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product life cycle
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PRODUCT LIFE CYCLEWITH CASE STUDIES
INTRODUCTION A product is introduced among consumers, and if consumers perceive it as meeting their needs and want, it experiences a period of growth. Subsequently, it reaches the stage of maturity and when it loses its appeal, its decline starts and eventually is may be taken off the market (demise). The classical product life cycle curves are depicted as “S” shaped and generally divided in four stages: Introduction, growth, maturity, and decline.
Introduction Growth Maturity Decline
(d) Classical Life Cycle Pattern
Time
Sales
Profits
Loss
Common Product Life Curves
Introduction Stage
The introductory stage is viewed as fairly risky and quite expensive because large amounts of money is spent on advertising and other tools of marketing communications to create consumer awareness in sufficiently large numbers, and encourage trial.
3D Televisions: 3D may have been around for a few decades, but
only after considerable investment from broadcasters and
technology companies are 3D TVs available for the home,
providing a good example of a product that is in the Introduction
Stage.
INTRODUCTION STAGE OF THE PLC
SalesCostsProfits
Marketing Objectives
ProductPrice
Low sales
High cost per customer
NegativeCreate product awareness
and trialOffer a basic product
Use cost-plus
Distribution Build selective distribution
Advertising Build product awareness among early adopters and
dealers
Growth Stage
The growth stage of life cycle is characterized by a sharp rise
in sales. Only a small percentage of new products introduced
survive to reach the growth stage.
Tablet PCs: There are a growing number of tablet PCs for
consumers to choose from, as this product passes through the
Growth stage of the cycle and more competitors start to come
into a market that really developed after the launch of Apple’s
iPad. Another example is NANO car.
Growth Stage of the PLC
SalesCostsProfits
Marketing Objectives
ProductPrice
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market shareOffer product extensions,
service, warrantyPrice to penetrate market
Distribution Build intensive distributionAdvertising Build awareness and interest
in the mass market
Maturity Stage
Most products after surviving competitive battles, winning
customer confidence and successful through growth phase enter
their maturity stage. The sales plateau, and this flattening of
sales usually lasts for some time because most products in the
category have reached their maturity stage, and there is stability
in terms of demand, technology, and competition.
Laptops: Laptop computers have been around for a number of
years, but more advanced components, as well as diverse
features that appeal to different segments of the market, will help
to sustain this product as it passes through the Maturity stage.
Maturity Stage of the PLC
SalesCostsProfits
Marketing Objectives
ProductPrice
Peak sales
Low cost per customer
High profitsMaximize profit while defending
market shareDiversify brand and models
Price to match or best competitors
Distribution Build more intensive distribution
Advertising Stress brand differences and benefits
Decline Stage
Decline stage sets in when customer preferences change
due to the availability of technologically superior products
and consumers’ shift in values, beliefs, and tastes to
products offering more value.
Decline Stage of the PLC
SalesCostsProfits
Marketing Objectives
ProductPrice
Declining sales
Low cost per customer
Declining profitsReduce expenditure and milk
the brandPhase out weak items
Cut price
DistributionGo selective: phase out
unprofitable outlets
Advertising Reduce to level needed to retain
hard-core loyal customers
Implications and Limitations of Product Life Cycle Concept
Product life cycle concept shows a framework to spot the occurrence of opportunities and threats in a product market and the industry. This can help firms to reassess their objectives, strategies, and different elements of marketing programme.
INTRODUCTION- HUL
Hindustan Unilever Limited (HUL) is India's largest FMCG company, touching the lives of two out of three Indians with over 20 distinct categories in home & personal care products and food & beverages.
INTRODUCTION-LUX
1916LUX
launched in USA as Laundry
soap
1929LUX
launched in India1925
LUX launched in
USA as Toilet soap
1960LUX went colored
PRODUCT LIFE CYCLE
INTRODUCTION (1929- 1950S)Company Objectives Actions
Sales Low
Cost of manufacturing HighProfits Negative
Marketing Objective Create product awareness in major cities
Product strategy Offer a basic productPrice strategy Higher than LifebuoyDistribution Created network in major
citiesAdvertising strategy Awareness among early
adopters.
GROWTH- (1950S- 1990S)Company Objectives Actions
Sales Rising Sales
Cost of manufacturing Average cost reductionProfits Positively increasing
Marketing Objective Maximise market shareProduct strategy Offer variants
Price strategy To penetrate the marketDistribution Intensive network in the
entire countryAdvertising strategy Awareness an interest in
mass market
MATURITY-(1990S TO TILL DATE )Company Objectives Actions
Sales Peak sales
Cost of manufacturing LowProfits High
Marketing Objective Maximize profit while defending market share
Product strategy Diversify brand Price strategy To match the nearest competitorDistribution More intensive focusing on rural
areaAdvertising strategy Multiple brand ambassadors for
different variants.
CASE STUDY 2: CADBURY
CADBURY-HISTORY Cadbury Chocolates was started in
Birmingham in 1824 by John Cadbury. Cadbury Dairy Milk came up with the mix
of milk and chocolate tray which is pretty much how the product still is.
No drastic change in the recipe of the product but the packaging and the representation and prominence of the ‘glass and half of milk’ logo has changed over a period of time.
1904 - A new recipe is perfected by George Cadbury for milk chocolate.
1905 - Cadbury launches Dairy Milk onto the market
1913 - Dairy Milk becomes Cadbury's best selling line.
1928 - Fruit & Nut is introduced as a variation of Dairy Milk
1933 - WholeNut is added to the Dairy Milk family.
1948 - Cadbury Dairy Milk is sold in India 1998 - Dairy Milk is re-launched with the
new and modern pack design, but its recipe and unique taste are still very similar to the original recipe
2005 - Cadbury Dairy Milk celebrates its 100th birthday
CONSUMER TRENDS The Mithaai or sweet has been the tradition
in India so far. Chocolates are now trying to break into
that league. Chocolates are more of an impulse buy. Consumers are preferring chocolates to
Mithaai because of proper packaging, longer shelf life, mid-range pricing and convenience.
CONTINUED.... Consumers have started showing interest in
not just milk chocolates but other varieties like Dark Chocolate etc.
One of the major challenges that Cadbury Dairy Milk faces is a decline in sales due to new variants being introduced in the market by other brands which could result in the product moving from maturity to decline stage.
Another major challenge comes from a different product category altogether which is the Indian Sweets or Mithaai.
INTRODUCTION In the 1980s, CDM was positioned as ‘the
perfect expression of love’, captured in memorable copy.
During the early1990s, communicating that it was the ‘real taste of chocolate’.
In 1994 came the path-breaking ‘real taste of life’ campaign.
Cadbury Dairy Milk redefined itself as the perfect expression of spontaneous, shared good feelings, providing the ‘real taste of life’ experience.
The strategy paid off: Brand Cadbury grew by over 50% in sales volumes.
GROWTH 1998- The next stage of growth for the
brand deals with popularizing consumption in a social context, especially in more traditional settings like weddings.
With the campaign ‘Khaanein waallon ko khaanein ka bahana chahiye’
Cadbury Dairy Milk aimed to substantially increase penetration levels with the award winning ‘Kuchh khaas hai.. .’campaign.
The brand penetrated into smaller towns and sales volumes grew by 40%
MATURITY With Bachchan they also launched their new
positioning of “Kuch Meetha Ho Jaaye” bringing in the tradition of celebrating a joyous occasion in India with sweets and now Cadbury Dairy Milk in particular.
The “Pehli Tareekh Hai” campaigns talked about the importance of having Dairy Milk and celebrating on getting your pay on pay-day.
“Shubh Aarambh” ads that have brought back the old charm of Cadbury Dairy Milk with its very interesting insight of mixing the traditional with the new age
DECLINE / NEW PRODUCT INTRODUCTIONMany marketing experts would agree
that the best time to reinvent for a brand is when the going is still good.
No brand can afford to assume it’s created the definitive product.
Cadbury Dairy Milk(CDM) introduce the sub brand Silk.
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