AAWAZ INSTITUTE OF MEDIA

& MANAGEMENT SCIENCES

NAME: Bushra Zakir

GR No. 976

CLASS: BBA-II

SUBJECT: Small & Medium Enterprises

INSTRUCTOR: Miss Sobia

DATE: 26-04-2020
 CONTENTS

What is product lifecycle?

01

The product I chose

02

Graphical Representation
03

Stages of product lifecycle

04 with examples according to
graph
 1) WHAT IS PRODUCT LIFECYCLE?

Introduction:
The product lifecycle is an important concept in
marketing. It describes the stages a product goes
through from when it was first discovered until it
finally removed from the market. Not all
products reach their final stage. Some continue
to grow and others rise and fall.
Definition:

"A theoretical model which describes/predicts

the stages a product goes through during its
life"
 2) THE PRODUCT I CHOSE

Nestlè Maggi Pakistan

In 1992, when the product was launched in Pakistan, it was the only brand of noodles in the
country.Maggi noodles, an iconic brand that is popular among many Pakistanis, has ceased
production in Pakistan. Maggi noodles were manufactured by Nestle, under the instant noodles
portfolio.While talking to a news outlet profit, sources inside the company confirmed that they
would no longer be manufacturing Maggi noodles in the country.

An official from Nestle confirmed that Maggi was discontinued by the end of 2018. The
divestment is part of Nestlé’s strategy to manage its multi-product portfolio.

However, no public announcement has been made by Nestle Pakistan in this regard, and the
product is still present on the company’s official website.

The product was listed on the 2017 annual report, but it was absent from the 2018 report.
However, there was no official statement about the discontinuation of the product.
 3) GRAPHICAL REPRESENTATION

 The Blue line above X-axis is showing sales made by Maggi

 The black line which is below the X-axis is representing
profit

4) STAGES OF PRODUCT LIFECYCLE WITH

EXAMPLES ACCORDING TO GRAPH

STAGE 1
INTRODUCTORY:
"Launching the product into the market"

 This stage of the cycle could be the most expensive for a company
launching a new product.
 The size of the market for the product is small, which means sales
are low, although they will be increasing.
 On the other hand, the cost of things like research and
development, consumer testing, and the marketing needed to
launch the product can be very high, especially if it’s a competitive
sector.

EXAMPLE:
  Nestlé Pakistan launched Maggi in Pakistan in 1992 with its
launch of Maggi 2 minutes noodles, an instant noodles product.
 With the launch of Maggi noodles, Nestlé created a new food
category - instant noodles in the Pakistani food market.
 Because of its first mover advantage, Maggi successfully
managed to retain its leadership in the instant noodles category.

Product: branding and quality level was established and intellectual

property rights were obtained.
Price: Price was relatively high to build market share and to recover
development costs. The cost of one packet was Rs.10 which was slightly
high at that time.
Distribution: was selected until consumers show acceptance of the
product
Promotion: They focused on awareness and information. Promotion
were started through ads in the newspapers and on television.
Competition: There was no single competitor of Maggi noodles.

BY GRAPH
Sales: In the graph, the blue line is just above X-axis which means it just
start selling and will make more and more sale.
Profit: The black line representing profit is below X-axis which means no
profit earned.,
 STAGE 2
GROWTH:
"When sales are increasing at their fastest rate"

 The growth stage is typically characterized by a strong growth in

sales and profits, and because the company can start to benefit
from economies of scale in production, the profit margins, as well
as the overall amount of profit, will increase.
 This makes it possible for businesses to invest more money in the
promotional activity to maximize the potential of this growth stage.

EXAMPLE:
 10 years back it enjoyed 50% of marlet share in this segment.
 After 2 years of launching, they changed the formulation of maghie
noodles.
 The customers didn't like the new taste so they reintroduced the
old formulation.
Product: The quality was maintained and company made heavy
investment in advertising and marketing.
Price: They increased the price from Rs.10 to Rs.15 and then Rs 25 as the
company was enjoying increasing demand with little competition.
Distribution: Channels were added as demand increased and customers
accepted the product.
Promotion: was aimed at a broader level
Competition: Knorr a brand of Unilever introduced instant noodles in
1993. Knorr became more popular because of its flavors and marketing
strategy.

BY GRAPH
Sales: In the graogh, the blue line is now vertically going upward which
means the product is on the road.
Profit: Black line representing profit ratio is now getting above the X-axis
and representing huge profit.

STAGE 3

MATURITY

"Product enjoys its high market share and cashing brand name"

 During the maturity stage, the product is established and the aim
for the manufacturer is now to maintain the market share they have
built up.
 This is probably the most competitive time for most products and
businesses need to invest wisely in any marketing they undertake.
 They also need to consider any product modifications or
improvements to the production process which might give them a
competitive advantage.

Product: The company enhanced the features and launched new

flavors to differentiate the product from its competitors. Such as
Atta noodles, maggi Chotoo, maggi yumm power
Price: They lowered the price from 25 Rs to Rs.20
Distribution: The company made distribution intensive to
encourage preference over competitive products.
Promotion: They lowered their investment for advertising and
promotions because everyone knows about the product.
Competition: The competition now increased. In 2012, Shan foods
launched Shoop instant noodles and in 2018, they launched unique
Shoop saucy.

BY GRAPH
Sales: The blue line remains constant and no variations occur that
means sales are still high.
Profit: The black line representing profit is showing maximum profit
because it's still distance from the X-axis.
 STAGE 4
DECLINE:
"Final stage of cycle, when sales begin to fall"

 Eventually, the market for a product will start to shrink, and this is
what’s known as the decline stage.
 This shrinkage could be due to the market becoming saturated (i.e.
all the customers who will buy the product have already purchased
it), or because the consumers are switching to a different type of
product.
 While this decline may be inevitable, it may still be possible for
companies to make some profit by switching to less-expensive
production methods and cheaper markets

Product: The product is same as it was so the customers shifted to

different options.
Price: The price is lower Rs.25 in contrast with its competitor's price
which is Rs.30
Distribution: The distribution channels are now decreased.
Promotion: Promotion is not strong as it should to attract
customers.
Competition: The competition increased due to imported products
 such as Nuclear Fire Ramen.

BY GRAPH
Sales: The blue line is showing decrease in se that means no sales.
Profit: The black line is also representing no profit.

“Consumers mostly buy Knorr Noodles now and they are high in
demand,”
said Ghulam Abbas, one of the workers at Savera departmental
store in Shadman, Lahore.

WHY MAGGI NOODLES FAILED IN PAKISTAN? Some reasons

 More competitors
 No more profit
 Long - run drop sales
 Elimination of all non-essential market expenses.
 Shifting of customers to other brands
 Usage of harmful chemicals such as MSG, glutamate and lead.

Maggi was my childhood romance,”

Ahmed Abbas, an ardent foodie, who works as an accountant at Royal
Swiss, a newly constructed luxury hotel in Lahore.
“I grew up eating Maggi two minutes instant noodles and I badly miss
them. It used to be the part of our afternoon snacks and occasionally
for school lunch break.”

How did this happen? How could such a beloved brand just die?
The company’s management likes to use meaningless corporate drivel to
explain it, but there is no denying a simple fact: a collapse like this does
not happen without a shock event.
Unfortunately for the management of Nestle Pakistan, that event took
place across the Wagah.

******** The end ***********

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