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Product Strategies. Managing Life Cycle Strategies. Product Life Cycles Marketing Strategies throughout the PLC Market Evolution Stages. The Product Life Cycle. Demand/Technology Life Cycle

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Managing life cycle strategies l.jpg
Managing Life Cycle Strategies

  • Product Life Cycles

  • Marketing Strategies throughout the PLC

  • Market Evolution Stages


The product life cycle l.jpg
The Product Life Cycle

  • Demand/Technology Life Cycle

    • describes changing need levels as well as the level of technology available to satisfy these changing needs

  • Product Life Cycle presumes:

    • products have limited life

    • products pass through distinct phases

    • profits rise and fall at different stages

    • different strategies are required at dif. stages


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The Product Life Cycle

  • Stages

    • Introduction

      • product is introduced

      • slow sales growth

      • profits non-existent

      • heavy expenses

    • Growth

      • rapid market acceptance

      • substantial profit improvement


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The Product Life Cycle

  • Stages (cont)

    • Maturity

      • slowdown in sales growth

      • profit stabilization/decline

      • expenses rise to defend against competition

    • Decline

      • sales show downward drift

      • profits erode


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Figure 11.8

Stages in the Product Life Cycle

Introduction

Growth

Maturity

Decline

Food

Processors

Cassette

Tapes

Cellular

Phones

Network

Computers

Sales and Profits

Industry

Sales

Industry

Profits

Time


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The Product Life Cycle

  • PLC can be applied to:

    • product categories

      • have longest life cycles;indefinite maturity stage

      • examples: cigars, newspapers, cell phones, bottled water

    • product forms

      • example: manual, electric, electronic typewriter

    • products

    • branded products


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The Product Life Cycle

  • PLC Shapes

    • Growth-slump-maturity pattern

    • Cycle-recycle pattern

    • Scalloped pattern

  • Style-Fashion-Fad Life Cycles

    • Style - distinctive mode of expression

    • Fashion - currently accepted or popular style

    • Fad - quick-peak, quick-decline fashions


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The Product Life Cycle

  • Fashion Stages

    • distinctiveness

    • emulation

    • mass-fashion

    • decline


The introduction stage l.jpg
The Introduction Stage

  • Slow growth of new products caused by:

    • delays in production capacity expansion

    • technical problems

    • distribution channel delays

    • customer reluctance to change behaviors

    • small number of buyers who can afford product


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The Introduction Stage

  • Negative or low profits caused by:

    • low sales

    • heavy distribution/promotion expense

  • High levels of promotion required to:

    • inform potential customers about product

    • induce trial

    • secure the readiest to buy


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Introduction Stage Strategies

  • Rapid-skimming

    • high price

    • high promotion

  • Slow-skimming

    • high price

    • low promotion


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Introduction Stage Strategies

  • Rapid-penetration

    • low price

    • high promotion

  • Slow-penetration

    • low price

    • low promotion


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Market Pioneers

  • Research shows “first to market” gain greatest advantages, both consumer and producer-oriented

  • Over 40% market share = 38.5% ROI

  • At 11% market share = 10 % ROI


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Market Pioneers

  • Source of Pioneer’s Advantage

    • consumers may prefer pioneering brands

    • pioneer’s brand establishes attributes of product class

    • economies of scale

    • technological leadership

    • ownership of scarce assets

    • barriers to entry


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Stages of Competitive Cycle for the Pioneer

  • Pioneer understands competition will eventually enter and cause prices and market share to fall

  • Pioneer must anticipate stages of competitive cycle

    • sole supplier

    • competitive penetration

    • share stability

    • commodity competition withdrawal


Growth stage l.jpg
Growth Stage

  • Characteristics

    • new competitors enter market

    • competitors introduce new product features

    • competitors expand distribution chain

    • prices remain constant or fall slightly (depends on demand)

    • sales rise much faster than promotional expenditures

    • profits increase (mfg/promo. costs spread)

    • rate of grown eventually decelerates


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Marketing Strategies in the Growth Stage

  • improve product quality

  • add new product features

  • add new models and “flanker” products

    • different sizes, flavors to protect main product

  • enter new market segments

  • increase distribution channels/coverage

  • shift to product-preference advertising

  • lower prices


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Maturity Stage

  • Characteristics

    • growth rate starts to decline; (growth maturity)

    • then declines per capita; (stable maturity)

    • then declines absolutely (decaying maturity)

    • overcapacity occurs

    • leads to intensified competition

    • profits erode

    • industry shakeout occurs /remainder stabilization


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Marketing Strategies in Maturity Stage

  • Market Modification

    • where volume = number of brand users x usage rate per user

    • increase users

      • convert nonusers

      • enter new market segments

      • win competitors’ customers

    • increase uses

      • more frequent use; more usage per occasion

      • new and more varied uses


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Marketing Strategies in Maturity Stage

  • Product Modification

    • quality improvement

    • feature improvement

    • style improvement

  • Marketing Mix Modifications

    • prices distribution advertising

    • sales promotion personal selling

    • services


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Decline Stage

  • Characteristics

    • technological advance

    • shifts in consumer tastes

    • increased domestic and foreign competition

    • some firms withdraw

    • remainder reduce number of products


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Marketing Strategies in Decline Stage

  • Increase investment to dominate

    • “dowager” brands

  • Maintain investment to reduce risk

  • Decrease investment selectively - niching

  • Harvest - milk - investment to produce cash

  • Divest


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Market Evolution

  • Emergence Stage

    • one company enters to satisfy need/want of “latent” market ( product does not exist)

  • Growth Stage

    • new firms enter attractive market

  • Maturity Stage

    • heavy compet.; market fragment./consolidation

  • Decline Stage

    • total need declines; new technology arrives


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Figure 11.10

Overlapping Life Cycles for Two Products

Introduction

Growth

Maturity

Decline

Product A

Industry Sales

Product B

Time


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