Explain Product Life Cycle, and marketing strategies adopted at different stages.

The product life cycle proposes that a product goes through a life cycle like humans go through different stages of life. The product life cycle begins once a product is introduced into the market and it ends when a product is finally phased out, abandoned or becomes obsolete. These stages help marketers understand and manage the product acceptance and market share in the market.
The life cycle consists of four stages – introduction, growth, maturity, and decline. Not all products go through these four stages. For example, there are products that never get accepted in the market and are withdrawn from the market.

1) Introduction stage – During this stage the product is introduced in the market. The organisation has to invest in lot of marketing expenditure in order to make people aware about the new product highlighting its features and characteristics. This stage is marked by low profits as the earnings mostly cover the research and development, and marketing costs of the new product. Depending on the product promotion there are activities such as reaching retailers and wholesalers, TV advertising, billboards and transit signs (signs on buses, cabs, etc.). For products like tooth pastes, candies, soaps, etc., firms often give high profit margins to retailers to ensure these products occupy visible and high shelf space. For technical and expensive products like laptops, plasma televisions firms adopt personal selling, demonstrations, etc. at popular retail stores or malls.

This stage is characterised by the following –

• Organisations need to be prepared to meet demand
• High investment in promotion activities
• Focus on creating awareness in the market
• Enough distribution outlets for easy product availability
• Strategies to seek cooperation from sellers, wholesalers, and retailers.
• Pricing should justify the product value the consumers will get apart from covering the costs

2) Growth stage – If a product is accepted by consumers in the market, it enters the growth stage. Here the competitors too launch products of similar kind. For example, Diet Coke and Diet Pepsi launch in the market. The organisation needs to ensure that at this stage product remains available to customers else consumers will switch to the competitor product. The organisation must promote the product features as well as emphasise brand name to counter competition. Distribution outlets also increase to cover more market and increase profits. Increasing distribution and production results in costs, but companies usually keep the same price or even reduce it slightly to increase sales and counter competition.
This stage is characterised by the following –
• Increase in sales
• Increase in competition
• Increase in production
• Higher profits because of high sales
• Distribution networks expand
• Reduction in promotion expenditure with major focus on highlighting the features and quality of the productto differentiate it from competition
• Product offered at discount, price reduced to gain new customers

3) Maturity stage – when the sale of the product stabilises with reduction in potential new customers and increased competition, it indicates that the product has entered the maturity stage of its life cycle. This stage lasts longer that the other life stages. All efforts should be made to prolong this stage. Organisations at this stage have exhausted all its distribution channels, there is saturation of demand, and promotion is done to communicate customer value, brand value and quality to take competitive advantage. Price is often reduced to gain customer loyalty so that existing customers don’t switch to competitor product. Organisations get into promotional war to retain market shares and maximise sales as much as possible. Competition is severe and weak players leave the market. Organisations invest in modifying the product. For example, price wars can be easily seen during holiday season among different Airlines. Large organisations are able to absorb costs at this stage but small organisations often get hit. Car manufacturers often add additional features to their existing models by changing design and offering new styles to prolong the maturity stage. Similarly, Coca-Cola and Pepsi changed the design and packaging of their soft drinks.

It becomes easy for organisations to enter new geographic regions or new target market with the product at maturity stage as the organisations rely on their experience in existing markets. Organisations highlight their success in promotion activities in new markets. Few adaptations to the marketing strategy are needed to align with the marketing environment like culture, etc. of the new region. For example, In India, McDonalds had to introduce vegetarian offerings as majority of the population in India is vegetarian.

This stage is characterised by the following –
• Severe competition
• Cost reduction
• Product modification – additional features, increase in quality, change in style, packaging
• Entry into new markets (different geographic, international markets)
• Change in marketing mix
• Reaching out to existing customers to retain customer loyalty

4) Decline Stage – At this stage the sale of the product starts falling to lower levels. This is caused by many reasons like entry of a substitute product, change is customer preferences, or changes in the marketing environment like technology, demographic changes, etc. For example, computers replaced typewriter, mobile phones with cameras sounded the death bell for easy to use cameras. To save money, organisations reduce the promotional expenditure and distribution channels.
Via Harvesting,price cuts are done to sell the existing products in shops or stores, or till the inventory gets exhausted to minimise losses. The product is eventually withdrawn from the marketing by Divesting. Working on marketing strategies on an aging product incurs costs as well as management’s time and efforts. Organisations adopt to Harvest or Divest basis the organisations objectives.

This stage is marked by following characteristics –
• Declining sales
• Declining profits
• Less spending on promotion
• Withdrawal from weaker markets and distribution channels
• Harvesting or Divesting basis the organisations objectives
• Organisations may opt to serve the hard-core loyal customers.