15-01-2013, 03:39 PM
Product life cycle
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Product life cycle(PLC) analysis is a very valuable tool in the hands of a marketer. A typical product goes through four stages in its life.
Introduction
Growth
Maturity
decline
introduction
In the introduction stage the product is introduced to the customer. Introducing a new product is difficult because
Only a few sellers can afford the technological know-how, marketing and other costs to launch the product
The risk of new product failure is quite high.
Promotional expenses are at their highest because the company needs to
Inform the customer about the product
Induce product trial and
Secure distribution in retail outlets.
advertising is one of the most effective tools at this stage at this stage of PLC because marketers must communicate their product’s features, usage and advantages to potential customers
growth
The growth stage is crucial for the product’s survival in the market because the reactions of the competitors to the product’s life expectancy
This stage is characterized by increase in sales, heavy demand for the product and peaking the profits.
Strategies for growth stage
They restore to aggressive pricing, including price cuts to attract price sensitive customers.
They emphasize the product’s benefits in order to create a competitive niche in the market.
They try to improve product quality and add new features and models.
They may introduce new distribution channels
They enter new markets
Strategies for maturity stage
Abandon weaker products and concentrate more on profitable products.
Increase advertising and sales promotion.
Invest more in R&D to bring about improvements in the product and product line extensions.
Strategies for the decline stage
Reducing the number of product in the product line offered to the market.
Cutting promotional budgets and prices
Cutting down the distribution channels and distributors with poor sales
Ultimately withdrawing totally from the market or withdrawing from the weaker segments and weaker trade channels
What a company can do in decline stage?
Increase the firm’s investment to strengthen its competitive position and dominate in the market.
Maintain the firm’s investment level until the market uncertainly passes by.
Selectively decrease the firm’s investment level by dropping unprofitable customer group.
Harvest the firm’s investment to recover the cash quickly
Divest the business through disposal of assets.