amity business school. product life cycle amity business school definition product life cycle (plc)...
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Amity Business School
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Amity Business School
Product Life Cycle
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Amity Business SchoolDefinition
• Product Life Cycle (PLC) deals with the life of a product in the market with respect to business or commercial costs and sales measures
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Amity Business School
• Every Product has a limited life• Product sales pass through distinct stages, each
posing different challenges, Opportunities, and Problems to the seller
• Profits rise and fall at different stages of the Product Life Cycle
• Products require different Marketing, Financial, Manufacturing, Purchasing and Human Resource Strategies in each Life Cycle stage.
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Amity Business School
Product Life Cycle Stages
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Amity Business SchoolIntroduction
a. Costs are highb. Slow sales volumes to startc. Little or no competition - competitive
manufacturers watch for acceptance/segment growth losses
d. Demand has to be createde. Customers have to be prompted to try
the productf. Makes no money at this stage
Conti….
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Amity Business SchoolGrowth
a. Costs reduced due to economies of scale
b. Sales volume increases significantly
c. Profitability begins to rise
d. Public awareness increases
e. Competition begins to increase with a few new players in establishing market
f. Increased competition leads to price decreases
Conti…
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Amity Business SchoolMaturity
3. a. Costs are lowered as a result of production volumes increasing and
experience curve effectsb. Sales volume peaks and market saturation is reachedc. Increase in competitors entering the marketd. Prices tend to drop due to the proliferation of competing productse. Brand differentiation and feature diversification
is emphasized to maintain or increase market sharef. Industrial profits go down
Conti….
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Amity Business SchoolSaturation and Decline
a. Costs become counter-optimal
b. Sales volume decline or stabilize
c. Prices, profitability diminish
d. Profit becomes more a challenge of production/distribution efficiency than
increased sales
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Amity Business SchoolStrategies for the differing stages of the Product Life Cycle.Introduction.
• The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution.
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Amity Business SchoolGrowth
• Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilise.
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Amity Business SchoolMaturity
• Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.
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Amity Business SchoolDecline
• At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.
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Amity Business SchoolClassification of New Products
• Marketing Innovations:
The actual product is not changed and the habits of the consumer also need not to be changed, only a few alternatives are done. Eg. Packaging, branding, easy availability etc.
Maggi
Juices
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Amity Business School
• Product Improvements
when a little improvement is done to the existing product. Like 100 cc scooters, Tubeless tyres, Digi Cams etc.
These are normally targeted to a new segment of buyers.
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Amity Business School
• Technological Innovations
personal Computers, Photo copiers
Here early entrants enjoy the major market leadership.
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Amity Business SchoolNew Product Development
• Transfer of Technology
• Penetration of New Market
• New Product Lines
• Product Line Extensions
• Cost Reduction
• Repositioning or New Product Launch
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Amity Business SchoolTransfer of technology
• This is more of an adoption of any product.
New products are often launched on the basis of new technology.
It can be acquired from the parent company or with foreign collaboration.
Eg. Personal Computers
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Amity Business SchoolDiversification
• Eg. ITC venturing into Paper Products, FMCG Etc.
Bombay Dieing Venturing into Real Estate Business.
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Amity Business SchoolAdditions to existing product line
• Eg. Godrej extension from Durable like Refrigerators to Office equipment etc.
• Videocon entered into washing machine and Music Systems etc.
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Amity Business SchoolImprovement in existing product
• New product which offers superior performance than the existing one and replace it.
• Eg. Gramophones and record players have been replaced by cassette players and now CD players.
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Amity Business SchoolCost Reduction
• New product which provides similar performance at lower cost.
Classic Eg. Nirma
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Amity Business SchoolProduct Re-launch
• Some times old products are re-launched with little improvements.
• Eg. Tata Tea, Maggie
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Amity Business SchoolNew Product development process
• Idea Generation
• Screening
• Business Analysis
• Prototype Development
• Test Marketing
• Commercialization
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Amity Business School
Home Assignment:
• Details of New Product Development
Submitted on 8th of September.
Individual Assignments only.
Will be marked
Hand written
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Amity Business School
Thank You