified level. Rejuvenate surviving products to make them look new again. The effectiveness of the marketing-mix strategy is the most important factor in the maturity stage. Types of Wholesalers: Simple Classification, Product Life Cycle Stages & Strategies with Examples, Top 10 Best Free Educational Websites in India, 81 Digital Marketing Topics For Presentation, 100+ Indian Economy Topics For Presentation (Updated 2020), Supply Chain Management MCQ Questions and Answers, Marketing MCQs with Answers & Explanation, Marketing Objectives: Create Product Awareness and Trial, Distribution: Selective Distribution and Heavy promotion, Advertising: Build product awareness among early adaptors and dealers, Marketing Objectives: Maximize Market Share, Product: Offer Product Modification, Extension, Service, Warranty, Price: Competitive Price to Penetrate Market, Advertising: Build awareness and interest in the mass market and reduce sales promotion, Marketing Objectives: Maximize Profits while defending market share, Price: Price to match or beat competitors, Distribution: Build more intensive distribution, Marketing Objectives: Reduce Expenditure and milk the brand, Distribution: Go selective, phase out unprofitable outlets. (b) Harvest it, reducing marketing support and coasting along until no more profit can be made. Obviously, our current position is located in the top left-hand corner, where our products are competing in established markets and where we have greatest knowledge and experience. A product is introduced to the market during the introduction stage. That is why they are not willing to part with the old products. 3. 1. Examples include Coca-Cola, Gillette, American Express, which … High promotional expenditure as the product is new to the market. In the maturity stage, the objective of the company is to maximize profits, while defending its market share. This is the final stage in the product life cycle. Product life cycle consist of 5 important stages viz. (b) Promotion – Promotion is aimed at building brand awareness. When cash flow is managed effectively, the viability of the business improves. If it is not possible or there are heavy losses, the manufacturer may seek merger with a strong firm. If he finds bleak possibility, he should divert his resources to other products. It is important to note that product life cycle is applicable to every product – big or small, cheap or expensive. Focus is on product . In the introduction stage, the company may focus on the core benefits through the basic product, can add product line extensions in the growth stage. Sales reach to its peak in this stage and then it starts declining. The combination of options provided in the Ansoff Matrix gives rise to the following broad strategies: To grow our business, we should consider ways in which we can gain more customers for our current product offering- for example, by seeking routes to alternative markets in order to reach customers we do not currently serve. At this stage, the marketer should explore the possibilities of selling the product.
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