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T6: Pt2 Product Life Cycle (PLC) (Five factors of long-term marketing…
T6: Pt2 Product Life Cycle (PLC)
Product Life Cycle (PLC)
- good summary table on p.371
2.
Growth**
Sales growth rate fast
Focus is on strengthening the company and brand in the market
Competitors will be entering market by now
Market penetration is option and market share is a focus
Benefits from economies of scale and better control of costs and prices
Strategies
Enter new market segments
Increase distribution or add new distribution channels
Add new models or flanker products
Move from product-awareness to product-preference advertising
Improve quality/styling/features
Reduce price to attract next tier customers
Must sacrifice short-term profits for long-term gains at this point
3. Maturity
Sales slow then stabilise, will hit industry peak
Marketing strategies move to extending PLC and encouraging greater usage
Should be underway with replacement product development process
Strategies
Market modification
Expand the number of users
Attract competitors customers
Enter a new market segment
Convert nonusers
Increase the usage rates among users
Use on more occasions
Use more of the product on each occasion
Use the product in different ways
Product modifications
Quality
Features
Styling
Marketing programme modifications
Particularly price, distribution, communication
Can be any aspect of the marketing mix
Hour-glass can establish - squeezing out the mid-range companies
Players
Niche players
Weakest withdraw
Dominant giants
Quality specialist
Service specialist
Cost leader
1. Introduction
Sales are slow
Marketing is focused on innovators and early adopters
Entry to the market
Emphasis on awareness strategies
Competitors are taking notice and watching progress
Profits will be negative or low
Strategies
Long-range
P
roduct
M
arket expansion mapping, p.366
Pioneer or not
4. Decline
Market saturation - sales slow and start decline
Company needs to consider all exit options for the product/brand
Eliminating weak products
Harvesting
Define: Gradually reducing a product or business cost while trying to maintain sales
Reduce R&D costs and plant investment
May reduce quality, sales force size, marginal services, advertising costs
Ethically ambivalent and difficult to execute
Can substantially improve cashflow
Divest if possible, or liquidate
PLC asserts that:
Product sales go through distinct stages, changing the challenges and opportunities for the seller
Profits rise and fall with the stages
Products have a limited life
Each stages requires different marketing, financial, manufacturing, purchasing, and HR strategies
Special categories of PLCs
Fashions
Stages
Emulation
Mass-fashion (contributes to inevitable decline)
Distinctiveness
Decline
Will last longer if based on genuine need
Fads
Don't really fulfil a strong need
If identified, smart companies can capitalise
Sharp rise and fall
Styles
Can last for generations
Go in and out of vogue
Appears in architecture, clothing (formal, casual), art
Five factors of long-term marketing leadership (Golder & Tellis, p.365) - Could look to Collins for comparison of this.
Relentless innovation
Financial committment
Persistence
Asset leverage
Vision of the mass market
Critics of PLC (p.371)
Potential to be a self-fulfilling prophecy
Too hard to know what stage a product is in
Too many variables to be useful
Too product-oriented, ignoring the overall market environment, which also goes through emergence, growth, maturity and decline.