A company's positioning and diffrentiation strategy must change as the product, market and competitors change over the Product Life Cycle(PLC). to say that a product has a life cycle is to assert four things:
1.Products have limited life
2. Product sales passes through different stages, each posing a different challenge and opportunity.
3.Profits rise and fall at different stages of life cycle.
4.Products require different strategies in different life cycles.
The product life cycles:
1. Introduction: A period of slow growth, because the product is just introduced in the market, the profits here are non existent due high cost of advertising and other product introduction strategies.
2. Growth: A period of rapid market acceptance and substantial profit improvement
3. Maturity: A slowdown in sales growth, because the product has achieved acceptance by most potential buyers. I believe this to be more of a stable stage for the product,where the graph is almost flat. looking at Amul butter, I think it is safe to say that Amul Butter is in its maturity stage.
4. Decline: Here the sales show a downward drift and profits decrease. This is where the company has to really think of ways to get its product back in business. It may try hard at advertising, or may be add new features, but basically come with a new marketing strategy to increase its falling profits.
There are variations to this bell shaped curve for various product categories.
They are as follows:
- Growth - Slump - Maturity Pattern: Here the sales rapidly grow as the product is introduced, and the fall with the same rapid rate.It is then sustained by late adopters. Such a trend is usually seen in small kitchen appliances products like toasters.
- Cycle - Recycle Pattern: Here the sales grow rapidly and fall too. But then the company gives a promotional push and again the sales grow or again the first cycle is repeated. This second cycle is usually of a shorter duration. The best example could be Bournvita, the chocolate drink which was later introduced with a new pack and claimed to be better than before due to new and improved ingradients.
- Scalloped Pattern: Here sales pass through a succession of life cycles based on the discovery of new product characteristics, uses or users. For example: The sales of nylon show this pattern because the many new uses - Parachutes, shirts, boat sails etc. that continue to be discovered over time.
Marketing strategies for Introduction Stage : Since the profits are really low due to all the introduction costs, the company has to carefully plan its introduction strategy. Being first in the market can be rewarding in case of a new to the world product, but may also be disastrous. It is also a lot more expensive to be the first to enter as the consumers and customers are not aware of the product and hence a lot is spent in creating awareness.
To come in second makes more sense if the product is augmented and has superior offerings. In case of Amul, Amul butter had to fight the regular home made white butter to have a good position in the market. With an advertising campaign that started in 1967, it is now one of the longest running campaigns.
Marketing Strategies for Growth Stage: This is the stage of rapid growth. New competitors enter, to cash in on the success of your product.Prices remain same or fall slightly depending on the demand.Sales rise faster than promotional expenditure. Companies must improve the quality of the product, add new features etc. Companies may offer new flavors, like Amul coming up with its low fat option. Companies also lower prices to attract customers.
Marketing Strategy for Decline Stage: Sales decline for a number of reasons like technological advance, change in consumer tastes, or increased competition. Unless strong reasons for retention exists, carrying a weak product proves very costly for a company. The appropriate strategy also depends on the attractiveness of the market and the companies competitive strength in he market. In the decline stage a company may drop its weak products, basically we are talking about phasing out a product.
| Introduction | Growth | Maturity | Decline | |
| Characteristics | ||||
| Sales | Low sales | Rapidly rising sales | Peak sales | Declining sales |
| Costs | High cost per customer | Average cost per customer | Low cost per customer | Low cost per customer |
| Profits | Negative | Rising profits | High profits | Declining profits |
| Customers | Innovators | Early adopters | Middle majority | Laggards |
| Competitors | Few | Growing number beginning to decline | Stable number | Declining number |
| MARKETING OBJECTIVES | ||||
| Create product awareness | Maximize market share | Maximize profit while defending market share | Reduce expenditure and milk the brand | |
| STRATEGIES | ||||
| Product | Offer a basic product | Offer product extensions, service, and warranty | Diversify brand models | Phase out weak items |
| Price | Use cost-plus | Price to penetrate market | Price to match or beat competitors | Cut price |
| Distribution | Build selective distribution | Build intensive distribution | Build more intensive distribution | Go selective: phase out unprofitable outlets |
| Advertising | Build product awareness among early adopters and dealers | Build awareness and interest in the mass market | Stress brand differences and benefits | Reduce to level needed to retain hard-core loyals |
| Sales Promotion | Use heavy sales promotion to entice trial | Reduce to take advantage of heavy | Increase to encourage brand switching consumer demand | Reduce to minimal level |
Industry Life Cycle is nothing but the summation of the PLCs of all the products that particular industry has to offer. Since the product is Amul Butter, ILC will not apply here
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