instructor: safaa s. y. dalloul

Instructor: Safaa S. Y. Dalloul

E-MarketingUnit 5

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Product Life Cycle

Elements of Lecture

◘ Marketing Strategies: Introduction Stage and the Pioneer Advantage

◘ Marketing Strategies: Growth Stage

◘ Marketing Strategies: Maturity Stage

◘ Marketing Strategies: Decline Stage

◘ The Product Life-Cycle Concept: Critique

◘ E-Marketing Case Study: Asos.com online fashion company

Product Life Cycle PLC

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Product Life-Cycle Marketing

Strategies

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What do you think the company will produce the product with unlimited time, stable income or losses…etc?

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Products Characteristics• Limited life.

• Product sales pass through distinct stages

• Profits rise and fall.

• Products require different strategies.

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Product Life Cycle

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Sales grow rapidly when the product is first introduced and then fall to

a "petrified" level that is sustained by late adopters buying the product

for the first time and early adopters replacing the product.

Growth-Slump-Maturity Pattern

For Example products of small kitchen appliances such as

handheld mixers and bread makers.

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The pharmaceutical company aggressively

promotes its new drug, and this produces

the first cycle.

Later, sales start declining and the

company gives the drug another

promotion push, which produces a second

cycle (usually of smaller magnitude and

duration).

Cycle-recycle Pattern

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Sales pass through a succession of life

cycles based on the discovery of new-

product characteristics, uses, or users.

The sales of nylon, for example, show a

scalloped pattern because of the many

new uses parachutes, hosiery, shirts,

carpeting, boat sails, automobile tires—

that continue to be discovered over time.

Scalloped Scalloped Pattern

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Style, Fashion, and Fad

Product Life Cycle• Product Development

Product development begins when the company finds and

develops a new product idea. During product development, sales

are zero, and the company’s investment cost mount

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Introduction Stage and the

Pioneer Advantage

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Product Life Cycle• Introduction Stage

Why the sales in the introduction stage are slow?

Take time to roll out a new product

Work out the technical problems

Fill dealer pipelines

Gain consumer acceptance

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Highest Promotional expenditures to:

Inform potential consumers.

Induce product trial.

Secure distribution in retail outlets.

Product Life Cycle• Pioneer Advantage

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To be first can be rewarding, but risky and expensive

Most studies indicate that the market pioneer gains the

most advantage.


Sales

Costs

Profits

Customers

Competitors

Low sales

High cost per customer

Negative

Innovators

Few

Characteristics

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Marketing Objectives Create product awareness and trial

Marketing Objectives

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Product

Price

Offer a basic product

Use cost-plus

Distribution Build selective distribution

Advertising Build product awareness among early adopters and dealers

Strategies

Sales Promotion Use heavy sales promotion to entice trail

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Growth Stage

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Product Life Cycle• Growth Stage

Sales

Costs

Profits

Customers

Competitors

Rapidly rising sales

Average cost per customer

Rising profits

Early Adopters

Growing Number

Characteristics

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Marketing Objectives Maximize market share


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Product

Price

Offer product extensions, service, warranty

Price to penetrate market

Distribution Build intensive distribution

Advertising Build awareness and interest in the mass market

Strategies

Sales Promotion Reduce to take advantage of heavy consumer demand

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What are the several strategies that the firm uses to

sustain rapid market growth?

Improves product quality and adds new product features

and improved styling.

Enters new market segments.

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

different sizes, flavors, and so forth that protect the main

product).

Increases its distribution coverage and enters new

distribution channels.

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Shifts from product-awareness advertising to product-

preference advertising.

Lowers prices to attract the next layer of price-sensitive

buyers.

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Com

pany

Log

o

Maturity Stage

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Com

pany

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Product Life Cycle• Maturity Stage

3 Phases

Stable

Decaying

Growth

The sales growth

rate starts to

decline.

No new distribution

channels to fill.

Sales flatten.

Most potential consumers

have tried the product, and

future sales are governed

by population growth &

replacement demand. The level of sales

starts to decline

Customers begin

switching to other

products

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In maturity stage what happen when the sales slowdown in

the industry? And how the competitors will act? Discuss

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Compare between quality, feature, and style

improvement?

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Sales

Costs

Profits

Customers

Competitors

Peak sales

Low cost per customer

High profits

Middle majority

Stable number beginning to decline

Characteristics

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Marketing Objectives Maximize profit while defending market share


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Product

Price

Vary brand and models

Price to match or best competitors

Distribution Build more intensive distribution

Advertising Stress brand differences and benefits

Strategies

Sales Promotion Increase to encourage brand switching

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Decline Stage

Product Life Cycle• Decline Stage

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Sales

Costs

Profits

Customers

Competitors

Declining sales

Low cost per customer

Declining profits

Laggards

Declining number

Characteristics


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Marketing Objectives Reduce expenditure and milk the brand



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Product

Price

Phase out weak items

Cut price

Distribution Go selective: phase out unprofitable outlets

Advertising Reduce to level needed to retain hard-core loyal customers

Sales Promotion Reduce to minimal level

Strategies

Product Life Cycle

Decline Stage

How the company can deal with the decline stage? And Why?

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Product Life Cycle• Critique | Analysis

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The PLC concept helps marketers interpret

product and market dynamics.

It can be used for planning and control,

although it is useful as a forecasting tool.

Advantages

Product Life Cycle• Critique | Analysis

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Product-life-cycle patterns are too variable in

shape and duration.

Marketers can seldom tell what stage the

product is in a product may appear to be

mature when actually it has reached a plateau

prior to another upsurge.

Disadvantages

Note: Critics put those

disadvantages of PLC theory

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Case Study

Exercises

List and define the steps in the new-product development process?

Explain the categories of innovativeness?

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instructor: safaa s. y. dalloul

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