Product Life Cycle Product Life Cycle Approach ToApproach To

Strategic ManagementStrategic Management

Importance Of Importance Of Understanding the Product Understanding the Product

Life CycleLife Cycle Deliver more innovative products

and services

Reduce costs and improve quality

Improved relationships with their customers, suppliers, and business partners

The Product Life CycleThe Product Life Cycle

The Introduction StageThe Introduction Stage

FeaturesFeatures

Profits are Low or Negative

Promotional Expenditure is high

Focus is on those buyers who are ready to buy

Strategic ThrustStrategic Thrust

Market Development

Strategic ConsiderationsStrategic Considerations

Time of Entry First, Parallel or Late entry

Target Market

Innovation

Target Customers

The Growth StageThe Growth Stage

FeaturesFeatures

Rapid climb in Sales and hence increase in profits

Promotional Expenditure is maintained or slightly increased

New Competitors enter attracted by oppurtunities

Strategic ThrustStrategic Thrust

Penetration

Strategic ConsiderationsStrategic Considerations

Improve product quality Addition of new models Enter new market segments Increase distribution coverage and

enter new distribution channels Lowering of price to attract new

customers

The Maturity StageThe Maturity Stage

FeaturesFeatures

Declining Sales

Very Low Profit Margin

Very few customers and Competition

Strategic ThrustStrategic Thrust

Cut costs, reposition or withdraw

Strategic ConsiderationsStrategic Considerations

Increase firms investment to dominate or strengthen its position

Maintaining firm’s investment until uncertainties pass

Decreasing firm’s investment level by dropping unprofitable customers

Harvesting the firm’s investment to recover cash quickly

Divesting business by quickly disposing assets

The Decline StageThe Decline Stage

FeaturesFeatures

Profits are Low or Negative

Promotional Expenditure is high

Focus is on those buyers who are ready to buy

Strategic ThrustStrategic Thrust

Market Development

Strategic ConsiderationsStrategic Considerations

Time of Entry First, Parallel or Late entry

Target Market

Innovation

Target Customers

Marketing Mix In Different Marketing Mix In Different PLC StagesPLC Stages

Stage Introduction

Growth

Maturity

Decline

Product Unique offering Improvement on early innovation

Different Variety

Rationalize Range

Price Low or Premium Low with High Volume

Maintain Margin

Smaller Margin

Promotion Incentive to use Heavy Parity, Loyalty Formation

Threshold level for reminder

Advertising Focus

Awareness Building

Brand name , Performance

Value for money

Rationalize

Distribution

Build Network Fast Spread out

Choose specific territory

Limited Coverage or Enter new market

Weakness’ of the Product Weakness’ of the Product Life Cycle ConceptLife Cycle Concept

Undefined Concept No Uniform Shape Unpredictable turning points Unclear Implications Product Oriented

Recap……Recap……

Stage Introduction

Growth

Maturity

Decline

Sales Low Fast Growth

Slow Growth

Decline

Profit Marginal or even loss

Rapid rise Falling Margins

Low Margin

Strategic Thrust

Market development

Penetration

Defend Share

Cut cost, Penetration or withdraw

Consumer Targets

Non-users, Innovators

Form New Segments

Shed segments

Selective; Explore new market

Competition

Few, less known Intensive, Growing with time

Many efficient ones

Limited

Differential Advantage

Superior performance, New benefit features

Brand name, Corporate identity

Price, unique service

Business experience, low cost producer