EXPLOIT the Product Life Cycle

- By Theodore Levitt

Presented by Group 1, Section B

Robin Bishwajeet Siddharth Mehta Siddhartha Roy Apoorva Goyal Madhuri Mukherjee Rithika Baruah

Product Lifecycle Curve: Brief History and Issues

Market Development Stage: New product brought in the market without proven demand and technology Market Growth Stage: Demand takes off and size of the market increases
Market Maturity:
Demand is saturated and replacement is the primary sales driver

Market Decline: Decline of interest in product leading to drop in sales Issues: The concept is known but never used strategically Objective: Find out ways to use the concept effectively and turning it into an instrument of competitive power

Development Stage and Growth Stage

Development Stage Demand needs to be created Time taken for demand creation depends upon
Product complexity Degree of newness Fit into Consumers Needs Presence of Competitive

Substitutes

Lack of success with new

products have led to Used Apple Policy

Let someone else be the

pioneer and then based on success take decision

Growth Stage Marked rise in consumer demand Potential competitors using the Used Apple policy jump in Functional and design improvements leading to product and brand differentiation Policies and strategies influenced by competitors Easier to expand into multiple distribution channels leading to greater factory sales Price War sets as more players come in seeing the

Maturity Stage and Decline Stage

Maturity Stage Market Saturation Sales growth linked to growth of population Intense price competition as distribution pipelines are full Brand differentiation needs finer adjustments in product and service Focus shifts to:
Holding distribution outlets

Decline Stage
Few companies are

Retaining shelf space

Greater personalized

communication with consumers Greater emphasis on packaging and advertising

capable of withstanding the competition Overcapacity is endemic Competitors try to force each other out through Mergers Buy outs Production gets concentrated in hands of survivors Only way to move out of the downward spiral is through styling and fashion

Preplanning : Failure Possibilities and Success Chances

Failure Possibilities
Factors causing success to

Success Chances
Newness creates Special

be slow:
Complexity and novelty

Number of person involved Lesser influence of fashion

Cost and degree of shift

Visibility Need to create favourable first impression Possibility of exaggerated disillusionment

Difference between

Unique or distinctive

products need time for acceptance

Need to identify the

development and growth distribution channels

Pricing Decisions: Skim or

characteristics that add value and then design a communicating strategy around it
More the number of people

Exclude?
Probable length of cycle

Degree of Patent

involved in decision to purchase the more long drawn conversion process

protection Amount of capital needed

Benefits of multiple

Originators Burden

Competitive Pressures Large number of companies in the market eat up share even though growth is rapid Happens also due to innovations introduced by competitors Profit Squeeze In stage 2 while industry sales rise the originators sales start decreasing, total profit may still be high owing to scale but margins take a drastic hit In Stage 3 unit profits approach zero due to high competition and reduced demand which causes price wars Importance of looking ahead: Helps in identifying change in competitive landscape

Market Stretching or Sequential strategyLife (1 of 2) Actions Extension Avoid early profit squeeze: Market growth stage Avoid waste and wear: Market maturity stage Planning in advance of a new product launch Long term strategy of extending product Exhibit IV: Nylons life Life Point A: First hypothetical point where

nylon curve flattens out Action by Du Pont: Pushing hosiery sales upwards C, D strategies to expand sales: Points B, Promoting frequent usage amongst current users sales-building actions like promoting social necessity to wear stockings Developing varied usage amongst current users fashion smartness of tinted and textured hosiery; neutral accessory to central ingredient of fashion Expand markets and create new users legitimate necessity of hosiery amongst teenagers using advertising, PR and merchandising using youth style icons Find new uses of basic materials from hosiery to rugs, tires and bearings

Sequential Actions (2 of 2)
Market extension strategies

Jell-O

3M

Frequent usage

Increase number of flavors (6 to 12)

Promotion as base for salads and development of vegetable flavors Fashion-oriented weight control appeal to capture new users Flavorless powdered gelatin for people suing it for bone-building

Developed variety of handy Scotch tape dispensers

Varied usage

New users

New uses

Developed line of colored, patterned, waterproof tapes Introduced low priced Rocket tape and cellophane tapes Double coated tapes for automobile bumpers,

Extension Strategies
Why plan life extension strategies at pre-introduction stage?
Active rather than reactive product policy
Structures companys long term marketing & product development efforts Avoids urgent stop gap responses of repetitive competitive thrusts and declining profits Right degree of care and right amount of effort at the right time to infuse new life into the product Sales activities are often taken without regard to their interrelationships or timings (optimum point for consumer readiness or competitive effectiveness) : Planning prevents that Example: Boom in hair coloring is best preceded with boom in hair sprays and chemical fixers Similarly, examples can be seen in industrial applications like transition from man-tended to computerised machines, Jello-O vegetable flavours and Scotch tape as company Forces the a gift seal to adopt a wider view of the nature of the product Force wider view of companys business also Jell-O: brand umbrella for wide range of dessert products including puddings and pie fillings 3M: expertise of bonding things particularly to thin materials used to develop tapes, fax, etc.

Conclusion (1 of 2)
Illustrating the virtue of pre-introduction planning
Example: Non-patentable new product: ordinary kitchen shaker. Before launch, predictions are: 1. Potential market of x million households 2. Market maturity time: 2 years 3. Time when profit margins will fall due to competitors entry: 1 year

Plan laid out: st

End of 1 year Expand market among current users E.g. New designs like sterling shaker for formal use, masculine shaker for barbeque,

End of 2nd year Expand market to new users E.g. Designs for children and beer drinkers in bars, etc.

End of 3rd year Find new uses E.g. Make identical products for use such as pepper shaker, silicon dust sprinkling shaker, etc.

Conclusion (2 of 2)
Plan for a timed sequence of conditional moves: New product strategy should be a planned totality Prediction, although hazardous and seldom accurate, mitigates market risks Acting offensive rather than defensive real virtue of preplanning

Judgment helps decide pricing (skimming or penetration basis), reseller relationships

Branding policy, policy for protected dealers formulated to not lock undesirable merchandising Careful positioning to avoid being stereotyped due to short term advertising campaigns, e.g., Metrecal Guides direction and pace technical product research Focus on optimum sequence rather than optimum things to do, e.g., Nylon and Jell-O

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