what marketing strategies are appropriate at each stage ?
Post on 12-Aug-2015
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What marketing strategies are appropriate at each stage of the product life cycle?
A company's positioning and differentiation strategy must change as the product, market, and competitors change over the product life cycle
Introductory stage
there will most-likely be heavy promotional and advertising activity designed to raise awareness of the new product, and to seek sales amongst early adopters
Introduction Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Low sales Low sales
High cost per customerHigh cost per customer
NegativeNegative
Create product awareness and trialCreate product awareness and trial
Offer a basic productOffer a basic product
Use cost-plus Use cost-plus
DistributionDistribution Build selective distributionBuild selective distribution
AdvertisingAdvertising Build product awareness among early adopters and dealersBuild product awareness among early adopters and dealers
Strategic focus
• Inform potential customers• Induce product trial• Secure distribution in retail
outlets
Growth stage
• The growth stage is typically characterized by a strong growth in sales and profits. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Rapidly rising sales Rapidly rising sales
Average cost per customerAverage cost per customer
Rising profitsRising profits
Maximize market shareMaximize market share
Offer product extensions, service, warrantyOffer product extensions, service, warranty
Price to penetrate marketPrice to penetrate market
DistributionDistribution Build intensive distributionBuild intensive distribution
AdvertisingAdvertising Build awareness and interest in the mass marketBuild awareness and interest in the mass market
Growth Stage of the PLC
Maturity stage
• During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up.
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Peak salesPeak sales
Low cost per customerLow cost per customer
High profitsHigh profits
Maximize profit while defending market shareMaximize profit while defending market share
Diversify brand and modelsDiversify brand and models
Price to match or best competitorsPrice to match or best competitors
DistributionDistribution Build more intensive distributionBuild more intensive distribution
AdvertisingAdvertising Stress brand differences and benefitsStress brand differences and benefits
Maturity Stage of the PLC
Strategic focus
• Develop and maintain brand loyalty• Competitive or promotional price may be used• Maximize profit while defending market share
Decline stage
• the market for a product starts to shrink, and this is what’s known as the decline stage as the market starts getting saturated or people start shifting to different products.
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Declining salesDeclining sales
Low cost per customerLow cost per customer
Declining profitsDeclining profits
Reduce expenditure and milk the brandReduce expenditure and milk the brand
Phase out weak itemsPhase out weak items
Cut priceCut price
DistributionDistribution Go selective: phase out unprofitable outletsGo selective: phase out unprofitable outlets
AdvertisingAdvertising Reduce to level needed to retain hard-core loyal customers Reduce to level needed to retain hard-core loyal customers
Decline Stage of the PLC
Strategic focus
• Decide upon which product models are to be kept and which ones are to phased out
• Reduce expenditure and milk the brand• Lessen advertising and retain loyal customers
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