44648012 plc product life cycle
Post on 28-Oct-2015
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By Er. Akash Bansal & Pankur Raheja
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PLC - Product Life Cycle
The purpose of having a diagram is to help you understand the changes, in the revenue that is made, as you go through the different stages of selling a product, from the beginning, to the end.
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
The time at each stage varies greatly
DVD
Mini-discElectric cars
VR*
*= virtual reality
Digital cameras
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Introduction
The seller tries to stimulate demand
Promotion campaigns to get increase public awareness
Explain how the product is used,
• Features Advantages Benefits
You will lose money, but you expect to make profits in the future
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Introduction
•Sales are low, and profits are below the line because your costs are greater than the amount of money you make
•you have “negative” profit
•Need to spend a lot of money on promotion
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Growth
A lot is sold - The seller tries to sell as much as possible
Other competitor companies watch, and decide about joining in with a competitor product
“success breeds imitation” (Text)
Growth will continue until too many competitors in the market - and the market is saturated
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Growth
•At the end of the growth stage, profits start to decline when competition means you have to spend more money on promotion to keep sales going.
•Spending money on promotion cuts into your profit
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Maturity
Many competitors have joined - the market is saturated
The only way to sell is to begin to lower the price - and profits decrease
It is difficult to tell the different between products since most have the same F.A.B. - Features, Advantages & Benefits
Competition can get “Nasty” and commercials are intense8
Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Maturity
“Persuasive Promotion” becomes more important during this stage
That is to say, you have commercials almost begging the customer to still buy your product because you still make it just as good.
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Decline
Newer products are now more attractive - even a low low price does not make consumers want to buy.
Profit margin declines - and so the only way to make money is to sell a high volume
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
Decline
To increase volume you try to
1. Increase the number of customers - get new customers
2. Increase the amount each customer uses
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1. Increase frequency of use by present customers
2. Add new users
3. Find new uses
4. Change product quality or packaging
Extending the Product Life Cycle
Market Modification
Product Modification
Purpose: to sell more product and cover original investment12
Extending the product Cycle
to prevent the product going into decline you to prevent the product going into decline you modify the marketmodify the market
MARKET MODIFICATIONMARKET MODIFICATION you look for new consumers by changing the
product so it has new users - and then new customers (Baking soda, vinegar, Q-tips,(Baking soda, vinegar, Q-tips, Avon Avon Skin So Soft, vaselineSkin So Soft, vaseline
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Extending the product Cycle
MARKET MODIFICATIONMARKET MODIFICATION
examples
Windex for cleaning jewelry
Javex bleach for toilets
Lemons for hair colouring
beer for hair
Bounce for in the garbage, gym bag etc.
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Extending the product Cycle
to prevent the product going into decline you to prevent the product going into decline you modify the productmodify the product PRODUCT MODIFICATIONPRODUCT MODIFICATION
adding new features, variations, model varieties will change the consumer reaction - create more demand
therefore you attract more users
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Extending the product Cycle
PRODUCT MODIFICATIONPRODUCT MODIFICATIONexamplesCD playerschip flavours - many kindsflavoured tongue depressorscouples seats at movie theatre
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Extending the product Cycle
PRODUCT MODIFICATIONPRODUCT MODIFICATIONexamples continueddigital sound at theatres
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Overlap of Life Cycle for Products A and B
WINDOWS 95
1991 1995 1996 1997
WINDOWS 3.1
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Most people have a problems thinking this theory is relevant because they apply it to specific product brands - it should be applied only to a general product category
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Length of Cycle Stages
Products move through the cycle at different speeds
sometimes introduction is very long, or very short, depending on how easy it is for the public to understand the F.A.B.
Not all products follow the same pattern
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Life Cycle Length
Some products move very fast because they are new and have no competition so the intro stage is short, and they go direct to growth stage.
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Life Cycle Length
Because oftechnology andglobalizationthe introduction stage is getting very shortsome cycles more quickly to maturity, then have
many product modifications so the decline stage drags on and on
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Speed of the PLCSince the Intro Stage is getting shorter, and
sometimes the Growth Stage doesn’t last too long (because competitors move in) companies must continually come up with new products
You can tell when they are in the growth stage because this is when they introduce new model variations, and some improvements to the product
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Product Life Cycle Considerations in Marketing Strategy
Understand that profits have a predictable pattern
in the early stages, focus is on product information
in the later stages, focus is on brand promotion
use market segmentation in maturity stage to maintain strong core customer basis
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Stages in the Product Life Cycle
Introduction Growth Maturity Decline
The time at each stage varies greatly
Mini-discElectric cars
*= virtual reality
Digital cameras
Monopoly Monopolistic Oligopoly Pure Competition
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