1. Product Life-Cycle Strategies & Diffusion of Innovation Session-31

2. 10 - 1 The Typical Product Life Cycle (PLC) Has Five Stages The Typical Product Life Cycle (PLC) Has Five Stages  Product Development, Introduction, Growth, Maturity, Decline  Not all products follow this cycle:  Fads  Styles  Fashions Product Life-Cycle Strategies

3. 10 - 2 The product life cycle concept can be applied to a: The product life cycle concept can be applied to a:  Product class (soft drinks)  Product form (diet colas)  Brand (Diet Dr. Pepper)  Using the PLC to forecast brand performance or to develop marketing strategies is problematic Product Life-Cycle Strategies

4. 10 - 3 Product Life-Cycle Strategies Product development Product development Introduction Introduction Growth Growth Maturity Maturity Decline Decline Begins when the company develops a new-product idea Sales are zero Investment costs are high Profits are negative PLC Stages

5. 10 - 4 Product Life-Cycle Strategies Product development Product development Introduction Introduction Growth Growth Maturity Maturity Decline Decline Low sales High cost per customer acquired Negative profits Innovators are targeted Little competition PLC Stages

6. 10 - 5 Product – Offer a basic product Product – Offer a basic product Price – Use cost-plus basis to set Price – Use cost-plus basis to set Distribution – Build selective distribution Distribution – Build selective distribution Advertising – Build awareness among early adopters and dealers/resellers Advertising – Build awareness among early adopters and dealers/resellers Sales Promotion – Heavy expenditures to create trial Sales Promotion – Heavy expenditures to create trial Marketing Strategies: Introduction Stage

7. 10 - 6 Product Life-Cycle Strategies Product development Product development Introduction Introduction Growth Growth Maturity Maturity Decline Decline Rapidly rising sales Average cost per customer Rising profits Early adopters are targeted Growing competition PLC Stages

8. 10 - 7 Product – Offer product extensions, service, warranty Product – Offer product extensions, service, warranty Price – Penetration pricing Price – Penetration pricing Distribution – Build intensive distribution Distribution – Build intensive distribution Advertising – Build awareness and interest in the mass market Advertising – Build awareness and interest in the mass market Sales Promotion – Reduce expenditures to take advantage of consumer demand Sales Promotion – Reduce expenditures to take advantage of consumer demand Marketing Strategies: Growth Stage

9. 10 - 8 Product Life-Cycle Strategies Product development Product development Introduction Introduction Growth Growth Maturity Maturity Decline Decline Sales peak Low cost per customer High profits Middle majority are targeted Competition begins to decline PLC Stages

10. 10 - 9 Product – Diversify brand and models Product – Diversify brand and models Price – Set to match or beat competition Price – Set to match or beat competition Distribution – Build more intensive distribution Distribution – Build more intensive distribution Advertising – Stress brand differences and benefits Advertising – Stress brand differences and benefits Sales Promotion – Increase to encourage brand switching Sales Promotion – Increase to encourage brand switching Marketing Strategies: Maturity Stage

11. 10 - 10 Product Life-Cycle Strategies Product development Product development Introduction Introduction Growth Growth Maturity Maturity Decline Decline Declining sales Low cost per customer Declining profits Laggards are targeted Declining competition PLC Stages

12. 10 - 11 Product – Phase out weak items Product – Phase out weak items Price – Cut price Price – Cut price Distribution – Use selective distribution: phase out unprofitable outlets Distribution – Use selective distribution: phase out unprofitable outlets Advertising – Reduce to level needed to retain hard-core loyalists Advertising – Reduce to level needed to retain hard-core loyalists Sales Promotion – Reduce to minimal level Sales Promotion – Reduce to minimal level Marketing Strategies: Decline Stage

13. 12 Diffusion of Innovation  Innovators : They are venturesome & risk takers They are venturesome & risk takers They are highly resourceful They are highly resourceful They buy the product at the Introduction Stage They buy the product at the Introduction Stage

14. 13 Diffusion of Innovation  Early adopters : They are the opinion leaders They are the opinion leaders They are likely to transmit word –of –mouth influence and, due to this reason they are the most important group in determining the success of the product. They are likely to transmit word –of –mouth influence and, due to this reason they are the most important group in determining the success of the product. They contribute very much to the growth of the product since it has been accepted by innovators and early majority They contribute very much to the growth of the product since it has been accepted by innovators and early majority

15. 14 Diffusion of Innovation  Late majority : They are conservative,rely on tradition and generally adopt innovations in response to group norms and social pressure,or due to decreased availability of the previous product. 4.Laggards : They are tradition bound and by the time they adopt an innovation,it is old and has been superseded by something else.