PRODUCT LIFE CYCLE

Agenda

New Product Development

Process

Product Life Cycle

Co-creation

Leapfrogging

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Product Life Cycle

Sales and
Profits ($)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Develop-
ment

Losses/
Investments ($)

3
Introduction Stage of the PLC

Sales Low sales

Costs High cost per customer

Profits Negative
Create product awareness
Marketing Objectives and trial
Product Offer a basic product

Price Use cost-plus

Distribution Build selective distribution

Advertising Build product awareness among early

adopters and dealers

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 INTRODUCTION STAGE

In this stage firms need to take as much market as possible in this phase.
They can either use PRICE SKIMMING OR PENETRATIVE PRICING.
Growth is slow & as customers are not aware about the product/concept.
Maximum advertising & promotion helps the target market to know about
the price, product, place & promotion.
It is gaining importance due to faster rate of decline or obsolescence of a
product.

5
Growth Stage of the PLC

Sales Rapidly rising sales

Costs Average cost per customer

Profits Rising profits

Marketing Objectives Maximize market share

Offer product extensions, service,
Product warranty
Price Price to penetrate market

Distribution Build intensive distribution

Advertising Build awareness and interest in the mass

market
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 GROWTH STAGE

It involves large increase in volumes, & an increasing number of competitors.

Sales volume increase rapidly.
Competition rises.
Product design & specifications either gets standardized or customized.
Firms plan advertising to increase brand value or equity.
Prices may go down.
Distribution network gets into place.
Demand shifts from PRODUCT (Toothpaste) to BRAND (Colgate)

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Maturity Stage of the PLC

Sales Peak sales

Costs Low cost per customer

Profits High profits

Marketing Objectives Maximize profit while defending

market share
Product Diversify brand and models

Price Price to match or best competitors

Distribution Build more intensive distribution

Advertising Stress brand differences and benefits

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 MATURITY STAGE

In this stage, demand & growth stops & reaches a stagnant level.
There is constant sales volume year on year.
Product differentiation vanishes as competition also makes “ME TOO” product.

SUSTAINABLE COMPETITIVE ADVANTAGE (SCA)

It can be achieved by differentiating one or more of the following :
Service
Distribution
Advertising of intangible benefits like USP’s.
Pricing has to be competitive
Buyers become knowledgeable
Relatively few new buyers.

Firms need to manage sales or indulge in product differentiation. 9

Decline Stage of the PLC

Sales Declining sales

Costs Low cost per customer

Profits Declining profits

Marketing Objectives Reduce expenditure and milk the brand

Product Phase out weak items

Price Cut price

Go selective: phase out unprofitable
Distribution outlets
Advertising Reduce to level needed to retain
hard-core loyal customers
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 DECLINE STAGE

When the product declines, marketing support may be withdrawn completely.

And sales will entirely be the result of the product's residual reputation amongst a small
market sector.

Ex: Elderly people, for example, may go on buying brands that they started using forty or
even fifty years earlier.

By this stage, the most important decision that needs to be made is when to take the
product off the market completely.

It is essential that the product is not allowed to start costing its producer money, and this
can easily happen if production costs increase as volumes drop.

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 DECLINE STAGE

Decrease in sales volume

Cheaper substitutes & change in consumer taste accounts for decline stage
Over capacity in production
Severe price competition
Several competitors exit

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Thank you
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