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PRODUCT LIFE CYCLE

BY

ARUN TRIPATHI

ABHISHEK OJHA

AMRINDER SINGH BAKSHI



PLC - Product Life Cycle

Product Life Cycle ² shows the stages that

products go through from development to

withdrawalfrom the market



Stages in the Product Life Cycle

Introduction Growth Maturity Decline





Introduction

The seller tries to stimulate demand

Promotion campaigns to get increase public awareness

Explain how the product is used,

Features Advantages Benefits

You will lose money, but you expect to make profits in the

future





Introduction

Sales are low, and profits are below the line because your

costs are greater than the amount of money you make

you have ³negative´ profit

Need to spend a lot of money on promotion





Growth

A lot is sold - The seller tries to sell as much as possible

Other competitor companies watch, and decide about

joining in with a competitor product

³success breeds imitation´ (Text)

Growth will continue until too many competitors in the

market - and the market is saturated





Growth

At the end of the growth stage, profits start to decline

when competition means you have to spend more money

on promotion to keep sales going.

Spending money on promotion cuts into your profit





Maturity

Many competitors have joined - the market is saturated

The only way to sell is to begin to lower the price - and

profits decrease

It is difficult to tell the different between products since most

have the same F.A.B. - Features, Advantages & Benefits

Competition can get ³Nasty´ and commercials are intense





Maturity

³Persuasive Promotion´ becomes more important during

this stage

That is to say, you have commercials almost begging the

customer to still buy your product because you still make it just as good.





Decline

Newer products are now more attractive - even a low low

price does not make consumers want to buy.

Profit margin declines - and so the only way to make

money is to sell a high volume





Decline

To increase volume you try to

1. Increase the number of customers - get new customers

2. Increase the amount each customer uses



Fashions - currently popular products

that tend to follow recurring life cycleseg. Wide lapels, 3 button suits, high

heels vs. wedge heel

³the currently acceptable style´

Fashions & Fads



Fads - Fashions with abbreviated life

cycles - only popular with certain groups - music

- fast food

- children¶s toys

Fashions & Fads



Fashions & Fads



1. Increase frequency of use

by present customers

2. Add new users

3. Find new uses

4. Change product quality or packaging

Extending the Product Life Cycle

Market

Modification

ProductModification

Purpose: to sell more product and cover original investment



Extending the product Cycle

To prevent the product going into decline

you modify the market

MARKET MODIFICATION

you look for new consumers by changing

the product so it has new users - and then

new customers (Baking soda, vinegar, Q-

tips, Avon Skin So Soft, vaseline




MARKET MODIFICATION

Windex for cleaning jewelry

Javex bleach for toilets

Lemons for hair colouring

beer for hair

Bounce for in the garbage, gym bag etc.




PRODUCT MODIFICATION

CD players

chip flavours - many kinds

flavoured tongue depressors

couples seats at movie theatre

digital sound at theatres



Overlap of Life Cycle for Products A and B

WINDOWS 95

1991 1995 1996 1997

WINDOWS 3.1



Most people have a problems thinking this

theory is relevant because they apply it

to specific product brands - it should beapplied only to a general product

category



Length of Cycle Stages

Products move through the cycle at different

speeds

sometimes introduction is very long, or veryshort, depending on how easy it is for the

public to understand the F.A.B.

Not all products follow the same pattern



Life Cycle Length

Some products move very fast because they

are new and have no competition so the

intro stage is short, and they go direct togrowth stage.



Life Cycle Length

Because of

technology and

globalization

the introduction stage is getting very short

some cycles more quickly to maturity, then

have many product modifications so thedecline stage drags on and on



Speed of the PLC

Since the Intro Stage is getting shorter, and

sometimes the Growth Stage doesn¶t last

too long (because competitors move in)

companies must continually come up withnew products

You can tell when they are in the growth

stage because this is when they introduce

new model variations, and someimprovements to the product



Product Life Cycle Considerations in Marketing

Strategy

Understand that profits have a predictable

pattern

in the early stages, focus is on productinformation

in the later stages, focus is on brand

promotion

use market segmentation in maturity stage tomaintain strong core customer basis



Product Life-Cycle Strategies

The Product Life Cycle (PLC) has Five Stages

Product Development, Introduction, Growth, Maturity,

Decline

Not all products follow this cycle:

Fads

Styles

Fashions




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 development

Introduction

Growth

Maturity

Decline

Begins when the

company develops a

new-product idea

Sales are zero

Investment costs are high Profits are negative

PLC StagesPLC Stages




Product development

Introduction

Growth

Maturity

Decline

Low sales

High cost per customer

acquired

Negative profits

Innovators aretargeted

Little competition




Marketing Strategies: Introduction

Stage

Product ² Offer a basic product

Price ² Use cost-plus basis to set

Distribution ² Build selective distribution

Advertising ² Build awareness among early adopters

and dealers/resellers

Sales Promotion ² Heavy expenditures to create trial




Product development

Introduction

Growth

Maturity

Decline

Rapidly rising sales

Average cost per

customer

Rising profits

Early adopters aretargeted

Growing competition




Marketing Strategies:

Growth Stage

Product ² Offer product extensions, service, warranty

Price ² Penetration pricing

Distribution ² Build intensive distribution

Advertising ² Build awareness and interest in the mass market

Sales Promotion ² Reduce expenditures to takeadvantage of consumer demand




Product development

Introduction

Growth

Maturity

Decline

Sales peak

Low cost per customer

High profits

Middle majority are

targeted

Competition begins to

decline




Marketing Strategies:

Maturity Stage

Product ² Diversify brand and models

Price ² Set to match or beat competition

Distribution ² Build more intensive distribution

Advertising ² Stress brand differences and benefits Sales Promotion ² Increase to encourage brand

switching




Product development

Introduction

Growth

Maturity

Decline

Declining sales

Low cost per customer

Declining profits

Laggards are targeted

Declining competition




Marketing Strategies: Decline Stage

Product ² Phase out weak items

Price ² Cut price

Distribution ² Use selective distribution: phase out

unprofitable outlets Advertising ² Reduce to level needed to retain hard-

core loyalists

Sales Promotion ² Reduce to minimal level

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