PRODUCT LIFE CYCLE AND PRODUCT LIFE CYCLE AND MANAGEMENT OF THE MARKETING MIX MANAGEMENT OF THE MARKETING MIX Product life cycle - The process which a product passes through from birth (development) to death (withdrawal). - The changes that may take place in the health or the fortune of a product during the period it is on the market. - This process is classically 1
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PRODUCT LIFE CYCLE AND PRODUCT LIFE CYCLE AND MANAGEMENT OF THE MARKETING MIXMANAGEMENT OF THE MARKETING MIX
1. Product life cycle- The process which a product passes through from birth (development) to
death (withdrawal).
- The changes that may take place in the health or the fortune of a product during the period it is on the market.
- This process is classically grouped into four stages – introduction, growth, maturity and decline. Before introduction, is a painstaking development process. 1
2. Stages in the Product Life Cycle(a) Introduction Stage A period of entry into the market. Unknown to its prospects so no
benefit appreciation. No image or personality of its own
except if under a known brand. No or low trial and no market share. Negative margins. Foundation laying – unappreciated efforts
since investments yield minimal sales
returns.2
(b) Growth Stage
Rapid market acceptance & sales growth Repeat patronage results in profit growth. Imagery & Goodwill build-up. Investment yields, more than
commensurate returns. Fierce competition from big players. Expansionist & penetration strategies. Risk taking approaches.
3
(c) Maturity Stage
Peak awareness, patronage & sales Market share gain is on competitor
mistakes & expense. Care taking or maintenance rather than
risk taking or developmental efforts. No new reason for consumer patronage. Growth rate slows down & stagnates. Incremental returns on new investments
very low. Longest stage in a product life cycle. Returns run almost on inertial force. Vulnerable to competitive threat. 4
(d) Decline Stage:
Negative growth in sales and profit.
Negative returns on marketing investment.
Very low competitive capacity and possible
market decline.
Increased consumer switch-off
Low returns to the trade & slower off-take.
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3. VARIOUS PATTERNS OF
PRODUCT LIFE CYCLE
Important Factors
- Market Type
- Product Category
- Product
- Marketing Strategy
- Competitive Intensity
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Time
Sal
e V
ol.
IMPORTANT FACTORS AFFECTING PRODUCT LIFE CYCLE
MARKET TYPE
New or Existing
Growing, Mature or Declining
Single or variety of products
Well supplied or shortages
Key Factors for success
(a)
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Product Category
Type of product (cultural, I.T., Specialty appeal)
Homogeneity of products
New or Existing
Key Factors for success
Obsolescence factors & rate
(b)
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Product
Level of differentiation
Image & Goodwill (owned or acquired)
Resources available
Other competitive advantage
(c)
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Marketing Strategy
Level of marketing effort
Mix of marketing effort
Relevance to Key Success Factors
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Competitive Intensity
Number, Resources & Nature
Characteristics of Competing Products
Market Shares
Missions, Cultures and Strategies.
(e)
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4. Introduction Stage – Marketing Implication
Type of product being introducedimitativeimprovementinnovativebrand new
Objective for introductionreplacementcompetitive bolsteringcompetitive peckingmarket expansion or segmentation
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Overhead cost appointment.
Budget generosity & profitability
consideration.
Sales forecast (or projection) realism.
Non-sales performance evaluation criteria.
Complete understanding of the marketing
environment.
Focus on awareness & trail based on
benefits.13
Introduction Stage
4b. Managing the Introduction Timing of development and launch. (loud or silent placement)
Developing the distribution channel
- prospecting for channel members
(number, location, size, credit)
- independent or joint channel members
distribution concept – few mega
or many mini distributors
- fighting for visual market share.
identifying entire points through nicking.
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Communication strategies - benefits - rational & differentiating appeals - media mix and selection