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Marketing Strategy and the Product Life



Why a product life cycle?

A company’s positioning and differentiation strategy must change

as the product, market, and competitors change over the

product life cycle(PLC)

When we say that a product has a life cycle we assert four things:

i. Products have a limited life.

ii. Products sales pass through distinct stages, each posing

different challenges, opportunities and problems to the seller.

iii. Profits rise and fall at different stages of the product lifecycle.

iv. Products require different marketing, financial,

manufacturing, purchasing, and human resource strategies in

each life – cycle stages.



Product Life Cycle

product life cycle is the course of a product’s

sales and profits over time.

product life cycle(PLC) deals with the life of a

product in the market with respect to business

or commercial costs and sales measures.

The five stages of each product lifecycle are

product development, introduction, growth,

maturity and decline.



Product Life Cycle

Boston Consulting Group matrix

Brands or products are classified according to

whether each has a strong or weak market share

and slow or growing market

Dog: low share, low growth

Star: high share, high growth

Cash cow: high share, low growth

Question mark: low share, high growth

TimeProductDevelop-ment

Introduction

Profits

Sales

Growth Maturity Decline

Sales andProfits

Sales and Profits Over the Product’s Lifetime



Introduction Stage of the PLC

Sales

Costs

Profits

Marketing Objectives

Product

Price

Low

High cost per customer

Negative

Create product awareness and trial

Offer a basic product

Use cost-plus formula

Distribution Build selective distribution

Promotion Heavy to entice product trial

Summary of Characteristics, Objectives, & Strategies



Sales

Costs

Profits


Product

Price

Rapidly rising

Average cost per customer

Rising

Maximize market share

Offer extension, service, warranty

Penetration strategy

Distribution Build intensive distribution

Promotion Reduce to take advantage of demand


Growth Stage of the PLC



Sales

Costs

Profits


Product

Price

Peak

Low cost per customer

High

Maximize profits while defending market share

Diversify brand and models

Match or best competitors

Distribution Build more intensive distribution

Promotion Increase to encourage brand switching


Maturity Stage of the PLC



Sales

Costs

Profits


Product

Price

Declining

Low cost per customer

Declining

Reduce expenditures and milk the brand

Phase out weak items

Cut price

Distribution Selective: phase out unprofitable outlets

Promotion Reduce to minimum level


Decline Stage of the PLC



Marketing Strategies

Rapid-skimmingstrategy

Rapid-penetration

strategy

Slow-penetration

strategy

Slow-skimmingstrategy

Price

Low

High

PromotionHigh Low



Marketing strategies for Growth stage

During the growth stage, the firm uses several strategies tosustain rapid market growth.

Improves product quality and adds new features andimproved styling.

Adds new models and flanker products(i.e., products of

different sizes, flavors, and so forth that protect the main product).

It enters new market segments

It increases its distribution coverage and enters new

distribution channels. It shifts from product- awareness advertising to product-

preference advertising.

It lowers price to attract the next layer of price – sensitive buyers.



How to Increase Profitability



Dashboard

Indicator of a company’s success

Some measures will confirm advantages overcompetitors

Others can serve as a diagnostic in identifying problems



Discussion Question

What story does the dashboard tell?



Example: Metrics



Goals

Let’s make more money

Let’s delight our customers

Let’s redefine our position

Goals about broader concerns



Let’s Make More Money

State sales objectives in terms of

Currency

Market share

Units Change from last year or quarter

Region

Investments made toward current sales ROI, ROE, ROM (marketing), ROQ (quality)

Growth



Let’s Delight Our Customers

Enhance customer satisfaction

Increase loyalty

Reward influential customers

Spread word of mouth

Offer personalization

Increase customer lifetime values



Let’s Redefine Our Position

Product

Build new product sales

Build product category

Build brand equity Awareness

Positive brand associations

Brand preference

Trial

Repeat

Brand loyalty

Brand love




Promotion

Spend ad dollars more wisely

Determine most appropriate media

Determine most appropriate frequency

Determine most appropriate message, etc.




Channels (Place)

Determine appropriate channels

Determine multichannels

Determine lower cost channel interactions Determine whether to outsource functions to

channel partners, etc.

Price

Determine high price or low price



Goals about Broader Concerns

Goals that go beyond marketing

Human resource, finance, production, etc.

Societal concerns

Charitable or community contributions

Boosting stability of local employment

Demonstrating leadership in environmentally friendly

business practices, etc.



Goals

Goals can be complex, numerous,

interconnected and overwhelming

Focus on most important goals first

Consider the time frame and the financialsupport need to achieve the goals



Basic Strategies

Do nothing

Let the brand sink or swim on its own

Do nothing differently Maintain business as usual

Take action Do something different

Marketers have control over STP and 4Ps

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