Product life Cycle

Stages in PLC
1. Introduction stage
2. Growth Stage
3. Maturity stage
4. Decline stage
 1. Introduction stage
• Also called as pioneering stage.
• It starts when the new product is launched commercially
and made available for the purchase.
• A period of slow sales growth.
• Profits are non existent because of heavy expenses of
product introduction.
• Promotional expenditure are at highest because of need
of high level of promotional efforts to
a) inform the potential customers
b) induce trial of the product
c) To secure distribution in retail outlets.
• Demand has to be created and developed.
• Customers have to be prompted to try out the product.
 Marketing Strategies for
introduction stage
A)Market skimming
a) Rapid skimming
• Strategy of high price and high promotion
• Based on assumption that a large section of buyers is unaware and those
who will become aware are willing to buy at any price.
• Threat from competitors is imminent
• Profit maximization in short term
• Example- Electronic products like TV,DVD etc.
b) Slow skimming
• Strategy of high price and low promotion
• Based on the assumption that firm has sufficient time to recover its pre-
launch expenses.
• This happens, when the technology used by the firm is sophisticated and
difficult to imitate by the competitors.
• Competitors may not have the resources so competition may be limited to
2-3 firms
• Example- Laser technology etc.
B) Market penetration
a) Rapid penetration
• Launching a new product at a low price and spending heavily
on the promotion
• Based on the assumption that buyers are price sensitive
• Profit maximization in long run and hope for the large market
share.
• Intensive competition is there.
• Example: Nirma
b) Slow penetration
• Launching a new product at a low price and low level of
promotion.
• Threat from competition is minimal.
• Market is very price sensitive.
• Example: Maruti 800
 2. Growth stage
• Once the market has accepted the product,
sales become to rise.
• Demand for the product increases
• Price may remain same or may fall slightly
because competitors start invading.
• Promotional efforts may remain same or
can be increased slightly.
 Marketing strategies for growth
stage
• A firm can improve product quality and can
add new features to products
• It can enter into new market segments
• It can seek for new distribution channels
• Firm may shift for competition oriented
pricing.
• It shift from product awareness advertising to
product preference advertising.
• Lower the price to attract the next layer of
price sensitive buyers.
 3. Maturity stage
• Demand tends to reach at a saturation point.
• This stage lasts longer than the previous stages and
poses big challenges to the marketer.
• It can be divided into three stages
a) Growth maturity- The sales growth rate starts
declining. There are no distribution channels to fill.
New competitive forces emerge.
b) Stable maturity- Sales become stable because of
market saturation because most potential customers
have tried the product. There are no new customers
c) Decaying maturity- The level of sales starts to decline,
and customers starts moving towards other products.
• Cut throat competition
 Marketing strategies for the
Maturity stage
1) Market Modification
• A company must try to expand the market for its mature
brand by working with two factors which make up the sales
volume.
No. of brand users* usage rate per user
• No. of brand users can be increased by converting non-users,
entering new markets, attract competitors.
• Usage rate can be increased by convincing current users to
increase their brand usage.
Examples-
• Use aspirin daily for reducing the chances of stroke
• Use “Chyavanprash” after every meal to remain more healthy
and fit.
• For best results use fairness cream twice in a day.
2) Product modification (quality improvement, feature improvement, style improvement)
• Modify product’s characteristics like quality and features like
packaging and Labeling.
• Quality can be improved (functional improvement)
• New and improved product can be launched.
Example-
• More added flavors in food items
• Maruti Alto k 10.
• The appeals like ‘New, fresh, bigger and stronger’ can be used.
Example- New fair and lovely multivitamin using the fresh appeal.
• Packaging style may be changed i.e. more attracting packaging to
attract they customers
Example-
• Plastic coating in vim bar.
• Small packages can be introduced
Example- Shampoo in small-sachet packaging
3) Marketing Program modification
a) Price- Would a price cut attract new buyers?
OR
Would it be better to raise the price to signal higher quality
- Early purchase discounts may be there.
b) Distribution- Can company seek more distribution channels?
c) Advertising- should advertising expenditure be increased,
should the media mix be changed, should the message be
changed?
d) Sales promotion- Should the company step up the sales
promotion- offs, coupons, warranties, gifts, contests etc.
e) Personal selling- should the no. and quality of salespersons
be increased.
 4. Decline stage
• The sale eventually decline rapidly or slowly
• Demand for the product shrinks may be
because of technological advancements,
advanced products may available in the
market, increased domestic and foreign
competition.
• However company can earn some profit
largely coming from those people who are
willing to purchase because of antique
value.
 Marketing strategies for Decline
stage
• Retrenchment strategy- A firm can withdraw its
product.
• Remaining may reduce the production, may reduce
the promotion or may reduce the price further more.
• Some of the firm may try to link up the sale of
declining products with some premium products
and thus try to stretch the life of the declining
product.
• Some firms may go for product modification on a
higher level.
Example- The four stroke engine and a sleeker design
helped in slowing down the decline in the demand
for Bajaj scooters
 Case study of ITC- scissors, bread
winning brand of ITC.
• Launch stage: 1912 as generic product,
when bidis, chillums, hookah were popular.
• Low price and high promotion.
• New smokers to try out cigrattes.
• Go on elephants and camel.
• Thus low price and high promotion leads
to very less profits in launch stage.
 Growth stage
• 1920s, 1930,s and major part of 1940s.
• Cigrette was accepted.
• Very careful for price and Increased price
in small dosage.
• Promotion was remained same.
• But profits were very high
• Competition started but heat not yet felt.
• Golden tobacco- panama
• Priced lower, had little impact on growth of
scissors.
• Competition soon fragmented the market.
• Competition changed the game for
scissors.
 Maturity
• End of 1940s.
• Stability in sales, promotion was stale,
market was getting tough
• Market share was coming down
consistently.
• Panama becomes a challenger to scissors.
• Panama had done very good promotion:
good taste, price lowered, new flavour,
swadeshi as ITC was im perial tobacco of
britain
• Panama started growing in the early 1950s.
• Market welcomed the low priced product.
• ITC was unable to reduce the prices and
became looser.
• On the other hand, panama also obtained
national franchise as supplier to govt. and
sold cigarettes to armed forces at
discounted prices.
 Decline of scissors
• Decline In sales growth, market share ,
volume decline too.
• In 1948-49, scissors had market share of
16.6% and in 1960-61 it was just 6.6%.
• Everything looked irreversible.
• ITC initiates corrective measures but the
decline continues.
• Cheaper tobacco, reducing the length.
• Has not studied in deep the causes of decline
• Revamped ad campaigns, priced lower.