PRODUCT AND BRAND MANAGEMENT MKT - 451 LECTURE 4 INSTRUCTOR: DR. HAMZA PRODUCT LIFE CYCLE AFTER THIS LECTURE YOU SHOULD BE ABLE TO: • Product Life Cycle Definition • Stages : Recognize the stages and characteristics of the product life cycle • Identify appropriate marketing strategies for products in different life cycle stages • Importance • Describe the limitations of the product life cycle concept. • Discuss different product - mix and product - line strategies. PRODUCT LIFE CYCLE • Product Life Cycle Definition • Product Life cycle shows the typical path or stage of a product • It describes the different stages of a product from the period of its first launch in the market to its final withdrawal from the market • The understanding of a product life cycle of a particular product is very important for marketers and company to make adequate decisions PRODUCT LIFE CYCLE • like, what is the right time to introduce your new product in the market, what price should be fixed and how to plan effective as well as up to date for your product NEW PRODUCT DEVELOPMENT What is the demand for these products in 2022 compared to 2000? » Fixed phone, land - line » Cell phones » VCD, DVD PLAYER VS FLASH DRIVE » DESK TOP COMPUTER VS LAPTOP Demand for products ??? • New products meet needs better » Nokia 3360 v/s Galaxy S8 +, iPhone 10 • Technology changes » Video conference v/s air travel • Substitutes replace a product » Telegrams v/s SMS, SMS v/s Mobile Chat • Population moves to the next level » Basic variant of a car to full loaded model Why would demand change? NEW PRODUCT DEVELOPMENT STRATEGY The Product Life Cycle Concept is Based on Four Premises Products have a limited life. Product sales pass through distinct stages, each with different marketing implications. Profits from a product vary at different stages in the life cycle. Products require different strategies at different life cycle stages. Individual Product Strategies • Product Life Cycle (PLC): • Describes the advancement of products through identifiable stages of their existence Introductory Stage Growth Stage Maturity Stage Decline Stage Total Market Sales Time The Product Life Cycle Introductory Stage Growth Stage Maturity Stage Decline Stage Total Market Sales Time The Diffusion Process Innovators (2.5%) Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%) Laggards Late Majority Early Majority Early Adopters Innovators "The Chasm" Technology Adoption Process The Diffusion Process Laggards Late Majority Early Majority Early Adopters Innovators "The Chasm" Technology Adoption Process PLC Stages and Characteristics Product Life - Cycle Strategies • Product development • Introduction • Growth • Maturity • Decline • Begins when the company develops a new - product idea • Sales are zero • Investment costs are high • Profits are negative PLC Stages Product Life - Cycle Strategies • Product development • Introduction • Growth • Maturity • Decline • Slow sales growth – cell phones 15 yrs back, Hybrid cars today, Blu - Ray technology, HD TV • Intensive promotions, communications • Price uncertainty • Uncertain competition reactions • Uncertain consumer responses • Non - existent profits • Negative cash flow PLC Stages Product Life - Cycle Strategies • Product development • Introduction • Growth • Maturity • Decline • Rapid sales growth – cell phones today, internet, LCD TV • Market acceptance • Price stabilization • Features stabilization • Profits start coming in • Brand building starts • Competition starts building PLC Stages Product Life - Cycle Strategies • Product development • Introduction • Growth • Maturity • Decline • Slow sales growth – Land lines, 100cc motorbikes, fountain pens • Price reductions, promotions • Features changes / reductions / new • Profits go down • Competitors introduce new products • Brand sustainability is imperative in communication PLC Stages Product Life - Cycle Strategies • Product development • Introduction • Growth • Maturity • Decline • Decline in sales – audio & video cassette players, pagers • New products meet satisfaction • Profits erode • Communication expenses are stopped PLC Stages PLC Marketing Strategies Stage Objective Marketing Strategy Introduction Awareness & trial Communicate benefits Growth Usage of firm’s brand Specific brand communication, lower prices, expand distribution Maturity Maintain market share Sales promotion, drop price, Extend life cycle expand distribution, new uses & new versions of product Decline Decide what to do Maintain, harvest, or divest with product