· revenue (Pickett-Baker& Ozaki, 2008). The increase in sales attracted many competitors in the market who were producing almost similar product as that of Doritos. In the maturity stage of Doritos after increase in some competitors, the number of customers declined as the sales of the product started to level off. This was an indication that Doritos has entered …
The maturity stage of the product life cycle is characterized by the adoption of the product by the late majority and good profitability. During intense competition, a firm needs constant …
Choose a product and take it through the 4 stages of the Product Life Cycle. Discuss what marketing strategies you would use for the product in each stage. The product life cycle …
8. The maturity stage of product lifecycle is ________. a. a stage where a product's price is at a high level b. characterized by steep decline in profits c. usually the shortest stage in a product's …
The Maturity stage of the product life cycle presents manufacturers with a wide range of challenges. With sales reaching their peak and the market becoming saturated, it can be very difficult for companies to maintain their profits, let alone continue trying to increase them, especially in the face of what is usually fairly intense competition. During this stage, it is organizations that look for innovative ways to make their product more appealing to the consumer that will maintain, and perhaps even increase, their market share.
After the Introduction and Growth stages, a product passes into the Maturity stage. The third of the product life cycle stages can be quite a challenging time for manufacturers. In the first two stages companies try to establish a market and then grow sales of their product to achieve as large a share of that market as possible. However, during the Maturity stage, the primary focus for most companies will be maintaining their market share in the face of a number of different challenges.
Profits Start to Decrease: While this stage may be when the market as a whole makes the most profit, it is often the part of the product life cycle where a lot of manufacturers can start to see their profits decrease. Profits will have to be shared amongst all of the competitors in the market, and with sales likely to peak during this stage, any manufacturer that loses market share, and experiences a fall in sales, is likely to see a subsequent fall in profits. This decrease in profits could be compounded by the falling prices that are often seen when the sheer number of competitors forces some of them to try attracting more customers by competing on price.
Profits will have to be shared amongst all of the competitors in the market, and with sales likely to peak during this stage, any manufacturer that loses market share, and experiences a fall in sales, is likely to see a subsequent fall in profits.
Sales Volumes Peak: After the steady increase in sales during the Growth stage, the market starts to become saturated as there are fewer new customers. The majority of the consumers who are ever going to purchase the product have already done so.
Decreasing Market Share: Another characteristic of the Maturity stage is the large volume of manufacturers who are all competing for a share of the market. With this stage of the product life cycle often seeing the highest levels of competition, it becomes increasingly challenging for companies to maintain their market share.
ADVERTISEMENTS: The product life cycle is an indispensable tool for product planners and marketers in general. The product life cycle is based on the life process of all living things, beginning with birth and ending with death. Like human beings, products also have a limited life-cycle and they pass through several stages in their life-cycle.
A typical product moves through five stages, namely, introduction, growth, maturity saturation and decline. These stages in the life of a product are collectively known as product life-cycle. The length of the cycle and the duration of each stage may vary from product to product, depending on the rate of market acceptance, rate of technical change, ...
Some Product Lifecycles even include a sixth stage called the withdrawal stage, when the product is removed from the market. However, price strategies only affect four stages of the product life cycle. Therefore pricing changes are depending on the stage of the product life cycle.
However, by providing a life-history of a product, life-cycle concept is helpful in designing appropriate marketing strategies. The life of a product can be prolonged or changed by developing new uses, reducing prices, using aggressive promotion, changing package, brand or label and by improving the product.
Ultimately, the firm abandons the product in order to make better use of its resources. As preferences of customers change, new and more innovative products replace the abandoned product. When the decline is rapid, the product is abandoned. New products with unique features may be introduced. Some firms cannot bear the loss and sell out.
Market peaks and levels off during saturation. Few new customers buy the product and repeat orders disappear. Prices decline further due to stiff competition and firms fight for reta ining market share or replacement sales. Sales and profits inevitably fall unless substantial improvements in the product or reduction in costs are made.
During this stage prices and profits fall due to high competitive pressures. Growth rate becomes stable and weak firms are forced to leave the industry. Heavy expenditure is incurred on promotion to create brand loyalty. Firms try to modify and improve the product, to develop new uses of the product and to attract new customers in order to increase sales.
The Product Life Cycle (PLC) defines the stages that a product moves through in the marketplace. Oligopolistic Market The primary idea behind an oligopolistic market (an oligopoly) is that a few companies rule over many in a particular market or industry, as it enters, becomes established, and exits the marketplace.
1. Introduction Stage. When a product first launches, sales will typically be low and grow slowly. In this stage, company profit is small (if any) as the product is new and untested. The introduction stage requires significant marketing efforts, as customers may be unwilling or unlikely to test the product.
Eventually, the market grows to capacity, and sales growth of the product declines. In this stage, price undercutting and increased promotional efforts are common as companies try to capture customers from competitors. Due to fierce competition, weaker competitors will eventually exit the marketplace – the shake-out. The strongest players in the market remain to saturate and dominate the stable market.
Slowly reducing distribution channels and pulling the product from underperforming geographic areas. Such a strategy allows the company to pull the product out and attempt to introduce a replacement product.
Selling the product to a niche operator or subcontractor. This allows the company to dispose of a low-profit product while retaining loyal customers.
The underlying goal in the introduction stage is to gain widespread product recognition and stimulate trials of the product by consumers. Marketing efforts should be focused on the customer base of innovators – those most likely to buy a new product.
Economies of scale are realized as sales revenues increase faster than costs and production reaches capacity. Competition in the growth stage is often fierce, as competitors introduce similar products. In the growth stage, the market grows, competition intensifies, sales rise, and the number of customers increases.
Products generally go through a life cycle with predictable sales and profits. Marketers use the product life cycle to follow this progression and identify strategies to influence it. The product life cycle (PLC) starts with the product’s development and introduction, then moves toward withdrawal or eventual demise.
The five stages of the PLC are:
An effective promotional program or a dramatic lowering of price may improve the sales picture in the decline period, at least temporarily. Usually the improvements brought about by non-product tactics are relatively short-lived, and basic alterations to product offerings provide longer benefits.
brand differentiation and feature diversification is emphasized to maintain or increase market share
For example, enrollment in higher education tracks closely with economic trends. When there is an economic downturn, more people lose jobs and enroll in college to improve their job prospects. When the economy improves and more people are fully employed, college enrollments drop. This does not necessarily mean that education is in decline, only that it is in a down cycle.
profit becomes more a challenge of production/distribution efficiency than increased sales
Furthermore, evidence suggests that the PLC framework holds true for industry segments but not necessarily for individual brands or projects, which are likely to experience greater variability. [1]