A product or a business typically goes through several stages in its life cycle. Occasionally, but not always, marketing strategies can reposition the product or business within this cycle.
The Bottom Line
In June of 2011, Douglas A McIntyre reported in 24/7 Wall St. that 10 well-known brands- including Sears, Sony Pictures, A&W and MySpace- would disappear in 2012. While competition was the overwhelming reason, along with underfunding, redundancy, image, and profit margin pressures, the bottom line was that consumers no longer desired the products or services.
Life Cycle
There are four stages to a product or service life cycle:
- Introduction- the most likely customer, known as an innovator, is generally younger, well-educated and cosmopolitan.
- Growth- Often referred to as early adopters, attracts people who are socially well-integrated within their community.
- Maturity- The late majority is skeptical and adopts products just after the average consumer.
- Decline- Tradition bound customers.
Marketing Mix
Each stage of the product or service life cycle demands a different marketing strategy for each part of a marketing mix that includes:
- type of customer
- competition
- overall strategy
- product or service
- distribution
- price
- promotion
The Introduction
In the introduction stage of the life cycle, the competition is limited to non-existent. Consequently the overall strategy is to persuade the innovator to try the product or service. The marketing strategy will probably include using selective distribution outlets and the charging of a high price to recover costs when buyers are able to pay the higher price; a low price may be charged if customers are price sensitive and there is a strong potential for competition. Finally, the promotional communication will be informative and stress the excitement of being first.
Growth Stage
In the growth stage, there will be some copycats and an increase in the number of distribution outlets so the overall strategy will become one of mass market penetration along with an improved product quality and new product features. Price will be higher when demand is raised by using a moderate level of advertising to create product conviction.
Maturity Stage
By the maturity stage there is intense competition fighting for a piece of the pie. The overall strategy now becomes one of defending the brand’s position in the market place. Strategies include a revitalization of sales by modifying the product and by an improving the aesthetic appearance. Sometimes new markets are entered in an attempt to appeal to new types of customers. Price is now based on what the market will bear. A price may be lowered to attract new users but not to the point of a price war. Volume discounts, specials and easier credit may be offered. Advertising will be used to differentiate the product or service from the competition with expenditure levels modest because of high market awareness.
Decline Stage
One sign of decline in an industry is competitors opting out. The plan then becomes one of removal. At first there is selective removal from unpromising markets while maintaining profitable niches, followed by a complete removal of some products and services. Unprofitable outlets of distribution are phased out and price is pegged low enough to liquidate inventory. There are selective promotions for the profitable niches but in general there are minimum expenditures.
Strategies for Survival
As suggested, sometimes marketing strategies can reposition products and businesses on the life cycle. In a March 2010 article by Lou Abbott entitled Amway Parent, Alticor, Grows to $8.4 Billion in 2009, it was pointed out that while this infamous company’s “reputation became tarnished in North America (primarily for certain recruiting techniques and their infamous shadow business),” in the North American market there was continued transformation…marked by investments in visibility, training and consumer access.” These included:
- The launching of an ordering app for Apple® iPhone
- Product information and sales support via podcast
- Training apps on iTunes®.
- A new web commerce platform
At other times, however, the market environment is hostile and closing up shop is the only alternative. Douglas A McIntyre, in talking about the eventual demise of Kellogg’s Corn Pops, pointed out that “Corn Pops…contain mono- and diglycerides, used to bind saturated fat, and BHT for freshness, which is also used in embalming fluid.None of these are likely to be what mothers want to serve their children in an age in which a healthy breakfast is more likely to be egg whites and a bowl of fresh fruit.”
Sources:
- Douglas A McIntyre. 24/7 Wall St. Ten Brands That Will Disappear In 2012. 24/7 Wall St. June 22, 2011.
- Lou Abbott. Amway Parent, Alticor, Grows to $8.4 Billion in 2009. MLM: The Whole Truth. Mar 10, 2010.
James Gibson - James Gibson is a retired teacher and small business owner. He is a published writer and has a wide spectrum of interests.
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