product life cycle & the marketing mix, The
In this article I intend to discuss the product life cycle and the marketing mix. In this regard you may hear talk of the 5Ps of marketing. What do these terms mean, and what is their relevance in our every day activities?
Product life cycle
Let us first examine the concept of the product life cycle (plc). Consider the stages of your own life: From birth; growing into a child; developing into an adult; enjoying a phase of maturity and, eventually, dying. These changes can be seen as your own life cycle, and any individual will recognise that their actions change as they progress through each stage.
In essence, products evolve through similar stages. There are four stages of a product life cycle starting at the introduction stage when, typically, products are developed and introduced into the market. Growth is the second stage, when sales of the product begin to increase rapidly, and profits begin to peak. The third stage is maturity, where sales are no longer growing and profits start to fall. Decline is the fourth stage when sales rapidly decline. Occasionally this decline is terminal, resulting in the withdrawal of a product.
These stages can be represented in the following diagram:
A company’s aim is to create and maintain a marketing mix which satisfies the needs of the customer. Baking a cake can be used as a useful analogy. It is important to ensure the correct mix of ingredients for the perfect cake. However, the measurements may vary depending on the size of the cake. The marketing mix refers to a set of variables, or a toolkit, that we can consider as the ingredients used by organisations to implement their marketing strategy.
These variables can be better explained by the ’51’s’, as follows:
Remember that these variables are controllable because they can be altered, but there are limits. It is not easy suddenly to alter important elements of your promotional campaign, once it has begun.
In view of the above, can we now see a link emerging between the product life cycle and the marketing mix? Business Environment Exam Question November 1997:
Using a product of your choice explain how the marketing mix will change over the product life cycle.
Combining what we have learnt about both the product life cycle and the marketing mix we can answer the question as follows:
At the introduction stage the product makes its first appearance in the marketplace. It is necessary for customers to be made aware of its arrival, and therefore a range of activities from within the promotion mix variable are used. Companies will often spend heavily on advertising at this stage, hoping that, as awareness increases, sales grow. However, the failure rate for new products is high, so heavy advertising spend is no guarantee of success.
During growth, sales are rising and, as such, this is a critical stage. Competitors may react to the success of the product by launching a rival. The nature of competitive activity will also have an impact on the life expectancy of the product. In other words, if rival products are introduced, the overall length of the life cycle of the original product may be reduced.
Defensive action is required, normally in the form of a heavier spend on advertising. Other types of marketing activity will try to encourage brand loyalty, so sales promotions may be introduced. The pricing variable now becomes important, and aggressive promotional pricing might also be used during the growth stage.
Often during this stage the firm may also want to increase market penetration. Segmentation is an available option, and to be successful it is necessary to introduce product variations targeted at specific segments. Increased market penetration can also be achieved by focusing on the distribution element of the mix. A company may choose to move away from a selective to a more intensive distribution strategy, making the product available in a wider range of outlets.
Sales staff will undergo intensive training in the functional aspects of a product and they are seen as an important link between the new product and the customer. They are of particular importance in demonstrating the special features of any product, and to provide the lay person’s guide to use.
As the product reaches maturity, the sales curve has peaked and begins a steady decline. The market is often characterised by intense competition among several brands. Some of these competitors will leave the market, and those remaining begin to highlight the differences and improvements they have made to their product. In some instances, a company will re-launch its product. This action is normally accompanied by new promotional and distribution efforts. The most common forms of promotion will be advertising and other activities geared to encourage dealers to actively promote the product.
These types of marketing activities are necessary because, over time, the customer has become more sophisticated and has more diverse requirements.
Decline is the final stage, when sales fall rapidly and firms will seriously consider removing items from the product line. The sequence of removal may begin with a reduction of the promotional effort, followed by the elimination of the marginal distributors. Finally, a phased withdrawal of the product may be necessary.
Orin Miller is a visiting lecturer at London Guildhall University.
Copyright Institute of Credit Management Ltd. Mar 2001
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