PRODUCT LIFE CYCLE
Meaning
All products have certain length of life during which they pass through certain
identifiable stages.
The
PLC is a conceptual representation of product ageing process.
Like
your life is divided into stages same as life of a product is also
divided.
Product
start with introduction in the market for the purpose of sale.
The
demand of that product is gradually increased in the market & it reach to
its maximum, from where it start decline.
It
is effective lifespan of a product.
“The PLC is an attempt to recognize the distinct stages in the sales history of
the product.” •
“The Product life cycle concept is the explanation of the product from its
birth to death as a product exists in different stages & in different
competitive environments”
Stages of Product life cycle
Introduction
Stage
It
is the 1st stage, wherein the product is launched in the market with full scale
production & marketing programme.
The
product is a new one. It means “ a product that opens up an entirely new
market, replaces an existing product or significantly broadens the market for
an existing product.”
In
this stage sales grow at a very lower rate because it is not an effective
demand.
characteristics
Low
& slow sales.
High
product price.
Heavy
promotional expenses.
Lack
of knowledge.
Low
profits.
Narrow
product lines.
Growth
stage
Once
the market has accepted the product, sales begin to rise & product enter
its 2nd stage.
The
product achieves considerable & widespread approval in the market.
The
sales & profits increases at an accelerated rate.
In
this effective distribution, advertising & sales promotion are considered
as the key factors.
characteristics
Rapid
increase in sales.
Product
improvements.
Increase
in competition.
Increase
in profits.
Reduction
in price.
Strengthening
the distribution channel.
Maturity
stage
Market
becomes saturated because the household demand is satisfied & distribution
channels are full.
The
product has to face keen competition which brings pressure on prices.
Though
the sales of the product rises but at a lower rate.
Profit
margin however decline due to keen competition.
characteristics
Sales
increases at decreasing rate.
Normal
promotional expenses.
Uniform
& lower prices.
Product
modifications.
Dealer’s
support.
Profit
margin decreases
Decline stage
This
is the finial stage, sooner or later actual sales begin to fall under the
impact of new product competition & changing consumer behavior.
The
sales & profits fall down sharply & the promotional expenditure has to
be cut down drastically.
characteristics
Rapid
decrease in sales.
Further
decrease in prices
No
promotional expenses.
Suspension
of production work.
Product
life cycle for stylish products
A
style is the manner in which a product is presented and certain styles come and
go.
Acc
to Kotler: “ A style is a basic & distinctive mode of expression.
E.g.,
Furniture, automobile, clothing, shoes.
The
current style for mobile phone is touch screen and this style will last until a
new technology style appears.
So
the shape of a style life cycle is like a wave, as one style fades out, another
appears.
Product
life cycle for fashion products
A
fashion refer to a currently accepted style in a specific field.
It
is a current trend which can have a long or short life cycle.
Fashion
tends to grow slowly, remain popular for a while, then decline slowly
The
demand for the product increases at a faster rate, reaches to its top &
with the change in fashion the product life enter to decline stage.
E.g.,
readymade garments, purses, bangles, shoes etc
Product
life cycle for fad products
Fads
are fashions that enter quickly with great zeal, peak early & decline very
quickly.
A
fad is a product that is around for a short period.
E.g.,
garments, caps, hair style, music albums, films & other fashion products.
Features
of Product life cycle
Every
product has the life cycle as every human being has.
Every
product cycle start from an introduction of the product in the market & it
is ceased after passing through the market growth & market stages.
It
denotes that the product passes from different stages at different speed in
course of completing the whole cycle.
The
profit of business firm grow rapidly in the stage of growth & starts
declining due to competitive conditions at the stage of maturity.
However
the sales volume go on increasing.
No
two products have identical life cycle.
The
duration of each stage is different for different products.
It
depends upon factors(nature of products, technological advancement, competition
pressure, etc)
It
is not necessary that all products go through all stages, some fail at the
initial stage , other may reach maturity stage after a long time.
It
provide a useful framework for developing effective marketing strategies in
different stages of the product life cycle.
Factors
affecting The product life cycle
Rate
of technological change. •
Rate
of market acceptance. •
Competitor’s
entry. •
Economic
& managerial forces •
Risk
bearing capacity •
Government
policy
Extension
of product life cycle •
Product
modification. •
Entry
in the new market. •
Promoting
frequent use. •
Developing
different usage. •
Finding
new uses. •
Use
of modern advertising & sales promotion techniques.
Importance
of product life cycle •
Helpful
in sales forecasting. •
Helpful
as a predictive tool. •
Helpful
as a planning tool. •
Helpful
as a control tool. •
Helpful
in framing marketing programme. •
Helpful
in price determination. •
Development
of new product. •
Comparison
of different products.
Marketing Strategies during PLC Every marketeer tries that his product should
stay in the market for the longest period, thus he has to take up various
strategies at the different stages of product life cycle.
Introduction
stage •
Growth
stage •
Maturity
stage •
Declining
stage
Introduction
stage •
The
introduction stage start with the launching of a new product by the marketeer.
The
product is new one, so sales level is low & profits are negative. •
It
is very crucial stage for the marketeer because the success or failure of the
product is very much determine in this stage. •
Strategies:-
–
Make
proper advertising before the product is launched in the market.
Shorten
the period of introduction as far as possible.
Heavy
advertising & promotional expenses( attractive gifts).
Selective
distribution & attractive discount to dealers.
–
If product is technical then adopt skimming pricing policy & if product is
simple then adopt penetration pricing policy.
Growth
stage •
If
the new product satisfy the market, it will enter a growth stage in which sales
increases at a faster rate.
The
high profits attract the competitors to enter the market with improved
substitute products.
Price
remains the same or slightly decreased. •
Strategies:-
–
Improve
the product quality. –
Add
new product features & improve the product style. –
Enter
into new market areas
–
Reduce the price to attract more number of buyers. –
Increase
in promotional activities. –
Strengthen
the distribution channels by increasing the number of retailers. –
New
version/models, in different sizes & price range are introduced to cater
the requirements of different types of buyers. –
Create
brand image of the product through promotional activities. –
Emphasis
on customer satisfaction.
Maturity
Stage •
It
has a longer duration than the other stages.
In
this sales increase at a very low rate.
The
product has to face keen competition.
Competitors
lower down the price increase their advertising, sales promotion. It increases
the profit. •
Strategies:-
–
Improve
the quality of the product & introduce some new models.
–
Give proper attention to increase the usage among the current customers &
also pursue some new uses of the product.
Try
to convert non-users into users of the product.
–
Introduce new packaging & wrapper change policy.
–
Lowering the price to attract more consumer.
–
Middlemen’s margin is increased, to create the interest.
–
Give proper emphasis on advertising & promotional programmes.
–
Change in the style & design of the product.
A
firm can improve his sales by changing one or more elements of marketing
mix.
It
can reduce the price to attract new users & competitor’s.
Declining
stage
In
this final stage, sales begin to fall & the product is gradually replaced
by new innovation.
This
is because of technical advancement, change in consumer preference, increased
competition.
For
marketeer this stage is very crucial.
Strategies:-
–
Improve
the product in a functional sense. –
Review
the marketing & production programs. –
Emphasis
on cost control techniques to generate profits means cut all costs to minimum
level.
–
Economy packs or models may be introduced to revive the market.
Adopt
selective promotion of the product to reduce distribution costs.
–
Packaging may be made more attractive & reusable packages.
–
R&D efforts are increased to innovate the new product.
–
Sales incentive schemes are introduced to get dealer’s support.
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