PRODUCT
DECISIONS II
NILAMADHAB MOHANTY
CIMP
WE WILL DISCUSS…
▪ What is product life cycle?
▪ How product life cycle is important in marketing management?
PRODUCT LIFE CYCLE (PLC)
▪ The product life cycle describes the stages a new product goes through
in the marketplace: introduction, growth, maturity, and decline .
PRODUCT LIFE CYCLE (PLC)
BASIC PREMISES OF
PRODUCT LIFE CYCLE
▪ Products have a limited life
▪ Product sales pass through distinct stages, each with different marketing
implications
▪ Profits from a product vary at different stages in the life cycle
▪ Products require different strategies at different life cycle stages
INTRODUCTORY STAGE
▪ 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
GROWTH STAGE
▪ 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
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
DECLINE STAGE
▪ Long-run drop in sales
▪ Large inventories of unsold items
▪ Elimination of all nonessential marketing expenses
PLC STAGES AND
CHARACTERISTICS
PLC MARKETING STRATEGIES
Stage Objective Marketing Strategy
Introduction Awareness & trial Communicate benefits
Growth Usage of firm’s brand Specific brand communication,
lower prices, expand distribution
Maturity Maintain market shareSales promotion, drop price,
Extend life cycle expand distribution, new uses
& new versions of product
Decline Decide what to do Maintain, harvest, or divest
with product
STAGES OF THE PRODUCT LIFE
CYCLE, MARKETING OBJECTIVES
& MARKETING MIX
INTRODUCTION GROWTH MATURITY DECLINE
Product Limited models More models Large number Eliminate
Strategy Frequent Frequent of models. unprofitable
changes changes. models
Distribution Limited Expanded Extensive. Phase out
Strategy Wholesale/ dealers. Long- Margins drop. unprofitable
retail distributors term relations Shelf space outlets
Awareness. Aggressive ads. Advertise. Phase out
Promotion Stimulate Stimulate Promote promotion
Strategy [Link] demand heavily
Higher/recoup Fall as result of Prices fall Prices
development competition & (usually). stabilize at
Pricing
costs efficient produc- low level.
Strategy
tion.
FIVE CATEGORIES OF PRODUCT
ADOPTERS
Early Late
Majority Majority
Percentage of Adopters
34% 34%
Early
Adopters
13.5%
Laggards
Innovators 16%
2.5%
Time
LIMITATIONS OF THE PLC
1. The life cycle concept applies best to product forms rather than to
classes of products or specific brands.
2. It is only a descriptive way of looking at the behavior of a product
and the life cycle can not predict the behavior of a product
QUESTIONS,
COMMENTS,
CONCERNS?