UNIT - MARKETING MANAGEMENT PRODUCT LIFE CYCLE ‘THE PRODUCT LIFE CYCLE Product Life cycle (PLC) a concept that explains how products go through four distinct stages from birth to death: introduction, growth, maturity, and decline, The stages of the PLC are: 1. Introduction stage slow growth follows the introduction of a new product inithe marketplace. Rate of growth will depend on the factors affecting adoption of innovation. Lastsih quitellong timevit depends (on some of factors including marketplace acceptance and the producer's willinghtess to support its product during start-up, Ex: the introduction of hybrid cars. 2. Growth stage: The product is accepted and sales rapidiyincrease Competitors notice and rush their versions to market. x: Mini tablets, such as the iPad mini, or Google Nexus are inithe grOwthistage at the moment 3, Maturity stage: Longest stage in the productilife cyele, in Which sales peak and profit margins narrow. Competition is most intense during this stage to fightfor their share. Do reminder advertising (“Did you brush your teeth today?”) To maintain marketshare Ex: the iPod and the iPhone. Apple managed to extend the maturity phase of the iPod by introducing the iPod touch, which introduced a tough sefeen and new features 4, Decline stage: Sales decrease as customer needs changewAffected by the changes of consumer tastes and new technologies which may flake theyproduet become ultimately obsolete fx: the Personal Computer (PQ) If the firm decides to drop the preduct, itn eliminate it in two ways: (1) Phase it out by cuttingiproduction in stages and letting existing stocks run out, or (2) Simply dump the product immediately. Line stretching occurs when a company lengthens its product line beyond its current range. Down market stretch A company positioned in the middle market may want to introduce a lower price line for any of three Féasons: Up market stretch Companies may wish to enter the high end of the market for more growth, higher _matgins, ‘or simply to\position themselves as full-line manufacturers. Two-way stretch Companies serving the middie market might decide to stretch their line in both directions, Line filling A product line can also be lengthened by adding more items within the present range. There are several motives for line filling: reaching for incremental profits, trying to satisfy dealers who complain about lost sales because of missing items in the line, trying to utilize excess capacity, to keep ‘out competitors. ‘TALVIR SINGH - 95923-65456 (COMMERCE NET ACHIEVERS) Page 1Marketing Mix Strategies for Product throughout the life. FEATURE Introduction | Growth Maturity | Decline Product ‘Single company | New New No. of produce single’| competitor’. | features are | variations product enters into |. added, sales | reduced the ‘market, | are mostly Creating) replacemen product t products variations Goal Get Ts time | Encourage _ | Attract new | Remain buyer) to}new |/brand user profitable, product loyalty decide whether to keep or phase out product ‘Sales Increase at | Rapid Peak, the | Continue to steady but slow | Increase level off, | decline pace decline Profit Negative Increased | Profit Declining and peak —_| margins narrow Pricing High- Recover | May need to | Price to | May reduce R&D costs reduce as | maintain | if product competition | market can remain increased _| share profitable Marketing Informing Heavy adv | Reminder | Decreased Communication | Customer to counter | Advertising | to maintain competition. profitability TALVIR SING!Table 7.3: Product Life Cycle Stages, Characteristics and Standard Responses ‘Competitors Profitability Negative High for Market- | Low share leaders ‘Company's ‘Stimulate primary Harvest Standard Responses Hold line length Hold or reduce High or reduce ‘TALVIR SINGH - 95923-65456 (COMMERCE NET ACHIEVERS) Page 3