RAGHVENDRA SINGH BISHT
19100
SECTION B
GROUP 10
ASSIGNMENT
Marketers should view PLC as an indication of opportunities to a firm. Discuss in the light of product
planning and business strategy of the firm.
Product life cycle:
The product life cycle is broken into four stages: introduction, growth, maturity, and decline. This concept is
used by management and by marketing professionals as a factor in deciding when it is appropriate to
increase advertising, reduce prices, expand to new markets, or redesign packaging.
1. Introduction: When a product enters the life cycle, it faces many obstacles. Although competition
may be light, the introductory stage usually features frequent product modifications, limited
distribution, and heavy promotion. The failure rate is high. Production and marketing costs are also
high, and sales volume is low. Hence, profits are usually small or negative.
2. Growth: If a product survives the introductory stage, it advances to the growth stage of the life cycle.
In this stage, sales grow at an increasing rate, profits are healthy, and many competitors enter the
market. Large companies may start to acquire small pioneering firms that have reached this stage.
Emphasis switches from primary demand promotion to aggressive brand advertising and
communicating the differences between brands. For example, the goal changes from convincing
people to buy flat-screen TVs to convincing them to buy Sony versus Panasonic or Sharp. Toward
the end of the growth phase, prices normally begin falling, and profits peak. Price reductions result
from increased competition and from cost reductions from producing larger quantities of items
(economies of scale). Also, most firms have recovered their development costs by now, and their
priority is in increasing or retaining market share and enhancing profits.
3. Maturity: After the growth stage, sales continue to mount—but at a decreasing rate. This is
the maturity stage. Most products that have been on the market for a long time are in this stage.
Thus, most marketing strategies are designed for mature products. One such strategy is to bring out
several variations of a basic product (line extension).
For example: Kool-Aid, for instance, was originally offered in six flavours. Today there are more
than 50, as well as sweetened and unsweetened varieties.
4. Decline (and death): When sales and profits fall, the product has reached the decline stage. The rate
of decline is governed by two factors: the rate of change in consumer tastes and the rate at which
new products enter the market. Sony VCRs are an example of a product in the decline stage. The
demand for VCRs has now been surpassed by the demand for DVDs and online streaming of
content. Sometimes companies can improve a product by implementing changes to the product, such
as new ingredients or new services. If the changes are accepted by customers, it can lead to a product
moving out of the decline stage and basck into the introduction stage.
Product Planning
Product Planning is the ongoing process of identifying and articulating market requirements that define a
product's feature set. Product planning serves as the basis for decisions about price, distribution and
promotion. Product planning is the process of creating a product idea and following through on it until the
product is introduced to the market. Additionally, a small company must have an exit strategy for its product
in case the product does not sell. Product planning entails managing the product throughout its life using
various marketing strategies, including product extensions or improvements, increased distribution, price
changes and promotions.
The product life cycle may be used in planning. Marketers who understand the cycle concept are better able
to forecast future sales and plan new marketing strategies. Marketers must be sure that a product has moved
from one stage to the next before changing its marketing strategy. A temporary sales decline should not be
interpreted as a sign that the product is dying. Pulling back marketing support can become a self-fulfilling
prophecy that brings about the early death of a healthy product.
Strategies for Success at Each Stage of the Product Life Cycle
Category Introduction Growth Maturity Decline
Marketing Encourage trial, Get triers to Seek new user or Reduce marketing
sector establish distribution repurchase, attract users expenses, used to
new users keep loyal users
Product Establish competitive Maintain product Modify product Maintain product
advantage quality
Distribution Establish distribution Solidify Provide additional Eliminate trade
network distribution incentives to ensure allowances
relationships support
Promotional Build brand awareness Provide Reposition product Eliminate most
information advertising and sales
promotions
Pricing Set introductory price Maintain prices Reduce prices to Maintain prices
(skimming or meet competition
penetration pricing)
