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Slide 14.

New-product development and product life-cycle strategies Chapter 14

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The product life-cycle The product life-cycle (PLC) is the course of a products sales and profits over its lifetime. It involves five stages: Product development Introduction Growth Maturity Decline

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The product life cycle

Figure 14.2 Sales and prots over the products life from inception to demise

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The PLC as an effective marketing tool The PLC can be applied to product classes as well as styles, fashions and fads. The PLC will reflect these aspects in the length and type of PLC as illustrated:

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The PLC as an illustrator

Figure 14.3 Marketers need to understand and predict style, fashion and fad

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Product / concept development stage

Product concept converted into meaningful consumer terms of a product image. Concept tested to ascertain commercial appeal.

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Introduction stage
The phase where the new product is distributed and made available for purchase. The market pioneer has much responsibility when devising the appropriate strategy as it sets the stage for the products introduction to the consumer. Characterised by high promotional costs.

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Introduction stage strategies

Strategies are based upon the product and the dynamics of the market
Skim the market slowly using high price and relatively low promotional activity. Skim rapidly by using a high price and high promotion strategy if the market is price insensitive.

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Growth stage
The product sales begin to increase rapidly. Profit is generated as a result of effective promotional activity and the spread of costs over larger volume of sales.

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Maturity stage
The phase where sales growth slows or levels off. Marketers then seek to extend the life of the brand by the following methods;
New market development
New usage and application

Product development and modification Marketing innovation

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Decline stage
Sales decline. Marketers need to determine the value of retaining the product versus the cost of divesting from the product. This is weighed up against the market dynamics.

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Table 14.2 Summary of product life-cycle characteristics, objectives and strategies

Source: Philip Kotler, Marketing Management: Analysis, planning, implementation, and control, 11th edn, 2003, p. 340. Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ.