Other types of PLC

Growth- Maturity
Cyclical
Scalloped- discovery of new product characteristics
Style – basic distinctive mode of expression especially in
homes, clothing, art – lasts generations
Fashion – currently accepted, popular – clothing, jewellery
Fad – fashions that come come quickly adopted
enthusiastically, peak early and decline fast. Appeal to
people looking for excitement and do not satisfy a strong
need
 Introduction Stage

Sales – slow – instant coffee, orange juice,

creamers took time for acceptance
Delays in expansion of production capacity
Technical problems
Slow distribution
Customer reluctance to change behavior
 Introduction Stage

Profits – negative – low sales

Heavy distribution and SP spends
Money required to “fill the pipeline” and set up
distribution channels
SP highest ratio to sales – induce product trial
 Introduction Stage

Prices – higher side

Costs are high due to relatively low output rates
Technical problems not fully mastered
High margins to support heavy promo spends to
achieve high growth
 Marketing Strategies

PROMOTION
High Low
PRICE Rapid Skimming Slow skimming
High Strategy Strategy

Rapid Slow Penetration

Low Penetration Strategy
Strategy
 Rapid Skimming

Launch product at a high price and promo level

Charge a high price to recover as much profit

per unit as possible

Spend heavily on promos to convince customers

 Assumptions

Large part of potential market is unaware of the

product
Those aware are willing to pay the price and
eager to have the product
Firm faces potential competition and wants to
build brand preference
 Slow Skimming
Launch new product at high price and low
promotion
High price – recover cost
Low promo –keep marketing expenses low
Assumptions-
Market is limited in size
Market is aware of product
Buyers willing to pay the price
Potential competition not imminent
 Rapid penetration

Launch product at low price and heavy spend on

Promo- fast market penetration and large market
share
Market is large
Unaware of the product
Buyers are price sensitive
Strong potential competition
 Slow Penetration

Launch product at low price, low promo

Low price –rapid product acceptance
Low promo – higher profits
Market demand is price sensitive and not promo
sensitive
Market is large, highly aware of the product
 Growth Stage
Rapid increase in Sales
Increase in competition – new competitors
Introduce new product features
Expand distribution chain
Prices remain or fall slightly
Sales rise faster than promo spends
Profits increase as promo spends spread over
larger volume
Unit manufacturing costs fall faster – producer
learner effect
 Marketing Strategies

Improve product quality – add new features and

improve styling
Add new models – sizes, flavors
Enter new market segments
Increase distribution coverage and new
distribution channels
Lower prices to attract next layer of price
sensitive buyers
 Maturity Stage

Rate of sales growth slows down

Most products are in this stage and thus most
marketing management deals with the mature
product
Three phases –
1. Growth Maturity
2. Stable Maturity
3. Decay Maturity
 Three phases

1. Growth Maturity – sales growth decline, no

new distribution channels to fill, laggard buyers
2. Stable Maturity- sales flatten – market
saturation. Sales governed by population
growth and replacement demand
3. Decay Maturity- absolute level of sales decline-
customers switch to other brands
 Three phases

4. Shake out period begins- weaker competition

withdraws

5. Dominant firms – quality, service and cost leader

6. Surrounded by market niche's- product and

market specialization
 Marketing Strategies

1. Market modification

2. Product modification

3. Marketing Mix modification

 Market modification

Convert nonusers
Enter new segments
Win competitors customers
More frequent use
More usage per occasion
New and more varied uses
 Product modification
Improve product characteristics
Quality improvement- durability, reliability,
speed, taste – bigger, stronger, better
feature improvement – size, weight, materials,
additives, accessories
style improvement- aesthetic appeal- new car
models, sleeker design, fashion colors
 Marketing Mix modification

Price
Distribution
Advertising
Sales Promotion
Personal Selling
Services
 Decline Stage
Tech. Advances
Shifts in consumer tastes
High domestic and foreign competition
This leads to Over capacity,Price cutting and
Profit erosion
Company then needs to -
Identify weak products
The Drop Decision