Marketing Management, Millenium Edition - epiheirimatikotita.gr

Marketing Through the Product Life Cycle 171MARKETING THROUGH THE PRODUCT LIFE CYCLEIn today’s highly dynamic marketing environment, a company’s marketing strategymust change as the product, market, and competitors change over time. Here, wedescribe the concept of the product life cycle (PLC) and the changes that companiesmake as the product passes through each stage of the life cycle.The Concept of the Product Life CycleTo say that a product has a life cycle is to assert four things: (1) Products have a limitedlife; (2) product sales pass through distinct stages with different challenges, opportunities,and problems for the seller; (3) profits rise and fall at different stages of theproduct life cycle; and (4) products require different marketing, financial, manufacturing,purchasing, and human resource strategies in each stage. Most product lifecyclecurves are portrayed as a bell-shape (Figure 3-11).This PLC curve is typically divided into four stages: 20➤➤➤➤Introduction: A period of slow sales growth as the product is introduced in themarket. Profits are nonexistent in this stage because of the heavy expenses incurredwith product introduction.Growth: A period of rapid market acceptance and substantial profit improvement.Maturity: A period of a slowdown in sales growth because the product has achievedacceptance by most potential buyers. Profits stabilize or decline because ofincreased competition.Decline: The period when sales show a downward drift and profits erode.Table 3.7 summarizes the characteristics, objectives, and strategies associatedwith each stage.Marketing Strategies: Introduction StageBecause it takes time to roll out a new product and fill dealer pipelines, sales growthtends to be slow at this stage. Buzzell identified several causes for the slow growth:Figure 3-11Sales and Profit Life Cycles