Under the current competitive marketing environment, how to manage a good marketing strategy for a certain product is quite crucial for an enterprise’s survival and development. Product is the most essential part in the marketing mix. Life cycle for a product is another most important factor which should be identified by an enterprise correctly. To understand product life cycle is very important for marketers when they are planning the marketing strategies for its product. Therefore, as far as the product life cycle is concerned, this article will first illustrate a comprehensive concept about the product life cycle. Following this, the article will analyze the specific marketing strategies which shall be referred by marketers in the marketing process.
The Concept of Product Life Cycle
Just like everything else, product has its own life cycle too. The theory of product life cycle (PLC) was firstly brought forward and shaped by Professor Raymond Vernon of Harvard University in 1966. PLC refers to a period in which a product starts with its initial phase (R&D) and ends with its removal from the marketplace. A typical PLC includes four phases: introduction, growth, maturity and decline.
1. Introduction Stage
Introduction stage refers to the testing period of a product launching into the marketplace. Once a new product enters into the market, it starts the introduction phase. At this stage, the quantity of the products in the market is small and customers are totally not familiar with the product. Except some customers pursuing new things, nobody else will probably buy this product.
2. Growth Stage
When the product launches in the introduction phase with a success of take-off in sales, the product develops into growth stage. Growth stage refers to the product has passed the marketing test with a good sales result and consumers gradually accept and recognize the product and the product has achieved its standing ground in the marketplace. In this phase the demand and sales of the product are growing rapidly. Company will have a significant cost reduction in the manufacture and gain more profits. Meanwhile, other competitors may launch the similar products into the market by seeing the profitable market in this product.
3. Maturity Stage
At this stage, the product is in the phase of mass production and is accessing to the market steadily. The market demand for the product has been standardized and the distribution of the product is well established. At this time, the product is produced at low cost. The rapid growth of sales will slow down or even decrease to some extent. Due to the intense competition environment, the companies have to add the product’s value by improving the quality, or modifying the associated features like its appearance, specification, packaging and services etc.
4. Decline Stage
Decline means the product is becoming obsolete. As the technology development and change of consuming habit, sales and profits of the product are declining. The product can not meet the customer’s demand and new products with better performance and lower price appear in the market which can satisfy the consumer’s needs well. At this time, the product with higher production cost will gradually stop manufacturing as no profits from the market. Therefore, it is the time for the product to end its life cycle and withdraw from the market completely.
Marketing Strategies for the Product Life Cycle Stages
Product life cycle is a very important concept for marketer as it is directly connected with the marketing strategies for the product. In different PLC stages, marketers should consider to apply different marketing strategies.
In introduction stage, the company should highly focus on building product awareness and cover the market share rapidly as there is less challenge from competitors. Firms should consider applying large expenditure on promotion and advertising and be prepared to get only a small proportion of that back. Pricing is also important for company to establish in the phase. Company can establish a high price for recovering the development costs or low penetration price to build its market share quickly.
In growth stage, the basic guiding concept for the marketing is to expand the market and cover the market share maximum. Its target is to maintain its competitive status while expanding market rapidly. The marketing strategies in this phase should be different from that in the introductory stage. Company must differentiate its products offerings from the competitors. Promotion and advertising continues to aim in establishing a leadership in this market. This period is also the best time to make an overall coverage strategy in all marketplaces so as to reach to more consumers.
At maturity phase, the increasingly growth in sales is diminishing. The competition in the marketplace with appearance of many other replaceable new brands is getting intense ever before. At this stage, the marketing strategy’s aim is to defend the market share as best as it can do. Various marketing tools are applied, such as pricing and discount policies as responding to the competition environment. Promotion and advertising should emphasize product differentiation in terms of quality and reliability. Distribution continues multi-distributing channels. Successful product maturity stage is extended beyond the regular expectation. “Tide” washing powder is a good example. It is a very old brand, but still growing.
At decline stage, the sales continues decreasing and pricing strategies like discount, is not effective. Therefore, firms should make options for handling the product effectively. If company decide to maintain the product, three marketing strategies may be helpful. (1). Continuance of the previous marketing strategies with respect to price, market, distribution and promotion. (2). Concentrate on the most potential marketing channels. (3). Harvesting strategy. It means to reduce price greatly and promotion personnel or maintain the original price or even higher than before to maximize profits before withdrawal from the market.
In conclusion, product life cycle is a very important concept within an organization. In order to make a product survive in the market as long as possible, it is very essential for the marketers to understand the product life cycle so as to provide/design effective marketing strategies for each phase of PLC. An effective management of PLC will probably extend its life and gain growth in the competitive market.