The PLC BMI3C
The PLC The Product Life Cycle describes the changes in consumer demand with regard to a product over a period of time Marketers use this system to determine how long a product will last
Stages in the PLC
Product development The company does R&D to come up with a new product No sales happen during this time, but the company spends a lot of money
Introduction Launching a new product into the marketplace is VERY expensive Manufacturers, promotion, distribution, etc. Marketing efforts are focused on selling to “early adopters” (consumers who like to be first to buy) Expenses still outweigh revenue by a lot during this stage
Growth Most crucial stage for advertising as this is the time when the product will either catch on or fail Marketers will scrap a product if it does not do well in this stage (this is called a bust as the costs of production, etc. have not been recovered) The faster a company can reach the growth stage, the faster it can begin to make a profit
Growth The first company in the growth stage will pay the most in advertising but no major competition The idea is to recover the high cost of introduction before competition becomes strong and the price drops As competition enters, marketers must modify their original product (add features, improve quality, lower price) in order to maintain their market share
Maturity Period during which the sales of a product increase slowly Advertising is done to keep the name of the brand with the consumer, though promotional costs are not as high as the previous 2 stages Major costs have been recouped by now, so large profits are made during this stage Goal is to keep this stage going as long as possible…
Decline Company is unable to find new customers Company will try to redesign, repackage, etc. to try to reverse the decline process Company may remove the product from the market
The Decision Point If the decline persists, the company must decide the future of this product based on research the company may decide to: reformulate, repackage, (new & improved), reprice, new promotion Discontinue the product
The Decision Point Example: Arm & Hammer Decline in sales Research shoed a drop in the amount of home baking Instead of discontinuing the product, the marketers looked for a new target market Promoted the product’s ability to absorb odour (i.e. from the fridge) Plan worked: product entered new growth stage
Nontraditional Product Life Cycles What would the PLC look like for a… Fad… (Crocs) Niche…(skateboard wheels) Seasonal…(pumpkins)
Fads a product that is extremely popular for a very brief period of time, a fad dies very quickly this is a high-risk adventure, businesses do well if they get out of the market just as the fad reaches its peak if a company does not get out in time they are left with large product inventory that no one wants to buy
Fads What does the PLC look like?
Trends a mass movement towards a particular style or value and it has a more lasting effect on the marketplace by paying close attention to trends, marketers can predict which markets will grow in the future eg. organic foods
Niche Market a very short growth stage that leads to a solid maturity stage market is very small, therefore there is little competition (there are not enough consumers to make the market attractive to competitors)
Niche What does the PLC look like?
Seasonal Market seasons can impact upon a product Snow blowers, ski resorts marketers anticipate periods of high and low demand marketers work to create opportunities outside the peak season
Seasonal What does the PLC look like?
Questions What is the risk to a marketer of jumping on a fad? People seem to be interested in products that aren’t harmful to the environment… is this a fad? What’s the difference between a fad and a trend? What are some current trends? How could a business take advantage of these trends?