PRODUCT LIFE-CYCLE MARKETING STRATEGIES
A companyâ€™s positioning and differentiation 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 a limited life.
2. Product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller.
3. Profits rise and fall at different stages of the product life cycle.
4. Products require different marketing, financial, manufacturing, purchasing, and human resources strategies in each life-cycle stage.
Product Life Cycles
Most product life-cycle curves are portrayed as bell-shaped on a graph. This curve is typically divided into four stages: introduction, growth, maturity and decline.
(a) Introduction- A period of slow as the product is introduced in the market. Profits are nonexistent because of the heavy expenses of product introduction.
(b) Growth- A period of rapid market acceptance and substantial profit improvement.
(c) Maturity- A slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased competition.
(d) Decline- Sales show a downward drift and profits erode.
The PLC concept can be used to analyze a product category (liquor), a product form (White liquor), a product (vodka), or a brand (Smirnoff).Not all products exhibit a bell shaped PLC. A growth slump maturity pattern is a characteristic of small kitchen appliances such as handheld mixers and bread makers. Sales grow rapidly when the product is first introduced and then fall to a â€œpetrifiedâ€? level that is sustained by late adopters buying the product for the first time and early adopters replacing the product.
The cycle-recycle pattern often describes the sales of new drugs. The pharmaceutical company aggressively promotes its new drug, and this produces the first cycle. Later, sales start declining and the company gives the drug another promotion push, which produces a second cycle (usually of smaller magnitude and duration).
Another common pattern is the scalloped PLC. Here sales pass through a succession of life cycles based on the discovery of new-product characteristics, uses, or users. The sales of nylon, for example, show a scalloped pattern because of the many new usesâ€”parachutes, hosiery, shirts, carpeting, boats sails, automobile tiresâ€”that continue to be discovered over time.
Exceeding Customer expectations:
Crego and Schiffrin have proposed that customer centered organizations should study what customers value and then prepare an offering that exceeds their expectations. They see this as a three-step process:
1. Defining the customer value model: The company first lists all the product and service factors that might influence the target customersâ€™ perception of value.
2. Building the customer value hierarchy: The company assigns each factor to one of four group: basic, expected desired and unanticipated. Consider the set of factors at a fine restaurant.
Â· Basic: The food is edible and delivered in a timely fashion. (If this is all the restaurant does right, the customer would normally not be satisfied).
Â· Expected: There is good china and tableware, a linen table cloth and napkin, flower, discreet service, and well prepared food (These factors making the offering acceptable but not exceptional).
Â· Desired: The restaurant is pleasant and quiet, and the food is especially good and interesting.
Â· Unanticipated: The restaurant serves a complimentary sorbet between the courses and places candy on the table after the last course is served.
3. Deciding on the customer value package: Now the company chooses that combination of tangible and intangible items, experiences, and outcomes designed to outperform competitors and win the customersâ€™ delight and loyalty.