What marketing strategies are appropriate at each stage of the product life cycle?

A company's positioning and differentiation strategy must change as the product, market, and competitors change over the product life cycle

Typical life cycle

Introductory stage

there will most-likely be heavy promotional and advertising activity designed to raise awareness of the new product, and to seek sales amongst early adopters

Introduction Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Low sales Low sales

High cost per customerHigh cost per customer

NegativeNegative

Create product awareness and trialCreate product awareness and trial

Offer a basic productOffer a basic product

Use cost-plus Use cost-plus

DistributionDistribution Build selective distributionBuild selective distribution

AdvertisingAdvertising Build product awareness among early adopters and dealersBuild product awareness among early adopters and dealers

Strategic focus

• Inform potential customers• Induce product trial• Secure distribution in retail

outlets

Growth stage

• The growth stage is typically characterized by a strong growth in sales and profits. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Rapidly rising sales Rapidly rising sales

Average cost per customerAverage cost per customer

Rising profitsRising profits

Maximize market shareMaximize market share

Offer product extensions, service, warrantyOffer product extensions, service, warranty

Price to penetrate marketPrice to penetrate market

DistributionDistribution Build intensive distributionBuild intensive distribution

AdvertisingAdvertising Build awareness and interest in the mass marketBuild awareness and interest in the mass market

Growth Stage of the PLC

Strategic focus

• Persuasive advertising must be used• Maximize Market Share

Maturity stage

• During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up.

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Peak salesPeak sales

Low cost per customerLow cost per customer

High profitsHigh profits

Maximize profit while defending market shareMaximize profit while defending market share

Diversify brand and modelsDiversify brand and models

Price to match or best competitorsPrice to match or best competitors

DistributionDistribution Build more intensive distributionBuild more intensive distribution

AdvertisingAdvertising Stress brand differences and benefitsStress brand differences and benefits

Maturity Stage of the PLC

Strategic focus

• Develop and maintain brand loyalty• Competitive or promotional price may be used• Maximize profit while defending market share

Decline stage

• the market for a product starts to shrink, and this is what’s known as the decline stage as the market starts getting saturated or people start shifting to different products.

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

ProductProduct

PricePrice

Declining salesDeclining sales

Low cost per customerLow cost per customer

Declining profitsDeclining profits

Reduce expenditure and milk the brandReduce expenditure and milk the brand

Phase out weak itemsPhase out weak items

Cut priceCut price

DistributionDistribution Go selective: phase out unprofitable outletsGo selective: phase out unprofitable outlets

AdvertisingAdvertising Reduce to level needed to retain hard-core loyal customers Reduce to level needed to retain hard-core loyal customers

Decline Stage of the PLC

Strategic focus

• Decide upon which product models are to be kept and which ones are to phased out

• Reduce expenditure and milk the brand• Lessen advertising and retain loyal customers

Summary