The company should always take a cue from it and formulate its marketing strategy. Below you will find strategies devised to help your product or service as it moves through the product life cycle. That is why they are not willing to part with the old products. (ii) Economy packs or models may be introduced to revive the market. At this stage pricing strategy usually followed are: a. In this stage the product is absolutely new and distinctive. Furthermore, critics have argued that the product life cycle may become self-fulfilling. The product life cycle can be divided into 4 stages viz. Increasing competition leads to pressure on price and price starts falling, iii. Building on the success of the Boston Matrix, the Directional Policy Matrix (DPM) was developed as a further sophistication of the matrix tool technique. Product Life Cycle Stages: Examples, Strategies, Definition, 5 Stages, Examples, Notes and Diagram! These stages help marketers understand and manage […] (d) Promotion – Emphasis on differentiation and building of brand loyalty. The following steps are taken in the strategy adopted in this stage: (i) Introducing the new and unknown product to the prospective buyers. This is the saturation stage. If the sale is less, it amounts to definite loss to the firm. Therefore “Demand Stimulation” and “Dealer Support” activities become necessary. Distribution is narrowed down. This is the final stage in the product life cycle. Profit also increases. Decline in the growth rate of the sales volume, due to more competitors, ii. If he finds bleak possibility, he should divert his resources to other products. There is a recognized propensity for life cycles to become shorter as the rate of technological innovation increases and the expectations of customers heighten. Answer 1. Here is the example of watching recorded television and the various stages of each method: Introduction – 3D TVs Growth – Blueray discs/DVR The growth in sales volume is at a lower rate because of lack of knowledge on the part of the customers and difficulties in making the product available to the customers. Take iPod. Different stages and strategies at each level of the Product Life Cycle are given below: Kia Sonet, Maruti Suzuki S-Presso, Nissan Climber, Maruti Suzuki Swift, WagonR, Toyota Innova, Honda City, Honda Amaze, Toyota Fortuner, Tata Indica, Sumo, Bolt, Maruti Suzuki S-Cross, Mahindra Xylo. An example of the Product Life Cycle model. Each stage (development, introduction, growth, maturity and saturation, decline, rejuvenation and decline) are all explained in depth along with a chart and adv. This is a stage when market is saturated with variations of the basic product and every competitor has as alternative product. 2. There are four main stages that compose the life cycle. Consumers start accepting the products due to these efforts and sales get a boost as a result of this process. Stages of Product Life Cycle [with definition]: Answer 5. (d) Promotion – Increased advertising to build brand preference. During this stage, high expenditure has to be incurred on advertising and other promotional techniques. Managers should concentrate on the following tasks at this stage: (i) More attention to be paid on kind, quality, size and shape of the product. The product enters the more markets and marketers have to adopt measures to stimulate demand and face competition through additional advertising and sales promotion. Understanding the distinction between cash flow and profits is crucial. Like a human being, all products have certain length of life during which they pass through certain identifiable stages through the conception of the product, during its development and up to the market introduction, then goes through a period during which its market grows rapidly, eventually, it reaches at maturity and then stands saturated. (iii) Sales become low after reaching the apex point due to tough competition in the market. At this stage of product, the marketer must try to develop new and alternative uses of the product. Stages of Product Life Cycle (PLC) [with notes]. (b) Price – Maintained at a high level if demand is high, or reduced to capture additional customers. The PLC demonstrates how products move and is manipulated in the market place, extending from the introductory phase through to the typical stages of rapid growth, maturity, saturation and finally decline as the product is overtaken by other products that better fulfill customers’ needs. With the new usage of the product also, the sales and profit cycle shows a different scalloped pattern like plastics, nylon and fiber. (a) Invest and develop if resources are available, but check extent of possible diversification and cash availability. (ii) Profits start increasing in this stage for producers, distributors and retailers at a fast pace. In the maturity stage, the objective of the company is to maximize profits, while defending its market share. The production goes on increasing and the competitors try to capture the market. Types of Wholesalers: Simple Classification, Product Life Cycle Stages & Strategies with Examples, Top 10 Best Free Educational Websites in India, 81 Digital Marketing Topics For Presentation, 100+ Indian Economy Topics For Presentation (Updated 2020), Supply Chain Management MCQ Questions and Answers, Marketing MCQs with Answers & Explanation, Marketing Objectives: Create Product Awareness and Trial, Distribution: Selective Distribution and Heavy promotion, Advertising: Build product awareness among early adaptors and dealers, Marketing Objectives: Maximize Market Share, Product: Offer Product Modification, Extension, Service, Warranty, Price: Competitive Price to Penetrate Market, Advertising: Build awareness and interest in the mass market and reduce sales promotion, Marketing Objectives: Maximize Profits while defending market share, Price: Price to match or beat competitors, Distribution: Build more intensive distribution, Marketing Objectives: Reduce Expenditure and milk the brand, Distribution: Go selective, phase out unprofitable outlets. (iv) Many important decisions are taken at this stage like choice of channel of distribution; the type of research to be undertaken so as to have wide share in the market and choosing the appropriate advertisement policy etc. This is because the product is accepted by the market. Then, it leads to maximizing market share in the growth stage. (vi) The price of product is competitive. ii. The function of the Boston Matrix is to aid forward planning by suggesting strategy for the future development of the range- selectively invest in Question Marks; invest in and grow Stars; maintain Cash Cows; and critically examine Dogs and delete them as appropriate. 3. The technique’s popularity rests in its ability to capture a number of concepts simply and to offer strategic guidelines for future action. This is the third stage of a product. When a product is first introduced at the pioneering stage, the sales will take some time before they pick up. The product life cycle concept is very useful in this context. Nokia is considered a favorite example whenever the concept of product life cycle is discussed. The combination of options provided in the Ansoff Matrix gives rise to the following broad strategies: To grow our business, we should consider ways in which we can gain more customers for our current product offering- for example, by seeking routes to alternative markets in order to reach customers we do not currently serve. Penetration pricing strategy – Here the marketer charges a low price for the product so as to penetrate the market. To assist where the PLC falls short, there are additional analytical devices, generically known as matrix tools. During this stage, the demand expands, price fall, competition increases, and distribution is greatly widened. 6.1. Product Life Cycle Strategy: Modification Modification is the act of trading up or down a service in order to match the perceived value of consumers. This strategy embodies greatest risk, since both markets and products are new. ADVERTISEMENTS: Introduction: Product passes through four stages of its life cycle. Bruce Henderson is unequivocal in his view that there is no room for Dogs in the product portfolio and they should be deleted from the product range. It also is useful for monitoring sales results over time and comparing them to those of products having a similar life cycle. The prices are kept very high in the presentation stage because: (i) The cost of production becomes high due to less production. Under this stage a product gains acceptance from the part of consumers and businessmen. In a mature market, potentially entering the decline stage of the product life cycle, larger firms may be in a position to try and rethink the overall positioning of a product in order to try and broaden its market or to create new usage or opportunities for silence. – Philip Kotler, “The concept of life cycle of a product as from its birth to death, a product exists in different stages and in different competitive environment. It helps a marketer in preplanning the entry of a new product in a market, in prolonging the profitable stage, in meeting competition and in long-term decisions on investment on products. With the advancement of technology these products have quickly extinguished and developed. More market research may enable us to find and address unsatisfied customers or segments within our current area of operations. (b) Price – Generally high, assuming a skim pricing strategy for a high profit margin as the early adopters buy the product and the firm seeks to recoup development costs quickly. Each stage poses different challenges, opportunities and problems to the seller. 4. It is reasonable to assume that potential customers have satisfied their needs to a greater or lesser extent, and that entering new markets may involve significant risks attributable to high investment costs and dealing with the unknown. This gives birth to “Creative Sales.”. The PLC can be a predictive device, forecasting how products may behave in the future and allowing corrective action to be taken. 1. Each stage poses different challenges, opportunities and problems to the seller. i. Originally designed as a financial management tool, it now has an accepted role in marketing and strategic planning. Image Guidelines 4. Falling prices reduce profit margins. One of the advantages of using matrix tools is that they can reduce complexity, aiding a clearer understanding of product behaviour and market dynamics. Prices are usually high during the introduction stage because of small scale of production, technological problems and heavy promotional expenditure. The Boston Matrix is based on the principle that cash – not profits – drive a product from one box of the matrix to another. Product Life Cycle (PLC) is an important part of marketing. and disadv. The Boston Matrix uses only two factors to analyses performance- market growth rate and relative market share. There are many features of this stage of product life cycle:Small Market: This stage involves business capturing the market. Increasing promotional expenses to meet the competition and increasing public awareness. It is also possible that the same product is not available in all the markets. Increasing distribution outlets as more retailers are interested in selling the product. Limitations of the Product Life Cycle Concept: The term “life cycle” implies a well-defined life cycle as observed in living organisms, but products do not have such a predictable life and the specific life cycle curves followed by different products vary substantially. Product life cycle is important in various ways. In this stage, the product achieves considerable and wide spread approval in the market, the demand and sales improves very rapidly due to promotional efforts. (b) Price – Prices may be lowered to liquidate inventory of discontinued products. In order to lengthen the period of maturity stage, the following strategies may be adopted: (i) Product may be differentiated from the competitive products and brand image may be strengthened further. (ii) The warranty period may be extended. At the end of the stage, the company struggles to keep its market share intact. Huge Collection of Essays, Research Papers and Articles on Business Management shared by visitors and users like you. This article explains the product life cycle stages and strategies with example. For instance, some manu­factures of TVs have introduced the concept of life time warranty. The sale of product becomes less at this stages because some new and advanced products make their appearance in the market. New products are introduced in the market by competitors. The Ansoff Matrix helps us to understand these relationships better and to arrive at more informed judgments about our present position and proposed future direction. (ii) Production process is thought to be old at this juncture and need is felt to modify it. During this stage each of the characteristics mentioned under different stages is intensified. The promotional expenses remain high although they tend to fall as a ratio to sales volume. Brand extension can also help in getting to a new category, through the same brand image. This is important because it reflects the degree of dominance enjoyed by the product in the market. Here the firm can consider the strategies of market modification and product modification. Intense price cutting is there. Definition: The product life-cycle (PLC) refers to the different stages a product goes through from introduction to withdrawal.. The three most widely known and important of these are the Ansoff Matrix, the Boston Matrix and the Directional Policy Matrix. In this stage, the maturity of product is reflected in terms of its capacity face competition. The success of firms depends upon the efficient manufacturing and distribution systems of the product. Also, the life cycle has limited value as a predictive tool. Generally all the products pass through these four stages, but in some cases the PLC curve may be different. Expand the brand in the maturity stage and prune the product or brand mix in the decline stage. While plotting on a diagram, it takes the shape of a bell; leading to call it a Bell shaped PLC Curve. Prices may be maintained for continued products serving a niche market. For example, this product life cycle marketing strategy is where a company into yoghourt production introduces other versions such as vanilla yoghourt, chocolate yoghourt etc… The need for this is so enable the firm satisfy various type of customers and also encourage selection This quadrant therefore represents the lowest level of risk. The criteria defining these broad headings may include: Once the axes criteria are established, they can be weighted in terms of importance and ranked against those of competitors or other products to provide a comparative view. The traditional product life cycle curve is broken up into four key stages. But manufacturers often can employ several strategies to stave off decline, extend the profitable maturity stage and perhaps even foment a renewed growth period for their product. (iii) ‘Price off’ as an introductory offer, i.e., introducing the product at a discount to attract the people. Profits also increase at an accelerated rate. The major difference between the two matrices, however, lies in the way the axes are constructed. For example, Maruti Suzuki has got a product portfolio of 13 different cars. High promotional expenditure as the product is new to the market. This is the first stage of product life cycle. The main features of this stage are as follows: (i) The firm does not face any competition in the market because competitors are not able to present their product for sale in the market so very quickly. Great examples of products that are discontinued are music media products. (iii) Firm distributes its product in limited area and increases the sale gradually. After the product is introduced in the market the product enters its second stage of the life cycle called as the Growth-stage. (iii) Competitive commercial firms feel tempted to make their appearances in the market after knowing about those rising profits. Product decline strategies. (b) Promotion – Promotion is aimed at building brand awareness. So the firm, presenting its product in the market, is able to acquaint them with its products. If it is not possible or there are heavy losses, the manufacturer may seek merger with a strong firm. The sales fall down sharply and the expenditure on promotion has to be cut down drastically. The Boston Matrix uses four boxes to categorize the generic nature of the product being described. At one time probably a strong performer in the product range, but now substantially declined, generating a poor cash flow and perhaps even consuming cash due to the costs of maintaining the product in the range. Sedan SX4 is also getting replaced by Ciaz. Examples of stages and how PLC evolved are: Introduction. Firms may find it difficult to meet the demand. The product is first introduced in the market. This article explains the product life cycle stages and strategies with example. (ii) Efficiency in product marketing and distribution works should be increased so that the life cycle of the products increases gradually. Harvest for current profitability or divest. The concept of PLC is important for the success and longevity of the company. Strategies followed During Various Stages of Product Life Cycle are: 1. Not all products follow all five stages of the product life cycle. At this stage, the marketer should explore the possibilities of selling the product. b. In 2009, it has launched Ritz and Estilo and now in 2010, it has launched all new Wagon R. In the same way, its competitors are not far behind. This also happens in the case of Fads, the fashion that becomes hit among the people instantly and then it peaks and after that it declines very fast. (iii) High price becomes essential in order to meet the promotional expenses. Every product has a certain length of life during which it passes through different stages. Introduction, growth, maturity, saturation and decline. The level of sales plotted on the vertical axis is usually given in unit or revenue terms. The prices are decreased because of competition and innovations in technology. A marketer should watch on its sales and market situations to identify the stage in which the product is passing through, and […] Growth stage is marked by rapid increment in sales and profits. Necessary developments and modification may also be introduced. (c) Distribution – Distribution is selective and scattered as the firm commences implementation of the distribution plan. Fast movement through the product life cycle also creates the need to alter the cycle and/or introduce new products. The production is undertaken on full scale in this stage. In the decline stage, the company needs to reduce the expenditure and milk the brand. Each of stages demands the unique or distinguished set of marketing strategies. (iv) Costs are high in the initial stage because firm resorts to wide advertisement and promotional efforts. In this context, the product could be service-based. During the introduction stage, the primary goal is to establish a market and build primary demand for the product class. Low profits or negative returns as the expenditure is high and sales are low, iii. The following are some of the marketing mix implications of the introduction stage: (a) Product – one or few products, relatively undifferentiated. Therefore this stage is also known as birth stage or introductory stage. To introduce the product successfully, the following strategies may be adopted: (i) Advertisement and publicity of the product —’Money back’ guarantee may be offered to stimulate the people try the product. Innovative products are introduced in the market to take place of the abandoned products. Most of the marketers withdraw from the market and some withdraw from some marketing segments. iv. Necessary developments and modifications must also be introduced so that some new consumers may start using it. In reality, there are many gradations between these two extremes. Previous buyers continue in their purchase and new buyers appear. While some products are introduced and die quickly afterwards, others stay in the mature stage for a very long time. In considering our future strategy, the Ansoff Matrix suggests a number of options, each with varying degrees of risk. These products gradually evolve, receive their share of market acceptance and then eventually vanish from the market.Sure, many products, which are decades and decades-old may still not have vanished from the market. It is worth reiterating here the importance of clearly defining the unit of analysis to be used. During the maturity stage, the primary goal is to maintain market share and extend the product life cycle. Terms of Service 7. Tata has launched Nano and Indigo Manza, while Hyundai has launched new face lifted Santro, i20 Diesel and i20 Automatic, Verna Automatic and face-lifted Sonata.

product life cycle strategies examples

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