Product Decision

1. Product Life Cycle
Dr. Pooja
Assistant Professor
Dept. of Commerce
AMPGC, BHU
Product Decisions

2. Introduction
• We have a life cycle, we are born, we grow, we mature, and finally we pass away.
Similarly, products also have life cycle, from their introduction to decline they
progresses through a sequence of stages. The major stages of the product life
cycle are - introduction, growth, maturity, and decline. Product life cycle describes
transition of a product from its development to decline.
The time period of product life cycle and the length of each stage varies from
product to product. Life cycle of one product can be over in few months, and of
another product may last for many years. One product reach to maturity in years
and another can reach it in few months. One product stay at the maturity for years
and another just for few months. Hence, it is true to say that length of each stage
varies from product to product.

3. Meaning & Definition
• Product life cycle is associated with variation in the marketing situation, level
of competition, product demand, consumer understanding, etc., thus
marketing managers have to change the marketing strategy and the
marketing mix accordingly.
• Product life cycle can be defined as "the change in sales volume of a
specific product offered by an organisation, over the expected life of the
product.“
• Philip Kotler:”The product life cycle is an attempt to recognize distinct
stages in sales history of the product.”
• Thus, we can define PLC as: PLC concerns with the study of the degree of
product acceptance by the market over time. It includes major rises and falls
of sales during its life.

4. Importance of Product Life Cycle
• Product life cycle is an important tool for market forecasting, planning
and control. Product life cycle is important in various ways. The situation
of the product can be analyzed properly and changes can be made in
order to increase profit. Some other important features are −
1. Helpful in formulating a proper product policy, production and pricing.
2. Helpful in modifying the marketing policy.
3. Helpful to the marketer regarding competition.
4. Cautions the management about the decline stage of the product.

5. Product Life Cycle
Product Life Cycle (PLC): The course of a product’s sales and profits
over its life

6. Marketing Strategies - Introduction
Stage
• Introduction stage is marked with slow growth in sales and a very little or no profit. Note that
product has been newly introduced, and a sales volume is limited; product and distribution
are not given more emphasis. Basic constituents of marketing strategies for the stage
include price and promotion. Price, promotion or both may be kept high or low depending
upon market situation and management approach. Following are the possible strategies
during the first stage:
1. Price Skimming of introducing a new product at high price and high promotional expenses
2. Slow Skimming Strategy to recover as much as gross profit as possible.
3. Rapid Penetration of launching the product at a low price and high promotion to get larger
market share.
4. Slow Penetration of introducing a product with low price and low-level promotion in
realization of more profits, even at a low price.

7. Marketing Strategies -Growth Stage
This is the stage of rapid market acceptance. The strategies are aimed at sustaining market
growth as long as possible. Here, the aim is not to increases awareness, but to get trial of the
product. Company tries to enter the new segments. Competitors have entered the market.
The company tries to strengthen competitive position in the market. It may forgo maximum
current profits to earn still greater profits in the future.
Several possible strategies for the stage are as under:
1. Product qualities and features improvement
2. Adding new models and improving styling
3. Entering new market segments
4. Designing, improving and widening distribution network
5. Reducing price at the right time to attract price-sensitive consumers
6. Preventing competitors to enter the market by low price and high promotional efforts

8. Marketing Strategies -Maturity Stage
In this stage, competitors have entered the market. There is severe fight among them for more
market share. The company adopts offensive/aggressive marketing strategies to defeat the
competitors.
Following possible strategies are followed:
A. To Do Nothing
B. Market Modification:
 Convert non-users into users by convincing them regarding uses of products
 Entering new market segments
 Winning competitors’ consumers
C. Product Modification:
 Strategy for Quality Improvement
 Strategy for Feature Improvement
D. Marketing Mix Modification

9. Marketing Strategies for Decline Stage
Company formulates various strategies to manage the decline stage. The first important task is to
detect the poor products. After detecting the poor products, a company should decide whether poor
products should be dropped. Some companies formulate a special committee for the task known as
Product Review Committee. The committee collects data from internal and external sources and
evaluates products. Company may follow any of the following strategies:
1. Continue with the Original Products
2. Continue Products with Improvements
3. Drop the Product:
Product may be dropped in following ways:
 Sell the production and sales to other companies
 Stop production gradually to divert resources to other products
 Drop product immediately.

10. Summary of PLC