PLC stages and their strategies

               Product Life Cycle Stages:

           Product passes through four stages of its life cycle. Every stage poses different opportunities and challenges to the marketer.

                           INTRODUCTION  STAGE

·      The first of the four product life cycle stages.

·         Any business that is launching a new product needs to appreciate that this initial stage could require significant investment.

·          This is all about building the demand for the product with the consumer, and establishing the market for the product.

Challenges of the Introduction Stage:

·         Small or no market

·         High costs

·         Losses, Not Profits

Benefits of the Introduction Stage:

·         Limited competition

·         High Price

Marketing Strategies for Introduction Stage:

Following are the possible strategies during the first stage:

1. Rapid Skimming Strategy:

This strategy makes a sense in following assumptions:

(a) Major part of market is not aware of the product.

(b) Customers are ready to pay the asking price.

(c) There possibility of competition and the firm wants to build up the brand preference.

(d) Market is limited in size.

2. Slow Skimming Strategy:

This strategy can be used under following assumptions:

(a) Market is limited in size.

(b) Most of consumers are aware of product.

(c) Consumers are ready to pay high price.

(d) There is less possibility of competition.

3. Rapid Penetration:

It is based on following assumptions:                                                                                          

(a) Market is large.

(b) Most buyers are price-sensitive. They prefer the low-priced products.

(c) There is strong potential for competition.

(d) Market is not much aware of the product. They need to be informed and convinced.

(e) Per unit cost can be reduced due to more production, and possibly more profits at low price.

4. Slow Penetration:

Assumptions of this strategy:

(a) Market is large.

(b) Market is aware of product.

(c) Possibility of competition is low.

(d) Buyers are price-sensitive or price-elastic, and not promotion-elastic.

GROWTH STAGE

·         The second of stages in the product life cycle

·         This is the key stage for establishing a product’s position in a market, increasing sales, and improving profit margins

·         profits are at their highest during the Growth stage, but in order to ensure that a product has as long a life as possible, it is often necessary for manufacturers to reinvest some of those profits in marketing and promotional activity during this stage, to help guarantee continued growth and reduce the threat from the competition.

Challenges of the Growth Stage:

·         Increasing Competition

·         Lower Prices

·         Different Marketing Approach

Benefits of the Growth Stage:

·         Costs are Reduced

·         Greater Consumer Awareness

·         Increase in Profits

Marketing Strategies for Growth Stage:

Several possible strategies for the stage are as under:

1. Product qualities and features improvement

2. Adding new models and improving styling

3. Entering new market segments

4. Designing, improving and widening distribution network

5. Shifting advertising and other promotional efforts from increasing product awareness to product conviction

6. Reducing price at the right time to attract price-sensitive consumers

7. Preventing competitors to enter the market by low price and high promotional efforts

 

MATURITY STAGE

·         The third of the product life cycle stages can be quite a challenging time for manufacturers.

·         The primary focus for most companies will be maintaining their market share in the face of a number of different challenges.

·         With sales reaching their peak and the market becoming saturated, it can be very difficult for companies to maintain their profits

·         organizations look for innovative ways to make their product more appealing to the consumer that will maintain, and perhaps even increase, their market share. 

Challenges of the Maturity Stage:

·         Sales Volumes Peak

·         Decreasing Market Share

·         Profits Start to Decrease

Benefits of the Maturity Stage:

·         Continued Reduction in Costs

·         Increased Market Share Through Differentiation

Marketing Strategies for Maturity Stage:

Following possible strategies are followed:

1. To Do Nothing:

2. Market Modification:

There are three ways to expand the number of users:

i. Convert non-users into users by convincing them regarding uses of products

ii. Entering new market segments

iii. Winning competitors’ consumers

Sales volume can also be increased by increasing the usage rate per user.

This is possible by following ways:

i. More frequent use of product

ii. More usage per occasion

iii. New and more varied uses of product

3. Product Modification:

Product modification can take several forms:

i. Strategy for Quality Improvement:

ii. Strategy for Feature Improvement:

Product improvement is beneficial in several ways like:

(1) It builds company’s image as progressiveness, dynamic, and leadership,

(2) Product modification can be made at very little expense,

(3) It can win loyalty of certain segments of the market,

(4) It is also a source of free publicity, and

(5) It encourages sales force and distributors.

4. Marketing Mix Modification

Decline stage

·         The last of the product life cycle stages

·         Many products going through the Decline stage of the product life cycle will experience a shrinking market coupled with falling sales and profits

·         However, depending on the particular markets involved, some companies may be able to extend the life of their product and continue making a profit, by looking at alternative means of production and new, cheaper markets

Challenges of the Decline Stage:

·         Market in Decline

·         Falling Sales and Profits

·         Product Withdrawal

Benefits of the Decline Stage:

·         Cheaper Production

·         Cheaper Markets

Marketing Strategies for Decline Stage:

Company may follow any of the following strategies:

1. Continue with the Original Products:

2. Continue Products with Improvements:

3. Drop the Product:

Product may be dropped in following ways:

i. Sell the production and sales to other companies

ii. Stop production gradually to divert resources to other products

iii. Drop product immediately.

Product Life Cycle Examples:

The traditional product life cycle curve is broken up into four key stages. Products first go through the Introduction stage, before passing into the Growth stage. Next comes Maturity until eventually the product will enter the Decline stage. These examples illustrate these stages for particular markets in more detail.

• 3D Televisions: 3D may have been around for a few decades, but only after considerable investment from broadcasters and technology companies are 3D TVs available for the home, providing a good example of a product that is in the Introduction Stage.
• Blue Ray Players: With advanced technology delivering the very best viewing experience, Blue Ray equipment is currently enjoying the steady increase in sales that’s typical of the Growth Stage.
• DVD Players: Introduced a number of years ago, manufacturers that make DVDs, and the equipment needed to play them, have established a strong market share. However, they still have to deal with the challenges from other technologies that are characteristic of the Maturity Stage.
• Video Recorders: While it is still possible to purchase VCRs this is a product that is definitely in the Decline Stage, as it’s become easier and cheaper for consumers to switch to the other, more modern formats.