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Strategy at PLC

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Strategy for the different

stages of life cycleThere are four stages in the lifecycle of any product

Introduction:- A period of slowsalesgrowth as the product is introducedin the market. profit are nonexistent

because of heavy expenses ofproduct introduction.

Growth:-A period of rapid marketacceptance & substantial profit

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Maturity:- A slowdown in sales growthbecause product has achievedacceptance by most potential buyers.Profit stabilize or decline because ofincreased competition.

Decline:- sales show a downward driftand profit erode.

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Typical Life Cycle of a Product Category

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The product life cycle

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The PLC as an effective

marketing tool The PLC can be applied to productclasses as well as styles, fashions and

fads. The PLC will reflect these aspects in

the length and type of PLC as

illustrated:

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Product Life Cycle

Applications Product classhas the longest life cycle (e.g., gas-powered cars) Product formtends to have the standard PLC shape (e.g., dial

telephone) Brandcan change quickly because of changing competitive

attacks and responses (e.g., Tide, Cheer) Styleis a basic and distinctive mode of expression (e.g., formalclothing, Danish modern furniture)

Fashionis a popular style in a given field (e.g., business casual) Fadis a fashion that enters quickly, is adopted quickly, and

declines fast (e.g., pet rocks)

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Figure 14.3 Marketers need to understand and predict style, fashion and fad

The PLC as an illustrator

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Product Life Cycle Variations

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Stage in product life cycleStagecharacter

introduction

growth shakeout mature decline

Marketgrowth

rate

Moderate High Levelingoff

Insignificant

Negative

Technicalchanges inproductdesign

High Moderate Limited Limited Limited

segments Few Few to

many

Few to

many

Few to

many

Few

competitors

Few Many Decreasing Limited Few

profitability

Negative high low High formarketsharele de

Few

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Firms normative responsesStagecharacteristic

introduction

growth shakeout mature decline

Strategicmarketingobjective

Stimulateprimarydemand

Build share Build share Hold share harvest

product Quality Continue

qualityimprovement

rationalize Concentrat

e onfeatures

No change

Productline

Narrow Broad rationalize Hold lengthof line

Reducelength ofline

price Skimmingorpenetration

Reduce Reduce Hold orreduceselectively

Reduce

channels Selective Intensive Intensive intensive Selective

communica high High High High to reduce

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Introduction Stage of PLC Sales ; low

Costs: high cost per customer

Profits: negative

Marketing Objective: create productawareness and trial

Product: offer a basic product

Price: use cost-plus formula

Distribution: build selectivedistribution

Promotion: heavy to entice product

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Strategy at introduction

stage there are 3 key objective for aproduct at introduction stage

1) Creating fast new productawareness.2) Induce product trials3) Ensure distribution in all retailoutlets.

Based on the level of promotionalexpenditure employed and price

structure, two strategies have

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a) Skimming strategy

1- Rapid skimming

2- Slow skimming

b) Penetration strategy1- Rapid penetration

2- Slow penetration

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Skimming strategy It is used when you have uniqueproduct

A product hardly marketed byanybody. At this time, you also charge a

premium price for product.

e.g.:-Mobile phone, digital camera. This product is generally targeted to

a limited number of customers, who

can afford to that product, at that

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Rapid skimming when we expect that our new

product may be duplicated very fast,

we use rapid skimming. So we use heavy level of advertising

& promotion in rapid skimming,

because before the competitor comein, you have to take the product inthe hand of the customer.

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Slow skimmingIs, when you dont expect your innovationto be duplicated.

you have enough time to create an

awareness & you give low advertisingexpenditure budget for your product.e.g. when pocket calculators were firstintroduced in the U.S., the price was 100$(approx) .American expected that theJapanese companies to duplicate this andmanufactured other version which could besold at a competitive price

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Penetration strategy It is applicable to product with low price,so that the product is within the reach ofeveryone.

When we expect the product to beduplicated by the competitor, and that tovery fast, we use Rapid penetration ,

mostly by heavy advertising and promotion.But when you dont expect an attack, you

go for slow penetration.

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Example :- Rapid

penetration Ball point pen, a pen introduced inthe U.S.

The price of the product was lowerthan the pencil. They used heavyadvertising because the product was

with a low technology. Hence rapidpenetration.

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Example:- Slow

penetration Gillette disposable razor Gillette was with a low price, the

price was equivalent to blade. Was user friendly and was unique.

It was also overlooked by

competitors.Hence slow penetration

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Growth Stage of PLC

Sales: rapidly rising Costs: average cost per customer

Profits: rising

Marketing Objective: maximize marketshare

Product: offer extension, service, warranty

Price: penetration strategy

Distribution: build intensive distribution Promotion: reduce to take advantage of

demand

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Strategy at growth

stage In growth stage, the sales of the newproduct starts showing steep rising trend.

Attracted by this rising trend in sales,sometime new competitors enter themarket.

As a result the market expand and along

with it comes new product features andgenerally an increase in the no. ofdistribution outlets.

Overall , the price tends to remain steady.

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Strategy at growth

stage Profit picks up because of good demand and goodrevenue from sales.

Also,inspite of high promotional cost, the

percentage of promotional cost to sales is lower,because of high volume and consequently lowmanufacturing cost.

The strategy for a product on growth stage isreferred to as a Market expansion strategy.

Which are the following types:-

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Quality improvement

strategy This strategy covers qualityimprovement , in addition to adding

new features and with new mode. This is generally done by the leader

for their products.

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Market distribution &

extension strategy Under this strategy, the productmarketing is extended to newer

segments. New distribution channels are

opened

Distribution is extended to moremarket and more outlets, to takecare of the demand created by the

new segments.

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Price review or price

reduction strategy this strategy is used via bringingsmaller pack (size) to attract more

buyers.e.g. HLL uses small sachet forshampoo.

Price are reduced and better valueis offered.

t n ts s

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ro uct ene ts aseadvertising communication

strategy In this advertising shifts from

product awareness to product-

preference.

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Maturity Stage of PLC Sales: peak

Costs: low cost per customer

Profits: high

Marketing Objective: maximize profitswhile defending market share

Product: diversify brand and models

Price: match or best competitors

Distribution: build more intensivedistribution

Promotion: Increase to encourage brand

switching

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Strategy at maturity

stage The best marketing or competitivestrategy for product on maturitystage is Defensive strategyWhat is defensive strategy ?

It is taking all the steps and fillingall the gaps so that the entry of the

competitor is stopped.The sub-strategy available for a

defensive strategy are:-

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Maturity Stage of the PLC Modifying the Market: Increase theconsumption of the current product.

How?

Look for new users and marketsegments

Reposition the brand to appeal tolarger or faster-growing segment

Look for ways to increase usage amongpresent customers

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Maturity Stage of the PLC Modifying the Product: Changingcharacteristics such as quality, features, orstyle to attract new users and to inspire moreusage.

How? Improve durability, reliability, speed, taste Improve styling and attractiveness Add new features

Expand usefulness, safety, convenience Advantage for improving the features are1)Image building 2)Fast adoption at a low cost3)Gaining performance of a selected market

segment

4) Sales representative & retailers enthusiasm

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Maturity Stage of the PLC Modifying the Marketing Mix: Improvingsales by changing one or more marketingmix elements.

How? Cut prices Launch a better ad campaign

Move into larger market channels Offer new or improved services tobuyers

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Decline Stage of PLC

Sales: declining Costs: low cost per customer

Profits: declining

Marketing Objective: reduce expendituresand milk the brand

Product: phase out weak items

Price: cut price

Distribution: selective--phase outunprofitable outlets

Promotion: reduce to minimal level

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Strategy at decline

stage The main task under this strategy isto effectively handle aging product

some of the strategies found hereare:-

a) Product trimming strategy:-

Withdrawing products, whichare a drain on companies resources (removal of certain outdated product

)

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Strategy at decline

stageb) Concentration strategy :-Concentrating only on selected

market/ product.c) Product revitalization strategy:-

Adding some new feature to the

product.