product life cycle
TRANSCRIPT
Product Life Cycle
PRODUCT LIFE CYLE
• The course of a products sales and profits over its lifetime is called the Product Life Cycle.
• The product life cycle is based upon the biological life cycle
• The PLC concept can be applied to what are known as styles, fashions, and fads.
• The PLC concept can described a product class, a product form, or a brand. The PLC concept applies differently in each case.
• Not all the product follows the product life cycle.
Product Life Cycles and Product Portfolio
• Product Life Cycle – shows the stages that products go through from development to withdrawal from the market
• Product Portfolio – the range of products a company has in development or available for consumers at any one time
• Managing product portfolio is important for cash flow
Product Life Cycles
• Product Life Cycle (PLC):– Each product may have a different life cycle– PLC determines revenue earned– Contributes to strategic marketing planning– May help the firm to identify when
a product needs support, redesign, reinvigorating, withdrawal, etc.
– May help in new product development planning– May help in forecasting and managing cash flow
Product Life Cycles
• The Stages of the Product Life Cycle:– Development– Introduction/Launch– Growth– Maturity– Saturation– Decline– Withdrawal
Product Life Cycles
• The Development Stage:• Initial Ideas – possibly large number• May come from any of the following –
– Market research – identifies gaps in the market– Monitoring competitors– Planned research and development (R&D)– Luck or intuition – stumble across ideas?– Creative thinking – inventions, hunches?– Futures thinking – what will people be using/wanting/needing
5,10,20 years hence?
Product Life Cycles
• Product Development: Stages– New ideas/possible inventions– Market analysis – is it wanted? Can it be produced at a
profit? Who is it likely to be aimed at?
– Product Development and refinement– Test Marketing – possibly local/regional– Analysis of test marketing results and amendment of
product/production process– Preparations for launch – publicity, marketing
campaign
Product Life Cycles
• Introduction/Launch:– Advertising and promotion campaigns– Target campaign at specific audience? – Monitor initial sales– Maximise publicity– High cost/low sales– Length of time – type of product
PRODUCT LIFE CYCLE OF
Doing well and doing good.
To make cleanliness commonplace, to lessen work for women, to foster health and contribute to personal attractiveness, that life may be more enjoyable and rewarding for the people who use our products.
William Hesketh Lever
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INTRODUCTION TO PRODUCT LIFE CYCLE
• The course of a products sales and profits over its lifetime is called the product life cycle.
• PLC shows the stages that products go through from development to withdrawal from the market.
• Product Life Cycle (PLC):– Each product may have a different life
cycle.
– PLC determines revenue earned.
– Contributes to strategic marketing planning
– To identify when a product needs support, redesign, renovating , withdrawal, etc.
PLC OF LUX SOAP• INTRODUCTION TO LUX:
• We all want to be pampered, to look and feel great And that's just what Lux offers you on a daily basis at a price you can afford.
• Lux is the brand of UNILEVER INDIA LTD. It has been winning hearts of INDIAN consumers for 80 years.
• Lux stands for the promise of beauty and glamour as one of India's most trusted personal care brands.
LUX PRODUCTS : Lux had modified their product into:
• Orchid touch Almond delight Energising fruit Aqua sparkle
“GLAMOUR FACTOR”
• Lux launched the world’s first mass-market beauty soap in the US in 1924 & had been launched in India in 1929.
• At that time there was only one competitor of Lux, which was from its own brand “LIFEBUOY”.
• In the initial stages Lux was introduced in the major cities of INDIA like Calcutta, Mumbai etc.
• MARKETING OBJETIVES - was to create the product awareness and to attract the
customers towards the product.
• The Lux MARKETING STRATEGIES in the initial stages :
• Product = They offer only on product in the market. They did not come up with the
differentiated product.
• Price = In the initial stages of the product, they offer the relatively higher price than their competitor (LIFEBUOY). Because, they want to recover their initial cost of making the product.
INTRODUCTION STAGE
• Advertising = In the initial stages, they allocate more advertising budget So that more and
more customers could be attracted towards the product. • In ads they targeted the early adopters, who were readiest to buy the product.• The first ambassador, Leela Chitnis.
Distribution = was selective and only covers the major cities of INDIA to get recognition in those cities.
• Their distribution channel was through: Manufacturer Wholesaler & Retailer
INTRODUCTION STAGE continued…
Introduction Stage of the LUX Introduction Stage of the LUX
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
Product StrategyProduct Strategy
Price StrategyPrice Strategy
Low sales Low sales
High cost per customerHigh cost per customer
NegativeNegative
Create product awareness in major cities in IndiaCreate product awareness in major cities in India
Offer a basic productOffer a basic product
Use cost-plus Use cost-plus
Distribution StrategyDistribution Strategy Build selective distributionBuild selective distribution
Advertising StrategyAdvertising Strategy Build product awareness among early adopters and dealers.
Build product awareness among early adopters and dealers.
Film stars promoting the product Lux
Product Life Cycles
• Growth:– Increased consumer awareness– Sales rise– Revenues increase– Costs - fixed costs/variable costs, profits may
be made– Monitor market – competitors reaction?
• In the growth stage, their sales rapidly started rising. • They have expanded their market to the other cities of INDIA.
• MARKETING OBJECTIVES = The marketing objectives of the Lux were to expand their
market to the other cities of INDIA. • Another objective was to maximize more market share.
• In the growth stage, company had the following MARKETING STRATEGIES :
• Product = In the growth stage, the company had offered the same product in the market.
• Price = In this stage, the company had changed their price to some extent because of
maximizing the market share. ( Slightly cut down the prices )
• Advertising = In the growth stage, they had increased their advertising budget as in the
initial stages because of attracting the new customers or to retain the existing customers.• Sharmila Tagore, Hema Malini, Zeenat Amaan, Juhi Chawla, Madhuri Dixit, Sridevi
GROWTH STAGE
• Distribution = In this stage, company had expanded their market to the other cities of INDIA. Their distribution channel was the same as in the initial stages of the product.
• Promotion = In the growth stage, the company had also used the different proportioning
strategies to attract the new and the existing customers.
GROWTH STAGE CONTNUED….
Growth Stage of the LUXGrowth Stage of the LUX
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
Product StrategyProduct Strategy
Price StrategyPrice Strategy
Rapidly rising sales Rapidly rising sales
Average cost per customerAverage cost per customer
Rising profitsRising profits
Maximize market shareMaximize market share
Offer product extensions, servicesOffer product extensions, services
Price to penetrate marketPrice to penetrate market
Distribution StrategyDistribution Strategy Build intensive distributionBuild intensive distribution
Advertising StrategyAdvertising StrategyBuild awareness and interest in the mass marketBuild awareness and interest in the mass market
Product Life Cycles
• Maturity:– Sales reach peak– Cost of supporting the product declines– Ratio of revenue to cost high– Sales growth likely to be low– Market share may be high– Competition likely to be greater– Price elasticity of demand?– Monitor market – changes/amendments/new
strategies?
• They modified the product by adding some changes in the product.• In this stage, few competitors enter into the market like ( CINTHOL, FAIRGLOW,
SANTOOR, CHANDRIKA, FIAMA DI WILLS and VIVEL ).
• The company has expanded their market to almost all the cities of INDIA.
• MARKETING OBJECTIVES = The marketing objective of Lux is to maximize more profit
while defending the market share. And to expand the market to all the cities of INDIA.
• MARKETING STRATEGIES In this stage are based on:
• Product = The Lux has made the modification in the product by introducing:
Lux Almond, Lux Orchid , Lux Fruit, Lux Saffron, Lux Sandalwood, Lux Rose, Lux International, Lux Chocolate, Lux Aromatic Extracts, Lux Oil and Honey.etc
• Price = The Lux products are now available at higher prices in the market, the reason
behind is that the company’s marketing objectives is to maximize more profit.
• Distribution = Now Lux products are available in almost all the cities of INDIA. Their
distribution channel is same as in the initial stage.
MATURITY STAGE
• Advertising = In this stage Lux advertising has been reduced to some extent because of the more brand awareness in the minds of customers.
Recently, they have shown Aishwarya Rai , kareena kapoor & Shah Rukh khan .
• PROMOTIONAL OFFERS : ----• Like buy 3 get 1 free.
MATURITY STAGE CONTINUED…
Maturity Stage of the LUXMaturity Stage of the LUX
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
Product StrategyProduct Strategy
Price StrategyPrice Strategy
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
Distribution StrategyDistribution Strategy Build more intensive distributionBuild more intensive distribution
Advertising StrategyAdvertising Strategy Stress brand differences and benefitsStress brand differences and benefits
Product Life Cycles
• Saturation:• New entrants likely to mean market is ‘flooded’• Necessity to develop new strategies becomes more pressing:
– Searching out new markets:• Linking to changing fashions• Seeking new or exploiting market segments• Linking to joint ventures – media/music, etc.
– Developing new uses– Focus on adapting the product– Re-packaging or format– Improving the standard or quality– Developing the product range
Product Life Cycles
• Decline and Withdrawal:– Product outlives/outgrows its usefulness/value– Fashions change– Technology changes– Sales decline– Cost of supporting starts to rise too far– Decision to withdraw may be dependent on availability
of new products and whether fashions/trends will come around again?
• Besides of all campaigns for the sales promotion of Lux .The reasons for its decline are :
• 1. Currency fluctuations: Unilever products are in over 100 countries worldwide, As a result, it is exposed to adverse currency fluctuations.
• For instance, in 2004, a 5.9% decline in turnover was primarily due to a 4% appreciation in the average Euro exchange rate.
• 2. SLOWDOWN: In year 2008 - 09 due to hard economic conditions in INDIA and other countries the sales were highly affected as the consumer started looking for some alternate products with a cheaper price than Lux.
• 3. Competition: Lux has been facing competition from HUL itself (Lifebuoy) & from other companies like:-
• Godrej Consumer Products : GCPL, India’s second largest soap maker with 9.2% market share.
• with leading brands such as CINTHOL, FAIRGLOW & NIKHAR.• Fairglow brand, India's first Fairness soap, has created marketing history as one of the
most successful innovations.
DECLINE STAGE
Wipro : The presence of Wipro in the toilet soap industry can be seen through their brands such
as SANTOOR and CHANDRIKA.• In the southern market of India it is a major market player in toilet soap.
ITC : It entered the segment last year and has made a strong headway in a short time by
growing to 1.75% in just five months. With the brands like: Superia, Fiama Di Wills and
Vivel.
DECLINE STAGE CONTINUED…
Decline Stage of the LUXDecline Stage of the LUX
SalesSales
CostsCosts
ProfitsProfits
Marketing objMarketing obj
Product StrategyProduct Strategy
Price StrategyPrice Strategy
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
Distribution StrategyDistribution Strategy Go selective: phase out unprofitable outletsGo selective: phase out unprofitable outlets
Advertising StrategyAdvertising Strategy Reduce to level needed to retain hard-core loyal customers
Reduce to level needed to retain hard-core loyal customers
Product Life CyclesSales
Time
Development Introduction Growth Maturity Saturation Decline
Product Life Cycles
Sales
Time
Effects of ExtensionStrategies
Product Life CyclesSales/Profits
Time
PLC and Profits
PLC
Losses
Break Even
Profits
SHORT LIFE SPAN OF FEW PRODUCTS
Challenges in Creating Brand Equity for Products with Short PLC
• Short attention span of the present generation• Varying Consumer Choice• Lack of availability of the product at all joints• Expensive with no long term benefits• Lack of significant usage• Disappearance of motivating factors that induce
buying behavior• Fatigue Factor• Utility of the product is for a short period and/or a
specific cause:
The Solutions proposed• Building Brand equity for a fad involves overcoming the challenges posed by the
inherent nature of its PLC. The following ways are suggested to build Brand equity for such products.
• 1. Brands undertaking Corporate Social Responsibility for a particular cause or on philanthropic grounds. These ideas of “socially responsible marketing” can build Brand equity for products with short life cycle.– Example: LiveSTRONG bands have created awareness about sensitive topics such as
AIDS & undertaken a great responsibility. This has build Brand equity for such products.• 2. Firms with strong Brand equity can bring in Fads under the Umbrella of
Family branding. This would help in easy brand recognition. Creating a product line with relevance to the fad will help in product usage. This would help in creating Brand equity for the fad & attract consumers with high brand loyalty.– Example: Adidas’ Wide skate shoes with fat laces came under Family branding. To
sustain the Brand equity of such products, a product line of such fads have to be built.
Further• 3. Bringing in innovation in products to reduce choices, hence reducing
the fatigue factor, increase utility of the fad & cut down prices.– Example: Apple ipod is an innovative product building brand equity for its parent
company. Continued innovations in the product shall optimize cost too.• 4. Strong advertising through print media, television, radio & public
relations. This would help in increasing the attention span of the product from consumer’s perspective. – Example: World Wrestling Federation, being a fad, was strongly advertised
through media. Thus, creating Brand equity for itself.• 5. Co-Branding with a high Brand equity brand, can help a fad channel
through its partner’s distribution channels. Thus reducing the problem of lack of availability.– Examples: The recent trend of companies enjoying high Brand equity co-brand
with fads from Bollywood movies, as in case of Archies co-branding with Amitabh Bacchan starer “Waqt-A race against time” for a soft toy.
• The PLC concept can be applied by marketers as a useful framework for describing how products and markets work. But using the PLC concept for forecasting product performance or for developing marketing strategies presents some practical problems.. In practice, it is difficult to forecast the sales level at each PLC stage, the length of each stage, and the shape of the PLC curve.
Conclusion