Ch- 12 Addressing Competition and Driving Growth

Product Life Cycle-

A company’s positioning and differentiation strategy

must change as its product, market and competition
change over the Product Life Cycle (PLC).
Product has a PLC asserts:

1. Products have a limited life.

2. Product sales pass through distinct stages

with different challenges and opportunities.

3. Profits rise and fall at different stages.

4. Products require different strategies

regarding marketing, finance, manufacturing
and HR.
Product Life Cycles
1. Introduction- Slow sales growth. Profits
nonexistent.

2. Growth- Rapid market acceptance and profit

improvement.

3. Maturity- Slowdown in sales growth as

achieved acceptance by most potential buyers.
Profits stabilize or decline.

4. Decline- Sales show downward drift and

profits erode.
Alternate Patterns:
A) Growth Slump Maturity pattern-
Sales grow rapidly when introduced and then
fall to a sustained level by late adopter’s first
buy and early adopter’s replacement. Eg- Small
kitchen appliances – toaster ovens.

B) Cycle-Recycle Pattern-
Sales of new drugs with aggressive promotions.

C) Scalloped pattern- Succession of life cycles

based on new product uses or users. Eg- Nylon-
parachutes, shirts, boat sails.
Style, Fashion and Fad
Lifecycles
Style: Basic and distinctive mode of expression.
(Clothing- Formal, Casual, Sporty). Last for
generations and go in and out of vogue.

Fashion: Currently accepted or popular style.

Length of cycle is hard to predict. Ends because
of compromise or too many adopt it.

Fad: Fashions that come quickly into public

view, adopted, peak early and decline very fast.
1. Marketing Strategies: Introduction Stage

Salesis low in introduction as it takes time to roll out

product, work out problems, gain acceptance.

Profits could be negative as high promotional

expenditure to inform customers, induce trial and secure
distribution.
Pioneering Advantages- (Coca Cola, Amazon)

Early users will recall the brand name.

Itestablishes the attributes a product class should

possess.

Captures more users as it targets the middle of the

market.

Customer Inertia.

Economies of scale, technological leadership,

patents.
Pioneering Drawbacks- (Apple Newton,
Netscape browser)

Second mover advantage.

New products could be improperly positioned.

Appeared before strong demand was there.

Lack of resources.

Complacency.
2. Marketing Strategies: Growth Stage

Rapid increase in sales and profits rise.

Additional consumers start buying it.

Prices stabilize or fall depending on demand.

Maintainmarketing expenditure to educate market and to

meet competition.
To sustain market share growth, firms should:

Improve product quality, add features.

Add new models.

Enter new segments.

Increase distribution coverage.

Shiftfrom awareness and trial communication to

preference and loyalty communication.

Lower prices for next layer of price sensitive buyers.

3. Marketing Strategies: Maturity Stage

Rate of sales growth slows and this stage lasts longer and
is in 3 phases-

No new distribution channels, new competitive forces

emerge.

Most potential customers have tried product and future

sales now depend on population growth and replacement
demand.

Customers begin switching to other products.

A few giants dominate and profit through
high volume and low costs.

Company can pursue niche strategy, profit

through low volume and high margins.

Three ways to change the course for a

brand:
Market Modification
Product Modification

Quality Improvement- Functional performance.

Feature Improvement- Expand performance, safety,

convenience.

Style Improvement- Increase Aesthetic appeal.

Marketing Program Modification

Modify
non-product elements- Price, Distribution and
Communication in particular.

Assesslikely success of changes in terms of effects on

new and existing customers.
4. Marketing Strategies: Decline Stage

Technologicaladvances, shift in consumer tastes,

increased competition.

Firms might withdraw, reduce number of products, cut

marketing budgets and reduce prices.
Eliminate weak products- (GM Oldsmobile
and Pontiac lines).

Identify
those products, appoint a committee,
and make a recommendation.

Harvesting- Gradually reduce costs while

trying to maintain sales. Cut R&D, investment
in equipment, product quality, sales force, ad
expenditure.

Divesting- Sell it to other firms. If not, liquidate

the brand quickly or slowly.