Description
It Explains what should be marketing mix at various stages of product life cycle.
MARKETING STRATEGIES ACROSS VARIOUS STAGES OF PRODUCT LIFE CYCLE
ADVANTAGES OF PRODUCT LIFE CYCLE
Each product may have a different life cycle
• • •
• •
PLC determines revenue earned Contributes to strategic marketing planning May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc. May help in new product development planning May help in forecasting and managing cash flow
?
To say that a product has a life cycle is to assert four things:
? That
products have a limited life, ? Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller, ? Profits rise and fall at different stages of product life cycle, and ? Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life cycle stage.
INTRODUCTION STAGE OF PLC
Costs are high ? Slow sales volumes to start ? Little or no competition - competitive manufacturers watch for acceptance/segment growth losses ? Demand has to be created ? Customers have to be prompted to try the product ? Makes no money at this stage, a skimming price strategy is employed ? The product is promoted to create awareness ? Advertising differentiates the product ? During the introduction stage, the primary goal is to establish a market and build primary demand for the product class.
?
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 - 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 OF PLC
Competitors are attracted into the market with very similar offerings ? Products become more profitable and companies form alliances, joint ventures and take each other over ? Advertising spend is high and focuses upon building brand ? Market share tends to stabilize ? Costs reduced due to economies of scale ? Sales volume increases significantly ? Profitability begins to rise ? Public awareness increases ? Competition begins to increase with a few new players in establishing market ? Increased competition leads to price decreases
?
MARKETING MIX IMPLICATIONS OF GROWTH
STAGE
? 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 OF PLC
Costs are lowered as a result of production volumes increasing and experience curve effects ? Sales volume peaks and market saturation is reached ? Increase in competitors entering the market ? Prices tend to drop due to the proliferation of competing products ? Brand differentiation and feature diversification is emphasized to maintain or increase market share ? Promotion becomes more widespread and uses a greater variety of media ? Advertising puts price ahead of the competition. ? During the maturity stage, the primary goal is to maintain market share and extend the product life cycle
?
MARKETING MIX IMPLICATIONS OF
MATURITY STAGE
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 OF PLC
Demand and competition for the product decreases ? There is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed ? There is intense price-cutting and many more products are withdrawn from the market ? Costs become counter-optimal ? Sales volume decline or stabilize ? Prices, profitability diminish ? Profit becomes more a challenge of production/distribution efficiency than increased sales ? Profits can be improved by reducing marketing spend and cost cutting. Defensive advertising or for revitalization.
?
?
During the decline phase, the firm generally has three options:
? Maintain
the product in hopes that competitors will exit. Reduce costs and find new uses for the product. ? Harvest it, reducing marketing support and coasting along until no more profit can be made. ? Discontinue the product when no more profit can be made or there is a successor product.
MARKETING MIX IMPLICATIONS OF DECLINE
STAGE
? 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.
LIMITATIONS OF THE PRODUCT LIFE CYCLE
Products do not have such a predictable life and the specific life cycle curves followed by different products vary substantially. ? Consequently, the life cycle concept is not well-suited for the forecasting of product sales. ? Nonetheless, the product life cycle concept helps marketing managers to plan alternate marketing strategies to address the challenges that their products are likely to face.
?
Thank You
doc_792326429.pptx
It Explains what should be marketing mix at various stages of product life cycle.
MARKETING STRATEGIES ACROSS VARIOUS STAGES OF PRODUCT LIFE CYCLE
ADVANTAGES OF PRODUCT LIFE CYCLE
Each product may have a different life cycle
• • •
• •
PLC determines revenue earned Contributes to strategic marketing planning May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc. May help in new product development planning May help in forecasting and managing cash flow
?
To say that a product has a life cycle is to assert four things:
? That
products have a limited life, ? Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller, ? Profits rise and fall at different stages of product life cycle, and ? Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life cycle stage.
INTRODUCTION STAGE OF PLC
Costs are high ? Slow sales volumes to start ? Little or no competition - competitive manufacturers watch for acceptance/segment growth losses ? Demand has to be created ? Customers have to be prompted to try the product ? Makes no money at this stage, a skimming price strategy is employed ? The product is promoted to create awareness ? Advertising differentiates the product ? During the introduction stage, the primary goal is to establish a market and build primary demand for the product class.
?
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 - 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 OF PLC
Competitors are attracted into the market with very similar offerings ? Products become more profitable and companies form alliances, joint ventures and take each other over ? Advertising spend is high and focuses upon building brand ? Market share tends to stabilize ? Costs reduced due to economies of scale ? Sales volume increases significantly ? Profitability begins to rise ? Public awareness increases ? Competition begins to increase with a few new players in establishing market ? Increased competition leads to price decreases
?
MARKETING MIX IMPLICATIONS OF GROWTH
STAGE
? 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 OF PLC
Costs are lowered as a result of production volumes increasing and experience curve effects ? Sales volume peaks and market saturation is reached ? Increase in competitors entering the market ? Prices tend to drop due to the proliferation of competing products ? Brand differentiation and feature diversification is emphasized to maintain or increase market share ? Promotion becomes more widespread and uses a greater variety of media ? Advertising puts price ahead of the competition. ? During the maturity stage, the primary goal is to maintain market share and extend the product life cycle
?
MARKETING MIX IMPLICATIONS OF
MATURITY STAGE
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 OF PLC
Demand and competition for the product decreases ? There is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed ? There is intense price-cutting and many more products are withdrawn from the market ? Costs become counter-optimal ? Sales volume decline or stabilize ? Prices, profitability diminish ? Profit becomes more a challenge of production/distribution efficiency than increased sales ? Profits can be improved by reducing marketing spend and cost cutting. Defensive advertising or for revitalization.
?
?
During the decline phase, the firm generally has three options:
? Maintain
the product in hopes that competitors will exit. Reduce costs and find new uses for the product. ? Harvest it, reducing marketing support and coasting along until no more profit can be made. ? Discontinue the product when no more profit can be made or there is a successor product.
MARKETING MIX IMPLICATIONS OF DECLINE
STAGE
? 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.
LIMITATIONS OF THE PRODUCT LIFE CYCLE
Products do not have such a predictable life and the specific life cycle curves followed by different products vary substantially. ? Consequently, the life cycle concept is not well-suited for the forecasting of product sales. ? Nonetheless, the product life cycle concept helps marketing managers to plan alternate marketing strategies to address the challenges that their products are likely to face.
?
Thank You
doc_792326429.pptx