plc strategy

Strategy at PLCStrategy at PLCStrategy at PLCStrategy at PLC

PRESENTED BY:- PRESENTED BY:-

AJAY MISHRAAJAY MISHRA

Strategy for the different stages of life cycle

There are four stages in the life cycle of any product

Introduction:- A period of slow sales growth as the product is introduced in the market. profit are nonexistent because of heavy expenses of product introduction.

Growth:- A period of rapid market acceptance & substantial profit improvement.

Maturity:- A slowdown in sales growth because product has achieved acceptance by most potential buyers. Profit stabilize or decline because of increased competition.

Decline:- sales show a downward drift and profit erode.

Typical Life Cycle of a Product Category

The product life cycle

The PLC as an effective marketing tool

• The PLC can be applied to product classes as well as styles, fashions and fads.

• The PLC will reflect these aspects in the length and type of PLC as illustrated:

Product Life Cycle Applications

• Product class has the longest life cycle (e.g., gas-powered cars)

• Product form tends to have the standard PLC shape (e.g., dial telephone)

• Brand can change quickly because of changing competitive attacks and responses (e.g., Tide, Cheer)

• Style is a basic and distinctive mode of expression (e.g., formal clothing, Danish modern furniture)

• Fashion is a popular style in a given field (e.g., business casual)

• Fad is a fashion that enters quickly, is adopted quickly, and declines fast (e.g., pet rocks)

Figure 14.3 Marketers need to understand and predict style, fashion and fad

The PLC as an illustrator

Product Life Cycle Variations

Stage in product life cycleStage character

introduction

growth shakeout mature decline

Market growth rate

Moderate High Leveling off

Insignificant

Negative

Technical changes in product design

High Moderate Limited Limited Limited

segments Few Few to many

Few to many

Few to many

Few

competitors

Few Many Decreasing

Limited Few

profitability

Negative high low High for market share leaders

Few

Firms normative responses

Stage characteristic

introduction

growth shakeout mature decline

Strategic marketing objective

Stimulate primary demand

Build share

Build share

Hold share harvest

product Quality Continue quality improvement

rationalize Concentrate on features

No change

Product line

Narrow Broad rationalize Hold length of line

Reduce length of line

price Skimming or penetration

Reduce Reduce Hold or reduce selectively

Reduce

channels Selective Intensive Intensive intensive Selective

communications

high High High High to decline

reduce

Introduction Stage of PLC Sales ; low Costs: high cost per customer Profits: negative Marketing Objective: create product

awareness and trial Product: offer a basic product Price: use cost-plus formula Distribution: build selective

distribution Promotion: heavy to entice product

trial

Strategy at introduction stage

there are 3 key objective for a product at introduction stage

1) Creating fast new product awareness. 2) Induce product trials 3) Ensure distribution in all retail outlets. Based on the level of promotional

expenditure employed and price structure, two strategies have emerged and these strategies are-

a) Skimming strategy 1- Rapid skimming 2- Slow skimming

b) Penetration strategy 1- Rapid penetration 2- Slow penetration

Skimming strategy It is used when you have unique product A product hardly marketed by anybody. At this time, you also charge a premium

price for product. e.g.:-Mobile phone, digital camera. This product is generally targeted to a

limited number of customers, who can afford to that product, at that premium price.

Rapid skimming when we expect that our new product

may be duplicated very fast, we use rapid skimming.

So we use heavy level of advertising & promotion in rapid skimming, because before the competitor come in, you have to take the product in the hand of the customer.

Slow skimming Is, when you don’t expect your innovation to be

duplicated. you have enough time to create an awareness

& you give low advertising expenditure budget for your product.

e.g. when pocket calculators were first introduced in the U.S., the price was 100$ (approx) .American expected that the Japanese companies to duplicate this and manufactured other version which could be sold at a competitive price

Penetration strategy It is applicable to product with low price, so

that the product is within the reach of everyone.

When we expect the product to be duplicated by the competitor, and that to very fast, we use “ Rapid penetration” , mostly by heavy advertising and promotion.

But when you don’t expect an attack, you go for slow penetration.

Example :- Rapid penetration

Ball point pen, a pen introduced in the U.S.

The price of the product was lower than the pencil. They used heavy advertising because the product was with a low technology. Hence rapid penetration.

Example:- Slow penetration

Gillette disposable razor Gillette was with a low price, the

price was equivalent to blade. Was user friendly and was unique. It was also overlooked by

competitors.Hence slow penetration

Growth Stage of PLC Sales: rapidly rising Costs: average cost per customer Profits: rising Marketing Objective: maximize market

share Product: offer extension, service,

warranty Price: penetration strategy Distribution: build intensive distribution Promotion: reduce to take advantage of

demand

Strategy at growth stage

In growth stage, the sales of the new product starts showing steep rising trend.

Attracted by this rising trend in sales, sometime new competitors enter the market.

As a result the market expand and along with it comes new product features and generally an increase in the no. of distribution outlets.

Overall , the price tends to remain steady.

Strategy at growth stage

Profit picks up because of good demand and good revenue from sales.

Also,inspite of high promotional cost, the percentage of promotional cost to sales is lower, because of high volume and consequently low manufacturing cost.

The strategy for a product on growth stage is referred to as a “Market expansion strategy”. Which are the following types:-

Quality improvement strategy

This strategy covers quality improvement , in addition to adding new features and with new mode.

This is generally done by the leader for their products.

Market distribution & extension strategy

Under this strategy, the product marketing is extended to newer segments.

New distribution channels are opened Distribution is extended to more

market and more outlets, to take care of the demand created by the new segments.

Price review or price reduction strategy

this strategy is used via bringing smaller pack (size) to attract more buyers.

e.g. HLL uses small sachet for shampoo.

Price are reduced and better value is offered.

Product benefits based advertising

communication strategy In this advertising shifts from

product –awareness to product-preference.

Maturity Stage of PLC Sales: peak Costs: low cost per customer Profits: high Marketing Objective: maximize profits

while defending market share Product: diversify brand and models Price: match or best competitors Distribution: build more intensive

distribution Promotion: Increase to encourage brand

switching

Strategy at maturity stage

The best marketing or competitive strategy for product on maturity stage is “ Defensive strategy”

What is defensive strategy ? It is taking all the steps and filling all

the gaps so that the entry of the competitor is stopped.

The sub-strategy available for a defensive strategy are:-

Maturity Stage of the PLC Modifying the Market: Increase the

consumption of the current product. How?

Look for new users and market segments

Reposition the brand to appeal to larger or faster-growing segment

Look for ways to increase usage among present customers

Maturity Stage of the PLC Modifying the Product: Changing characteristics such

as quality, features, or style to attract new users and to inspire more usage.

How? Improve durability, reliability, speed, taste Improve styling and attractiveness Add new features Expand usefulness, safety, convenience Advantage for improving the features are 1)Image building 2)Fast adoption at a low cost 3)Gaining performance of a selected market segment 4) Sales representative & retailer’s enthusiasm

Maturity Stage of the PLC Modifying the Marketing Mix: Improving

sales by changing one or more marketing mix elements.

How? Cut prices Launch a better ad campaign Move into larger market channels Offer new or improved services to

buyers

Decline Stage of PLC Sales: declining Costs: low cost per customer Profits: declining Marketing Objective: reduce

expenditures and milk the brand Product: phase out weak items Price: cut price Distribution: selective--phase out

unprofitable outlets Promotion: reduce to minimal level

Strategy at decline stage

The main task under this strategy is to effectively handle aging product

some of the strategies found here are:- a) Product trimming strategy:- Withdrawing products, which are

a drain on companies resources ( removal of certain outdated product )

Strategy at decline stage

b) Concentration strategy :- Concentrating only on selected

market/ product. c) Product revitalization strategy:- Adding some new feature to

the product.