Chapter 11 Product Management Over the Product Life Cycle

1
Chapter 11Product Management Over the Product
Life Cycle
2
What is the Product Life Cycle?

• Describes the stages a product goes through in
  the marketplace including introduction, growth,
  maturity, and decline.
• PLC can apply to
• Product category (watches)
• Product form (digital)
• Product brand (Timex)

3
Slide 11-7
4
I. Introductory Stage

• A. Characteristics
• Low sales volume
• High costs
• No or little direct competition
• Basic product configuration
• B. Strategies
• Develop primary demand by building awareness and
  educating consumers
• Stimulate opinion leaders to buy the product
• Build channels of distribution (selective in the
  beginning)
• Two pricing strategies
• price skimming introduce at high price
• price penetration introduce at low price

5
II. Growth Stage

• A. Characteristics
• Sales volume increases significantly
• Costs per unit decrease
• Competition increases
• More product variation
• Strategies
• Engage in product modification
• Build selective demand stress differentiation
• Move toward intensive distribution
• Practice more aggressive pricing

6
Ford Hybrid Automobile andCanon Digital Rebel
Camera What stage of the product life cycle?
Slide 11-10
7
III. Maturity Stage

• A. Characteristics
• Sales growth slows then levels off
• Profits decline for the industry
• Marginal competitors leave marketplace
• B. Strategies
• Rejuvenate product change packaging, new
• models, line extensions
• Stimulate usage rate
• Maintain brand loyalty through reminder
  promotions
• Continue aggressive pricing
• Continue intensive distribution

8
IV. Decline Stage

• A. Characteristics
• Strong downward shift in sales
• Profits stay low and continue to decline
• Only a few strong competitors remain
• Back to basic product configurations
• B. Strategies
• Distribution reduced to fewer outlets
• Promotional support reduced
• Prices lowered
• Use harvesting strategy

9

• Product life cycles vary in length
• Product life cycles are getting shorter