Question.3)
(b) Discuss Product Life Cycle concept and elaborate on the importance of PLC
as a tool for monitoring and nurturing a
the brand. Illustrate with suitable examples.
Ans : First referenced in the 1920s, the product life cycle
applies biological knowledge to products. In nature, a seed is planted, begins
to sprout, becomes an adult then eventually withers away and dies. The product
life cycle focuses on introduction (seed), growth (sprout), maturity (tree) and
decline (death) phases. Each phase has its own marketing mix strategy and
implications regarding product, price, distribution and promotion.
Life
Cycle Length and Incubation Period
Sometimes, the life cycle concept applies to a brand or
category of product. Fad items have a cycle of a few months, but some
categories, such as the gasoline automobile, will be around for at least a century.
During its incubation period, the product is developed and perfected. There are
no sales during this preparatory period, but the manufacturer prepares for the
product’s introduction into the marketplace.
Introduction
Stage
You can expect sales to be low while you perform
introductory marketing to create awareness. Your primary goal during this stage
is not to make a profit. Instead, you want to let customers know what your
product does, and why it is special. Typically, you will introduce one product
at a time, keeping the price either high for skim pricing--the most common--or
low for penetration pricing. Initial distribution is selective, but broadens
gradually based on your distribution plan. Early efforts focus on promotion and
recognition. Until customers know about the product, they will not buy it.
Growth
Stage
The growth stage is all about increasing sales and gaining
consumer loyalty. Competitors usually appear during the end of the growth
phase. Increased advertising builds brand preferences. Continuing to roll out
new product features, improvements or upgrades keeps your customers wanting
more. If demand for your product remains high, you can respond by keeping the
price at a high level or reducing the price to broaden your market share.
Distribution should be intensive during this phase to get the product out to
your entire consumer base.
Maturity
Stage
If your product survives the first two stages, it will
spend the most time in this phase. During the maturity stage, you will seek to
maintain market share and extend your product's life cycle. Tweaking your
product to make it unique helps it stand out from competitors. Keeping an eye
on the competition and pricing your product accordingly conserves market share,
while avoiding price wars. Widen distribution and offer incentives to sellers
to keep your product on the shelf. Finally, promoting brand loyalty and
offering consumer incentives spurs customers to switch to your brand.
Decline Stage
During the decline stage, demand for your product decreases
along with both price and profit margin. Now, you have three choices: maintain
the product and hope competitors do not, harvest the product and continue
making profit as long as possible, or discontinue the product. Reducing the
number of products, and refreshing the packaging can make them look new again.
Lowering prices helps liquidate inventory, but if your product continues to
serve a niche market, maintaining prices keeps profits coming in. Phasing out
less successful distribution channels and focusing promotions on brand image
for future products is a good strategy.
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