How Marketing Mix Strategies can Change through the Product’s Lifecycle
For Marketing Mix to succeed, a firm should properly manage the product's lifecycle
Published by Rina Villaruel. .Bestpractice Internationalisation SME Foreign markets International marketing International marketing
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Most marketing executives would be familiar with the idea of the Product Life Cycle (PLC), but perhaps far too less are reaping its advantage to plan effectively. The concept of Product Life Cycle is a powerful instrument giving companies competitive edge in planning both for marketing mix and product strategy. It can be defined as the set of phases that characterize the evolution of a product over time and in the reference market.
Four main phases of the product life cycle can be identified: the development of the product with the consequent introduction on the market, its growth, its maturity and its decline. Although many companies show some familiarity with the life cycle concept, few can boast a full awareness of the benefits that its proper management would bring to their business. However, this implies the need to continually modify their marketing strategies according to the different phases of the product life cycle. In this perspective, the marketing mix plays a particularly important role, since the four levers on which it is based (Product-Price-Place-Promotion) will inevitably undergo some changes along the PLC, as explained below.
First Stage: Introduction
During this stage the company would typically have high promotion activity planned, which focuses on informing about the product just launched. If your product is new and there is not much competition, the product then might be priced higher compared to a market with a high degree of competition. The distribution at first might be selective, to see whether the product takes off and has success in the marketplace. Cost on sales promotion tends to be higher too.
Second Stage: Growth
If the product succeeds on the market, demand for it naturally grows. During this stage, sales go up and so does production cost, as more products are being produced to meet customer demand. As success is reached, competition could also rise. As more competitors enter the market, the price would be affected; assessing your price might therefore be necessary. The consideration for distribution might change as well, as the product demand and competition are high. Most companies would try to increase their market share during this stage.
Third Stage: Maturity
The product has reached its peak and sales are starting to decline. There would be more sales promotion during this stage and discount prices would be one approach to liquidate stocks. The product distribution would then move to a more intensive approach as a way of handling aging products.
Fourth Stage: Decline
Profits are starting to reduce during this stage. Typically, companies would cut spending on promotion, as sales continue to decline. Distribution would be even more limited. This is the stage where companies would consider whether to develop and further innovate the product or find a new potential market elsewhere.
Companies which are keen on continuous growth and profits should therefore consider a product strategy focused on the overall view of their product life cycle over some years. The product strategy should be able to predict the company’s response to each stage of the PLC and plan accordingly.