Product life Cycle Strategies

Product life Cycle Strategies
After launching a new product, management hopes it will enjoy a
long and profitable life. Management, however, is also aware of that each product will
have a life cycle. The product lifecycle (PLC) is the course of a product’s sales and profits over its
lifetime. It involves five distinct stages:
a. The product
development stage
begins when the
company finds and
develops a newproduct
idea. During
product development,
sales are zero and the company’s investment costs mount.
b. The introduction stage is a period of slow sales growth as the product is being
introduced in the market. Profits are nonexistent in this stage because of heavy
expenses of product introduction.
c. The growth stage is a period of rapid market acceptance and increasing profits.
d. The maturity stage is a period of slowdown in sales growth because the product has
achieved acceptance by most potential buyers. Profits level off or decline because of
increased marketing outlays to defend the product against competition.
e. The decline stage is the period when sales fall off and profits drop.
1. Introduction Stage
Because the product-development stage of the PLC was examined at the beginning of the chapter,
the first stage to explore in more detail at this point is the introduction stage. This stage is when
the product is new and first distributed and made available for purchase.
a. In this stage, profits are negative or low because of the low sales and high
distribution expenses.
b. Prices tend to be on the high side because of low output, production problems,
high promotion, and other expenses.
c. There are usually few competitors.
d. The focus is on buyers who are the most ready to buy.
e. The market pioneer must launch its product with a strategy that is consistent
with a long-term focus on the market rather than a quick profit gain. Retaining
market leadership may be difficult, but is desirable.
2. Growth Stage
The growth stage is the product life-cycle stage during which a product’s sales start climbing
quickly.
a. Early adopters will continue buying and later buyers will start following their lead.
b. New competitors may enter the market and introduce new product features.
c. The market will expand.
d. Prices will remain where they are or fall only slightly

e. Companies keep their promotion spending at the same or at a slightly higher
level.
f. Educating the market remains a goal, but the company must also meet the
competition.
g. Profits increase.
h. The firm faces a trade-off between high market share and high current profit.
3. Maturity Stage
The maturity stage is that stage in the product life cycle where sales growth slows or levels off.
Product managers may have to do more than simply defend their products. Most products are in
their maturity stage, and therefore, management has the most experience with this stage.
a. Market modification is an approach in which the company tries to increase the
consumption of the current product. It looks for new users and market segments.
It tries to increase usage among present customers. It may also reposition the
brand to appeal to a larger or faster-growing segment.
b. Product modification is an approach to change product characteristics. This can
be accomplished by quality improvement, feature improvement, or style
improvement.
c. Marketing mix modification is an approach in which the product manager tries to
improve sales by changing one or more marketing mix elements.
4. Decline Stage
The decline stage is the stage in the product life cycle in which a product’s sales decline. This
can occur for several reasons:

a. Technological advances.
b. Shifts in consumer tastes.
c. Increased competition.

Firms must be aware that carrying a weak product past its useful life can be very costly to the
firm in many ways. Companies need to pay more attention to their aging products. Decisions that
need to be made are:

a. The firms may decide to maintain a brand without change in the hope that
competitors will leave the industry.
b. Managers may decide to harvest the product (which means reducing various costs
and hoping that sales hold up).
c. Managers may decide to drop the product from the line (sell it or liquidate it at
salvage value).

C. Price
“The amount of money charged for a product or service, or the sum of the values that
consumers exchange for the benefits of having or using the product or service”.
Price goes by many names in our economy. In the narrowest sense, price is the amount of money
charged for a product or service. This meaning, however, has been broadened. Today, despite the
increased role of non-price factors in the modern marketing process, price remains an important
element in the marketing mix.
Many internal and external factors influence the company’s pricing decision. Internal factors
include the firm’s marketing objectives, marketing mix strategy, costs, and organizational factors.
External factors that influence pricing decisions include the nature of market and demand,
competition, and other environmental factors like the economy, reseller needs, and government
actions. In the end, the consumer decides whether the company has set the right price. The