Strategies For the Product Life Cycle
The product life cycle is the process that explains the life stages of the product from its introduction to dropping out from the market. The product life cycle stages are – introduction, growth, maturity, saturation, and declining, every stage is distinct and every stage also requires distinct marketing strategies.
There are two major strategies for the product life cycle. They are:
- Product modification strategy
- Product Abandonment strategy
It would be better to apply these strategies either during the saturation situation of the maturity stage or at the beginning of the declining stage. Otherwise, it would be worthless or useless if these strategies are applied before the saturation stage or after the declining stage.
Lets’ first understand what is product modification and product abandonment strategy? Then we will understand how these strategies can be used for each stage of the product life cycle.
Product Modification Strategy
A product can be modified in several ways. The action of modifying or changing or improving some aspects of the existing product is the product modification strategy of the product life cycle.
Most commonly, the production modification can be done in four ways – by applying functional changes, quality changes, style changes, and socio-ecological changes. A marketer or marketing firm can choose one or two of these strategies while doing modifications.
1-Functional Changes: Functional change means making some changes in the product to make it work better – it may be adding new needs, adding additional utilities. For instance, let’s suppose, a marketer is selling shampoo that shampoo offers functions as – cleans scalp skin, makes silky & clean hair, provides freshness. To make this shampoo more potential and marketable maybe the marketer adds new utility also, say it “stops hair falls”. As such, new customers will be attracted having hair fall problems which created additional demand for the shampoo. This makes the marketer capable to maintain the position in the market and adjust easily.
Similarly, a simple example, the Apple company added a maximum of 1TB of storage in its iPhone 13, wherein iPhone 12 set maximum storage capacity was 512GB. People who are looking for maximum storage capacity phones will be attracted to the iPhone 13 series. Although the functional changes are likely to be expensive, they can sufficiently increase the sales of the company.
2-Quality Changes: Quality changing means improving or using the best materials during the production of the product. Change in quality may lead to enhanced performance of the product. The quality of the product may go up or down depending upon the market situation and objective of the firm. If the firm wants to build a good image, its position in the market may go for serving quality products. However, if the market demand is for low-priced products, as such the quality and price of the product will be reduced.
3-Style Changes: In this modern age, the style of the product has a big value to the consumers. Today, it is not enough to satisfy only consumers’ hands and mouths, but also their eyes and minds. Thus, changing the appearance of the product can be modified. It may be done in changing design, shape, color, packaging, arts, etc., and then make the product more attractive. Also, it can be done without changing its functions and quality.
4-Socio-Ecological Changes: Socio-Ecological change means improving product safety for the consumers especially focusing on their health and considering the impact on the environment. It may be done due to government pressure or for ecological impact. This modification is especially done in safeguarding products (foods, medicine), or safety products (machinery, vehicles), or ecological products (diesel-petrol vehicles that may pollute the air), etc. This modification may help in protecting the ecology. And, also this can be done withing making any changes in above mentioned three modification strategies of the product life cycle.
Product Abandonment Strategy
Simply, product abandonment strategy means dropping out a product from the line. If the marketer feels that after applying all strategies of product modification of the product life cycle, he may remove the product from the line and introduce a new one in the market.
However, removing the product is a very difficult job, expensive, and even a highly risky strategy. He may not drop the product overnight, it requires some procedures to make it efficient. It is expensive, may cause him to face loss due to some uncovered investment, and also there is a need for new investment for introducing a new product, and additional expenses required to make the abandonment process successful. Also, the firm’s image goes down, distributors and suppliers may come to protest, consumers may go against the firm and case file, etc.
Thus, while adopting a product abandonment strategy, the marketer needs to make several significant decisions.
- First, he must identify the reasons for product abandonment – reasons may be declining sales volume, high deviations from the sales forecast, declining market share, degrading social value, etc.
- Secondly, he must decide how often the products are to be reviewed. Sometimes it is done periodically and sometimes by continuous evaluation system.
- Thirdly, he must identify the person or group responsible for product abandonment review. He must be able to supply adequate information to the responsible person or group.
- And, fourthly, he must be able to develop a definite procedure to be followed for phasing the existing product out of the market, and hopefully, phasing the new product in.
And, some of the responsibilities the marketers also need to fulfill regarding product elimination from the line include – providing service and spare parts to the concerned parties even after the product dies, in advance informing consumers what is coming next, forecasting the impact of the dropping product to the society, and forecasting the potentiality of the new product in the market.
Implication of Marketing Strategies In Each Stage of the Product Life Cycle
A product’s stage in the life cycle can not be forecasted accurately. The product life cycle, the period of the entire life cycle, and the shapes of the life cycle vary from product. No marketer can accurately forecast when a particular stage appears, how long the stage will last, and what levels sales will reach.
The stages of the product life cycle are affected by various internal, majority external factors which sometimes shorten and lengthen the product’s life. A company itself may not manage the product life cycle, however, it can be extended to some extent through effective marketing strategies.
As every stage of the product life cycle is unique, the marketer needs to adopt different marketing strategies for different stages. The marketing mix has played an inevitable role in applying the marketing strategies for the product. The various implication of marketing strategies as per the stages of the product life cycle is as follows:
The introduction stage is where the new product is introduced to the market. Before understanding the strategies to apply, first understand the basic characteristics of this stage,
- A new product is introduced.
- The marketing objective of the firm is to attract innovators and opinion leaders to the new product.
- Company sales are increasing at a very slow pace.
- No competition, and if, it is very small.
- Company profit is almost negative.
- Here, the customers are innovators.
- One or two basic product models are introduced and marketed.
- Distribution depends on the product types.
- Price is a little bit high and also depends on prodcuts.
- Promotion is informative.
The marketer can adopt the following marketing strategies in the introduction stage of the product life cycle.
- Product Strategy: This strategy involves introducing the new product to the market.
- Pricing Strategy: Here, due to the new product, primarily penetration pricing strategy or mass-market pricing strategy is adopted.
- Place Strategy: Here, for the convenience prodcuts intensive distribution is carried out and for luxury products, selective distribution is carried out.
- Promotion Strategy: Since the product is new in the market, all the possible promotional tools are implemented. And, the promotion strategy should be covering a larger area and informative rather than persuasive, it is because when the product is new, most of the customers willing to know the product benefits and uses before purchasing as they are not familiar.
The growth stage is when the sales and number of customers increase at an increasing rate. Here the firm’s customers, sales, and profits increase rapidly. And, the new competitors are attracted as seeing the increasing market. The major features of the growth stage are:
- The firm starts expanding its distribution and product line.
- The firm’s sales are increasing rapidly.
- Competition is increasing.
- The company’s profit is increasing rapidly.
- Customers prefer affluent mass markets.
- Product mix involves expanding lines.
- Distribution involves rising the number of outlets.
- Greater range of pricing.
- The promotion strategy becomes persuasive.
In the growth stage of the product life cycle, a marketer can adopt the following marketing strategies:
- Product Strategy: In this stage, marketing of the existing product is carried out. If possible, the marketer should expand the product line with a great focus on product mix strategy.
- Price Strategy: Herer, should be the implementation of cost pricing strategy.
- Place Strategy: The focus here is on expanding the number of distribution outlets for effective distribution of the product.
- Promotion Strategy: In this stage, promotion cost is minimized with the focus more on mass communication. In addition, the advertising objective should be persuasive than informative as there is competition.
- Competition Strategy: Since in this stage, competition starts with few rivals, one should try to establish a competitive position in the market.
This is the perfect competition existed stage of the product life cycle. Market segmentation, market targeting, product positioning, and heavy promotional strategies are highly adopted. The major features of the maturity stage are:
- Companies try to maintain the differential advantage as long as possible.
- Company sales are stable.
- Competition is rapidly increasing.
- Company profit is saturated.
- Involves mass marketing.
- The company starts segmenting the entire consumer market and focuses on the positioning.
- Product mix involves focussing on product full line.
- For distribution greatest numbers of outlets are carried out.
- Pricing involves product full-line pricing.
- Promotion becomes compettiitve.
The marketing strategies needed to be applied in the maturity stage of the product life cycle are as follows:
- Product Strategy: The foremost focus in the maturity stage should be on adding additional attractive performance to the product. Moreover, one should give a high emphasis on product positioning.
- Price Strategy: Here, the price of the product is determined by the competitiveness of the market. Thus, it is important to set a price that is competitive.
- Place Strategy: The focus should be on the expansion of leader distribution outlets.
- Promotion Strategy: This stage demands more investment in promotion. Here, the promotion should be on using various forms of sales promotion tools. The promotion should involve psychological persuasion and also giving gifts, sample distribution, discounts, warranties, etc.
- Market Segmentation Strategy: The firm should carefully segment the market and choose one that has the most opportunities and is reachable and matches the firm’s resources and objectives.
- Competitive Strategy: The marketer must identify all major competitors and should carry a SWOT analysis in reference to them.
The saturation stage is which involves the peak point of maturity stage, where the competitors take some portion of the market, there is cutthroat competition, company’s growth ends, and sales & profits remains horizontal for some period, and at the end of the stage, sales and profit start decreasing. The major characteristics of the saturation stage are as follows:
- The firm’s marketing objective involves modifying existing products and markets by abandoning weak products.
- A company’s sales depend upon basic economic indicators.
- There is not only perfect competition, rather there is cutthroat competition.
- Company profit starts to decrease.
- Customers are highly effective and search for specialized products.
- The product mix includes a full product line with highly differentiated and specialized products.
- High entry barriers in the market.
- Pricing is cost-effective in production and reduced prices to the products.
- Promotion includes heavy use of sales promotion tools.
In the saturation stage of the product life cycle, the marketing strategies a marketer may apply are as follows:
- Product Strategy: The major implication here is to differentiate the product. One should also focus on improving product performance, quality, style, packaging, labeling, etc.
- Price Strategy: As the product is at saturation stage, the price of the product should be reduced so that customers can get benefit from buying it. It means less emphasis on profit and more emphasis on customer satisfaction.
- Place Strategy: The marketer should work and try to make better existing distribution outlets.
- Promotion Strategy: One should focus on excessive use of sales promotion strategies.
- Market Segmentation Strategy: The marketer should give more emphasis on customer need and satisfaction rather than on profit. However, because of the declining opportunities on market, it is advisable to search for a new one.
- Competitive Strategy: Try to adopt both attack and safe strategies.
In this last declining stage, as there is a continuous decrease in the sales, customers – usually firms try to remove the existing product from the market and seeks to introduce a new one. Here, sales, customers, and most of the firms quit the market.
As such, there remains again only a few numbers firms and this particular situation again increases the likelihood of the remaining firms increasing sales and gaining the market. However, this only happens after a very long period. The major characteristics of the declining stage are:
- The firms marketing objective involves either cut back, revive, or terminate the product.
- The sales of the company are in decreasing rate.
- Competiton is also decreasing.
- Company’s profit also decreasing.
- Customers are inactive or unwilling to buy.
- The product mix focuses on bestsellers.
- Decreasing the number of distribution outlets.
- There are selected pricing.
- Again the promotion goes on an informative approach.
The following marketing strategies may be suitable at this stage of the product life cycle:
- Product Strategy: In this stage, it would be better for the marketer to search for new opportunities.
- Price Strategy: When the product is at the decline stage, price strategy has almost zero impact.
- Place Strategy: As the price strategy, the place strategy also does not work at the decline stage.
- Promotion Strategy: One should give less emphasis on adopting any kind of promotional strategy.
- Market Segmentation Strategy: In this stage, for the marketer or marketing firm – it is better to quit the existing market and enter into the new one.
- Competition Strategy: Since there are no such competitors, there is no need to focus on competitive strategies as the introduction stage.
To sum up, to get success in the market, it is must understand carefully each stage of the product life cycle by the marketer, business firm, seller, etc. The customer’s needs, tastes go on changing over time, various factors affect the products, as such the same product may satisfy consumers at one time, but fails at another time. Thus, marketers need to adopt different marketing strategies at different stages of the product life cycle to maintain the competitive position of the product in the market.