Tourism Market

Product Life Cycle and its

strategies
submitted to, submitted by,
Amita Sarah Varghese SHAHINA M SAKKEER
MTTM
Product life cycle
• Kotler, (2000) “The product life cycle is an attempt to recognize
distinct stages in the sales history of the product”.
• Life cycle means journey of something from its start to its end.
• The product life cycle is broken into four stages: introduction, growth,
maturity, and decline.
• This concept is used by management and by marketing professionals
as a factor in deciding when it is appropriate to increase advertising,
reduce prices, expand to new markets, or redesign packaging.
STAGES OF PLC
1.Development
• This stage comprises of certain external and internal factors coming
together.
• external-- it’s the matter of opportunities and threat.
• internal factors-- comprises of resources and skill.
• This is the stage where new ideas are generated, valued and accepted
or rejected based upon their utility for the market.
• This stage also comprises of product development as per the
accepted ideas which brings into the financial considerations too.
2.Pre launch
• Before the products launch in the market ,a detailed marketing
strategies, understanding of the target market, promotional strategies
has to be chalked out.
• A testing phase will help the shortcomings and improvements
required in real market situation.
• Also the basic clearances have to be satisfied from the government
officials.
• An introduction of the new product to the tourism experts, media is
also desired.
3.Introduction
• This is the stage of introduction of product to the market.
• There is a sign of uncertainty of demand.
• The demand of product earlier was an estimated demand and now it
would be tested against the actual demand in the market.
• The growth is slow as the customers are still unaware about the product
• The sales are low and no profits or may be to some extent losses incurred.
• This stage is of operational strategies or the implementation phase.
• management has to be quick to solve and adapt to the new
developments.
Characteristics of introduction stage
1.To increase the awareness of the customers huge selling and
promotional costs are required.
2. Generally high price is charged to recover high development,
production, and marketing costs.
3.Technical and production problems arise at this stage and marketers
have to tackle them.
4.Sale is increasing but at a slower rate and this stage has a low Sale.
5.The profits are negligible or even losses are also incurred.
6.Competition at this stage is negligible.
4.Growth
• Growth is the phase in the life cycle of a product when it starts getting
acceptance in the market.
• This leads to higher sales and substantial profits.
• It gives way to repeat visits by the customer and customer loyalty.
• The pricing strategy leads for higher prices and profit maximization.
• This is the stage when the competition also starts coming in by the way of
similar products being introduced.
• The product has to be consolidated in the market by giving better
incentives and building better repo with travel agents, online booking sites
etc.
Characteristics of growth stage
1.Customer starts accepting the product and hence a rapid increase in
sales is observed.
2.At this stage the company is in a position to earn maximum profits.
3.New organizations start entering the markets as profits are very
attractive. i.e. competition starts increasing.
4.This is a customer’s acquisition stage and hence price can be reduced to
attract more customers.
5.Emphasis is on distribution network which is widened and improved as
it helps in reaching to maximum number of customers.
6.The product is fine tuned and necessary primary changes are made in
product to remove defects.
7.Company enters the new segments and new channels are selected.
5.Maturity
• the product sales will start stabilizing.
• The increasing numbers of sales will see slowdown.
• This would be a result of increased competition, market saturation,
product reaching to almost all the potential customers.
• Increased pressure on prices and profit margins starts showing up.
This leads to decline in profits.
This stage may be further divided into three
phases:

i.Growth Maturity: Sales-growth rate starts to decline.

ii.Stable Maturity: Sales remain stable (i.e., saturation stage).
iii.Decline Maturity: Sales now start to decline.
Characteristics of maturity stage

• 1.Sales increases but at a decreasing rate.

• 2.A decline is shown in the profits.
• 3.Fringe competitors start to leave the market.
• 4.Emphasis is on retaining customer.
• 5.Modifications of product, market, and marketing mix are
undertaken.
6.Decline
• This stage is the time when product starts experiencing drastic sales
decline.
• Profits plunge and competition offers better and enhanced products.
• Customers start drifting away.
• At this stage either the product would be phased out completely or a
new product rebirth may take place.
Characteristics of decline stage

• 1.There is a rapid fall in Sales.

• 2.Sales and profits both fall but profits fall more quickly than sales.
• 3.Company prefers to focus and shift resources on new products.
• 4.Sellers start withdrawing from the market.
• 5.Promotional expenses are decreased to achieve some profit.
• 6.Product modification is adopted.
The ideal shape of PLC is shown in Figure above is an “S” shaped curve. This is an ideal case and is hardly
possible.
 Product life cycle-
Marketing Strategies
To summarize the PLC changes following points should be
considered:-

• i. Product has a certain life period.

• ii. Product sales and profit passes through different phases.
• iii. Sales and profit will increase or decrease as per the stage.
• iv. The marketing, finance, resources, manufacturing etc. strategies
need to be changed as per the life cycle stages.
 Strategies to be applied at various stages of
the PLC:-
• 1. Introduction Strategy
• 2. Growth Strategy
• 3. Maturity Strategy
• 4. Decline strategy
1. Introduction Strategy

• The product is new hence less completion but less consumer

awareness as well.
• The strategy to be applied at this stage is extensive promotions,
pricing strategy depending upon the target market (can be
penetration pricing or skimming pricing), distribution strategy of
pushing the product through various channels.
During the introduction stage, you should concentrate on building a
base for your product, and focus on the following marketing factors:

• pricing : skimming price strategy , penetration pricing strategy (next slide)

• distribution
• promotion
Marketing strategies used in introduction
stages include:

• rapid skimming - launching the product at a high price and high

promotional level
• slow skimming - launching the product at a high price and low
promotional level
• rapid penetration - launching the product at a low price with
significant promotion
• slow penetration - launching the product at a low price and minimal
promotion
During the introduction stage, you should aim to:

 establish a clear brand identity

 connect with the right partners to promote your product
 set up consumer tests, or provide samples or trials to key target
markets
 price the product or service as high as you believe you can sell it, and
to reflect the quality level you are providing
2. Growth Strategy

• The competition increases at this stage as similar products emerge in

the market.
• The product is recognized and accepted by the customers.
• This stage demands for the aggressive strategies.
• Joint ventures, take over’s and forming alliances can be few strategies
which suit to this stage. Brand build up also starts at this stage.
Marketing strategies used in the growth stage
mainly aim to increase profits. Some of the
common strategies to try are:
• improving product quality
• adding new product features or support services to grow your market share
• enter new markets segments
• keep pricing as high as is reasonable to keep demand and profits high
• increase distribution channels to cope with growing demand
• shifting marketing messages from product awareness to product preference
• skimming product prices if your profits are too low.
• aiming promotion at a wider audience
3. Maturity Strategy

• This is stage of reaching the peak and stabilizing in terms of demand

in the market.
• When your sales peak, your product will enter the maturity stage.
• The strategies used are Differentiation, Brand build up, Pricing
competition.
• This stage is of intense competition and maintaining the market share.
• the market has often reached saturation
At this stage, you will probably notice that:
• you may need to enhance product features to make it more
appealing than competitors
• you may need to lower your pricing due to increased competition
• distribution is becoming more intensive and you may need to offer
incentives
• you may need to focus your promotion on the difference between
existing products
Common strategies:
• market modification - this includes entering new market segments,
redefining target markets, winning over competitor’s customers,
converting non-users .
• product modification - for example, adjusting or improving your
product’s features, quality, pricing and differentiating it from other
products in the marking.
4. Decline strategy
• This stage the downturn of the product starts.
• The sales decline and the profits shrink.
• This stage asks for possible ways to leave the market or wind up the
product.
• This can be due to factors such as technological advances, trends,
innovation or changing consumer tastes.
If you want to save money, you can:

• reduce your promotional expenditure on the products

• reduce the number of distribution outlets that sell them
• implement price cuts to get the customers to buy the product
• find another use for the product
• maintain the product and wait for competitors to withdraw from the
market first
• harvest the product or service before discontinuing it
At this stage, you should consider:

• maintaining the product

• reducing your costs and finding another use for the product
• reducing marketing support, 'harvesting' the product, coasting along
until profits dry up and then discontinuing the product
• discontinuing the product when your profit disappears, or when you
unveil a successor product.
Another option is for your business to discontinue the product from
your offering. You may choose to:

• sell the brand to another business

• significantly reduce the price to get rid of all the inventory

'extension strategy'
strategies that prolongs the life of your current product or service. Such a
strategy can temporarily delay the decline and give you enough time to
improve or amend your existing product or develop a new one.