1. MGT-519 STRATEGIC MARKETING AAMER SIDDIQI 1

2. LECTURE 24 2

3. RECAP Product Levels of Product Introduction of a Product Product form Product line Product depth Differentiation of Product New Product development Product decision 3

4. PRODUCT LIFE CYCLE A new Product progresses through a sequence of stages from – Introduction – Growth – Maturity & – Decline Sequence is known as PRODUCT LIFE CYCLE Associated with the changes in the marketing situation Impacts the marketing strategy and the marketing mix 4

5. PRODUCT LIFE CYCLE Every product has a life period, it is launched, it grows, and at some point, may die. Most companies understand the different product life cycle stages, and that the products they sell all have a limited lifespan Companies will invest heavily in new product development in order to make sure that their businesses continue to grow. However some products may not phase out with time Clothes probably will not, in fact it is unlikely Jeans will die as a product but they will change according to the evolving market needs of the consumers. E.g recent emergence of ‘Jeggings’ 5

6. PRODUCT LIFE CYCLE STAGES The product life cycle has 4 very clearly defined stages Each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products. 1.Introduction 2.Growth 3.Maturity 4.Decline 6

7. INTRODUCTION Introduction Stage The firms seeks to build product awareness and develop a market for the product. Impact on the marketing mix is as follows: - Product- branding and quality level is established Intellectual protection such as patents and trademarks are obtained Price- low penetration pricing to build market share rapidly High skimming pricing to recover development costs 7

8. Place- is selective until consumers show acceptance of the product Promotion: aimed at innovators and early adoptors Marketing communications seeks to build product awareness Educate consumers about the product This stage of the cycle could be the most expensive for a company launching a new product. high, especially if it’s a competitive sector. 8 INTRODUCTION (CONT’D)

9. The size of the market for the product is small Sales are low, although they will be increasing. Cost of – research and development, – consumer testing, and – marketing needed to launch the product can be very high 9 INTRODUCTION (CONT’D)

10. GROWTH Growth Stage – the firm seeks to build brand preference Increase market share Product- quality is maintained Additional features and support services are added Price- is maintained as firm enjoys increasing demand with little competition Place- channels are added as demand increases & customers accept the product Promotion- aimed at broader audience 10

11. GROWTH (CONT’D) The growth stage is typically characterized by a strong growth in sales and profits As 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. 11

12. MATURITY Maturity Stage – strong demand in sales diminished Competition may appear with similar products Primary objective is to defend market share & maximize profits Product- features are enhanced to differentiate the product from competitors Price- lowered because of new competition Place- distribution becomes intensive 12

13. MATURITY Incentives are offered to encourage preference over competitors Promotion- emphasizes product differentiation During the maturity stage, the product is established 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 Businesses need to invest wisely in any marketing they undertake. Also need to consider any product modifications or improvements to the production process which might give them a competitive advantage. 13

14. DECLINE Decline Stage –Eventually, the market for a product will start to shrink in the decline stage 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. Decline is inevitable Possible for companies to make some profit by switching to less-expensive production methods and cheaper markets 14

15. DECLINE As sales decline, the firm has several options – Maintain the product, rejuvenating by adding new features – Finding new uses HARVEST THE PRODUCT- reduce costs Continue to offer it Possibly to a loyal niche segment Discontinue the product, Liquidate remaining inventory Selling it to another firm willing to continue 15

16. DECLINE MARKETING MIX decisions depend on the selected strategy Product may be changed if rejuvenated or Left unchanged if being harvested or liquidated Price maintained if product is harvested Drastically reduced if liquidated 16

17. VARIATION IN LIFE SPAN "Branded product life cycles vary in length and shape. Product category and product form life cycles also possess degrees of variability, depending on the type of product under consideration. One extreme is the very short life cycle associated with the product fad (A temporary fashion with a short life cycle) Fads move almost immediately into the growth stage of the firm. Some fads possess significant residual markets that keep them around for a while But even these products move fairly rapidly into and through decline. 17

18. VARIATION IN LIFE SPAN Some products can have extremely long maturity phases, but others may have very long introductory phases. It may take some products a substantial amount of time to catch on in the market before they enter their growth phases. These products have been referred to as "high learning products." – These products often are complex to understand or use – may be extremely expensive, – or may not be compatible with existing social values."[6] (courcesunt.edu). 18

19. IMPORTANCE OF PLC The idea of the product life cycle is an important principle manufacturers need to understand in order to make a profit and stay in business. However, the key to successful manufacturing is not just understanding this life cycle but also proactively managing products throughout their lifetime Applying the appropriate resources and sales and marketing strategies depending on what stage products are at in the cycle. Example: Introduction - 3D TVs Growth - Blueray discs/DVR Maturity - DVD Decline - Video cassette 19

20. SUMMARY PLC Stages of PLC Introduction Growth Maturity Decline Variation in life span Importance of PLC 20

21. THANKYOU 21