Scribd
Upload
67 views

Presented To: Ms. Rupali Madan

The document discusses the product life cycle concept, which describes the stages a product goes through from introduction to decline. It identifies the four stages as introduction, growth, maturity, and decline. For each stage, it outlines typical characteristics like sales patterns and profitability, as well as implications for the marketing mix of product, price, placement, and promotion. Understanding the product life cycle can help managers plan strategies and forecast sales as a product progresses through each phase.

Uploaded by

Neha Bhogra
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
67 views

Presented To: Ms. Rupali Madan

The document discusses the product life cycle concept, which describes the stages a product goes through from introduction to decline. It identifies the four stages as introduction, growth, maturity, and decline. For each stage, it outlines typical characteristics like sales patterns and profitability, as well as implications for the marketing mix of product, price, placement, and promotion. Understanding the product life cycle can help managers plan strategies and forecast sales as a product progresses through each phase.

Uploaded by

Neha Bhogra
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 19

PRESENTED TO:

MS. RUPALI MADAN

BY:
NEHA MBA-867-2k10
A product is anything that can be offered to the
market, which has the ability to satisfy a
consumers needs & wants.

A market offering, whether TANGIBLE or


INTANGIBLE , DURABLE or NON-DURABLE,
that some one wants to purchase and consume.
Products like men are mortal. A product passes
through various stages, until it is finally
abolished i.e., discontinued from the market.
These stages are taken together are referred to
as the product life cycle. This life cycle of the
product comprises four stages :
I.Introduction
II.Growth
III.Maturity
IV.decline
Sales and
Profits ($)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Develop-
ment

Losses/
Investments ($)
Development stage:

Product development is the incubation stage of the product life


cycle. There are no sales and the firm prepares to introduce the
product. As the product progresses through its life cycle,
changes in the marketing mix usually are required in order to
adjust to the evolving challenges and opportunities.
Introduction Stage:

When the product is introduced, sales will be low until customers


become aware of the product and its benefits. Some firms may
announce their product before it is introduced, but such
announcements also alert competitors and remove the element of
surprise. Advertising costs typically are high during this stage in
order to rapidly increase customer awareness of the product and
to target the early adopters. During the introductory stage the
firm is likely to incur additional costs associated with the initial
distribution of the product. These higher costs coupled with a low
sales volume usually make the introduction stage a period of
negative profits.
During the introduction stage, the primary goal is to establish a market and build
primary demand for the product class.

The following are some of the marketing mix implications of the


introduction stage:

•Product - one or few products, relatively undifferentiated.

•Price - Generally high, assuming a skim pricing strategy for a high profit
margin as the early adopters buy the product and the firm seeks to recoup
development costs quickly. In some cases a penetration pricing strategy
is used and introductory prices are set low to gain market share rapidly.

•Distribution - Distribution is selective and scattered as the firm


commences implementation of the distribution plan.

•Promotion - Promotion is aimed at building brand awareness. Samples


or trial incentives may be directed toward early adopters. The introductory
promotion also is intended to convince potential resellers to carry the
product.
Growth Stage:
The growth stage is a period of rapid revenue growth. Sales
increase as more customers become aware of the product and its
benefits and additional market segments are targeted. Once the
product has been proven a success and customers begin asking for
it, sales will increase further as more retailers become interested in
carrying it. The marketing team may expand the distribution at this
point. When competitors enter the market, often during the later
part of the growth stage, there may be price competition and/or
increased promotional costs in order to convince consumers that
the firm's product is better than that of the competition.
During the growth stage, the goal is to gain consumer preference
and increase sales.

The marketing mix may be modified as follows:

Product - New product features and packaging options;


improvement of product quality.

Price - Maintained at a high level if demand is high, or reduced to


capture additional customers.

Distribution - Distribution becomes more intensive. Trade


discounts are minimal if resellers show a strong interest in the
product.

Promotion - Increased advertising to build brand preference.


Maturity Stage:

The maturity stage is the most profitable. While sales continue to


increase into this stage, they do so at a slower pace. Because
brand awareness is strong, advertising expenditures will be
reduced. Competition may result in decreased market share
and/or prices. The competing products may be very similar at this
point, increasing the difficulty of differentiating the product. The
firm places effort into encouraging competitors' customers to
switch, increasing usage per customer, and converting non-users
into customers. Sales promotions may be offered to encourage
retailers to give the product more shelf space over competing
products.
During the maturity stage, the primary goal is to maintain market
share and extend the product life cycle.

Marketing mix decisions may include:

Product - Modifications are made and features are added


in order to differentiate the product from competing
products that may have been introduced.
Price - Possible price reductions in response to competition
while avoiding a price war.
Distribution - New distribution channels and incentives to
resellers in order to avoid losing shelf space.
Promotion - Emphasis on differentiation and building of
brand loyalty. Incentives to get competitors' customers to
switch.
Decline Stage:
Eventually sales begin to decline as the market becomes saturated,
the product becomes technologically obsolete, or customer tastes
change. If the product has developed brand loyalty, the profitability
may be maintained longer. Unit costs may increase with the
declining production volumes and eventually no more profit can be
made.
The marketing mix may be modified as follows:

Product - The number of products in the product line may be reduced.


Rejuvenate surviving products to make them look new again.
Price - Prices may be lowered to liquidate inventory of discontinued products.
Prices may be maintained for continued products serving a niche market.
Distribution - Distribution becomes more selective. Channels that no longer are
profitable are phased out.
Promotion - Expenditures are lower and aimed at reinforcing the brand image
for continued products.
Facilitates pre-planning the product launch
Facilitates prolonging the profitable phase
Facilitates investment decisions on products
Facilitates choice of appropriate entry strategy
Facilitates choice of right time to exit
Provides useful clues for managing customers
The Product Level
The Product sub-category level
The Brand level
Example: New Flavor of Pepsi

*
Stage 1: Market Introduction

o Pepsi bottles the new flavored product and places it on the


market for consumers.

o Pepsi also spends a lot of money advertising the new


flavor creating awareness.

* Stage 2: Market Growth

o Customers like the flavor and begin to make routine


purchases.

o Coke introduces their competing flavor.


Stage 3: Market Maturity

o More competitors enter the market


taking some of Pepsi’s profits.

* Stage 4: Sales Decline

o Customers have moved on to the next


new flavor.

o Some loyal fans stay behind.


Product life cycle concept may be used as
a managerial tool. Marketing strategies
must change as the product goes through
the life cycle. If managers understand the
cycle concept they are in a better position
to forecast future sales activities and
plan marketing strategies.

You might also like