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