Marketing management

Product life cycle

Introduction A product is introduced among consumers, and if consumers perceive it as meeting their needs and want, it experiences a period of growth. Subsequently, it reaches the stage of maturity and when it loses its appeal, its decline starts and eventually is may be taken off the market (demise). The classical product life cycle curves are depicted as “S” shaped and generally divided in four stages: Introduction, growth, maturity, and decline.

Common Product Life Curves

Sales

Sales Sales

Time Time Time (a) Growth-Decline l plateau

(b) Cycle-Recycle Pattern

(c) Innovative Maturity or Scalloped Pattern

Introduction Growth Maturity Decline

(d) Classical Life Cycle Pattern

Time

Sales

Profits

Loss

Common Product Life Curves

Introduction Stage

The introductory stage is viewed as fairly risky and quite expensive because large amounts of money is spent on advertising and other tools of marketing communications to create consumer awareness in sufficiently large numbers, and encourage trial.

3D Televisions: 3D may have been around for a few decades, but

only after considerable investment from broadcasters and

technology companies are 3D TVs available for the home,

providing a good example of a product that is in the Introduction

Stage.

Introduction Stage of the PLC

SalesCostsProfits

Marketing Objectives

ProductPrice

Low sales

High cost per customer

NegativeCreate product awareness

and trialOffer a basic product

Use cost-plus

Distribution Build selective distribution

Advertising Build product awareness among early adopters and

dealers

Growth Stage

The growth stage of life cycle is characterised by a sharp rise

in sales. Only a small percentage of new products introduced

survive to reach the growth stage.

Tablet PCs: There are a growing number of tablet PCs for

consumers to choose from, as this product passes through the

Growth stage of the cycle and more competitors start to come

into a market that really developed after the launch of Apple’s

iPad. Another example is NANO car.

Growth Stage of the PLC

SalesCostsProfits

Marketing Objectives

ProductPrice

Rapidly rising sales

Average cost per customer

Rising profits

Maximize market shareOffer product extensions,

service, warrantyPrice to penetrate market

Distribution Build intensive distributionAdvertising Build awareness and interest

in the mass market

Maturity Stage

Most products after surviving competitive battles, winning

customer confidence and successful through growth phase enter

their maturity stage. The sales plateau, and this flattening of

sales usually lasts for some time because most products in the

category have reached their maturity stage, and there is stability

in terms of demand, technology, and competition.

Laptops: Laptop computers have been around for a number of

years, but more advanced components, as well as diverse

features that appeal to different segments of the market, will help

to sustain this product as it passes through the Maturity stage.

Maturity Stage of the PLC

SalesCostsProfits

Marketing Objectives

ProductPrice

Peak sales

Low cost per customer

High profitsMaximize profit while defending

market shareDiversify brand and models

Price to match or best competitors

Distribution Build more intensive distribution

Advertising Stress brand differences and benefits

Decline Stage

Decline stage sets in when customer preferences change due to the

availability of technologically superior products and consumers’ shift in

values, beliefs, and tastes to products offering more value.

Decline Stage of the PLC

SalesCostsProfits

Marketing Objectives

ProductPrice

Declining sales

Low cost per customer

Declining profitsReduce expenditure and milk

the brandPhase out weak items

Cut price

DistributionGo selective: phase out

unprofitable outlets

Advertising Reduce to level needed to retain

hard-core loyal customers

Implications and Limitations of Product Life Cycle Concept

Product life cycle concept shows a framework to spot the occurrence of opportunities and threats in a product market and the industry. This can help firms to reassess their objectives, strategies, and different elements of marketing programme.

Introduction- HUL

Hindustan Unilever Limited (HUL) is India's

largest FMCG company, touching the lives of

two out of three Indians with over 20 distinct

categories in home & personal care products

and food & beverages.

INTRODUCTION-LUX

1916LUX launched

in USA as Laundry soap

1929LUX

launched in India1925

LUX launched in USA as Toilet soap

1960LUX went

colored

PRODUCT LIFE CYCLE

Introduction (1929- 1950s)Company Objectives Actions

Sales Low

Cost of manufacturing HighProfits Negative

Marketing Objective Create product awareness in major cities

Product strategy Offer a basic productPrice strategy Higher than LifebuoyDistribution Created network in major

citiesAdvertising strategy Awareness among early

adopters.

Growth- (1950s- 1990s)Company Objectives Actions

Sales Rising Sales

Cost of manufacturing Average cost reductionProfits Positively increasing

Marketing Objective Maximise market shareProduct strategy Offer variants

Price strategy To penetrate the marketDistribution Intensive network in the

entire countryAdvertising strategy Awareness an interest in

mass market

Maturity-(1990s to till date )Company Objectives Actions

Sales Peak sales

Cost of manufacturing LowProfits High

Marketing Objective Maximize profit while defending market share

Product strategy Diversify brand Price strategy To match the nearest competitorDistribution More intensive focusing on rural

areaAdvertising strategy Multiple brand ambassadors for

different variants.

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