The PLC

BMI3C

The PLC

The Product Life Cycle describes the changes in consumer demand with regard to a product over a period of time

Marketers use this system to determine how long a product will last

Stages in the PLC

Product development

The company does R&D to come up with a new product

No sales happen during this time, but the company spends a lot of money

Introduction

Launching a new product into the marketplace is VERY expensive Manufacturers, promotion, distribution, etc.

Marketing efforts are focused on selling to “early adopters” (consumers who like to be first to buy)

Expenses still outweigh revenue by a lot during this stage

Growth

Most crucial stage for advertising as this is the time when the product will either catch on or fail Marketers will scrap a product if it does not do

well in this stage (this is called a bust as the costs of production, etc. have not been recovered)

The faster a company can reach the growth stage, the faster it can begin to make a profit

Growth

The first company in the growth stage will pay the most in advertising but no major competition

The idea is to recover the high cost of introduction before competition becomes strong and the price drops As competition enters, marketers must modify

their original product (add features, improve quality, lower price) in order to maintain their market share

Maturity

Period during which the sales of a product increase slowly

Advertising is done to keep the name of the brand with the consumer, though promotional costs are not as high as the previous 2 stages

Major costs have been recouped by now, so large profits are made during this stage

Goal is to keep this stage going as long as possible…

Decline

Company is unable to find new customers

Company will try to redesign, repackage, etc. to try to reverse the decline process

Company may remove the product from the market

The Decision Point

If the decline persists, the company must decide the future of this product

based on research the company may decide to: reformulate, repackage, (new &

improved), reprice, new promotion Discontinue the product

The Decision Point

Example: Arm & Hammer Decline in sales Research shoed a drop in the amount of home

baking Instead of discontinuing the product, the

marketers looked for a new target market Promoted the product’s ability to absorb odour

(i.e. from the fridge) Plan worked: product entered new growth stage

Nontraditional Product Life Cycles

What would the PLC look like for a… Fad… (Crocs) Niche…(skateboard wheels) Seasonal…(pumpkins)

Fads

a product that is extremely popular for a very brief period of time, a fad dies very quickly

this is a high-risk adventure, businesses do well if they get out of the market just as the fad reaches its peak

if a company does not get out in time they are left with large product inventory that no one wants to buy

Fads

What does the PLC look like?

Trends

a mass movement towards a particular style or value and it has a more lasting effect on the marketplace

by paying close attention to trends, marketers can predict which markets will grow in the future eg. organic foods

Niche Market

a very short growth stage that leads to a solid maturity stage

market is very small, therefore there is little competition (there are not enough consumers to make the market attractive to competitors)

Niche

What does the PLC look like?

Seasonal Market

seasons can impact upon a product Snow blowers, ski resorts

marketers anticipate periods of high and low demand

marketers work to create opportunities outside the peak season

Seasonal

What does the PLC look like?

Questions

What is the risk to a marketer of jumping on a fad?

People seem to be interested in products that aren’t harmful to the environment… is this a fad?

What’s the difference between a fad and a trend?

What are some current trends? How could a business take advantage of

these trends?