1. Watch the product
life cycle; but more
important, watch the
market life cycle.
Kotler on MarketingKotler on Marketing

2. Product Life Cycle
Introduction Stage
Causes for the slow growth:
Delay in the expansion of production
capacity,
 Technical problems,
Delays in obtaining adequate distribution
through retail outlets,
Customer reluctance to change established
behaviour

3.  Profits are negative or low in this stage
because of low sales and heavy distribution and
promotional expenses.
 Prices are high because of high cost due to
relatively low output rates, technological
problems in production
 New product launch may be set high or low
level for each marketing variable (4Ps).
Considering only price and promotion,
management can pursue one of four strategies.

4.  Rapid skimming – high price and high promotion
logic is – potential market is unaware of the product and
are eager to have it and will pay – asking price.
 Slow skimming – high price and low promotion--
market is limited in size, market is aware of the product –
buyers are willing to pay a high price.
 Rapid penetration – low price and heavy promotion--
when market is large – the market is unaware, most
buyers are price sensitive, strong potential competition,
unit cost will fall with company’s scale of production
and experience.
 Slow penetration – low price and low promotion--
when market is large, highly aware of product, is price
sensitive and there is some potential competition

5. PIONEER ADVANTAGE :
Companies that plan to introduce a new product
must decide when to enter the market. To be first
can be highly rewarding. To enter later makes
sense if the firm brings superior technology,
quality.
 Speeding up innovation time is essential in an
age of shortening product life cycle.
 Companies that first reach practical solutions
will enjoy “first - mover” advantages in the
market.

6. GROWTH STAGE :
 This stage is marked by rapid climb in sales. Early
adopters & other consumers start buying it.
 New Competitors enter attracted by the opportunities.
They introduce new product features and expand
distribution.
 Prices remain where they are or fall slightly –
depending on how fast demand increases.
 Companies maintain their promotional expenditures at
the same or at a slightly increased level to meet
competition & to educate the market.
 Profits increase during this stage as promotion costs
are spread over a larger sales and manufacturing cost
falls faster owing to learning / experience effect.

7. During this stage the strategies the firm uses to sustain rapid
market growth are :
Improves product quality, adds new features and improve
styling,
Adds new models & flanker (products of different sizes,
flavours to protect the main product)
Enters new segments
Increases & enters new distribution channels
Shifts product awareness advertising to product preference
advertising.
Lower prices to attract the next layer of price - sensitive
buyers.

8. MATURITY STAGE :
The rate of sales growth will be slow, and the
product will enter a stage of relative maturity. This
stage lasts longer than the previous stages & poses
challenges to marketing management.
This stage divides into three phases : growth, stable
and decaying maturity. First phase, the sales growth
rate starts to decline. In the second phase, sales flatten.
Most consumers have tried the product, sales are
governed by population growth and replacement
demand.

9.
 In the third phase, decaying maturity, the
absolute level of sales starts to decline & customers
begin switching to other products & substitutes.
Sales slow down creates over capacity in the
industry leading to intensified competition.
Competitors engage in frequent markdown.
They increase advertising & trade and consumer
promotion.
 They increase R & D budgets to develop product
improvements and the extensions.

10.
 Shake out begins & weaker competitors withdraw.
Dominating the industry are a few giants firms -
perhaps a quality leader, a service leader & a cost
leader - that serve the whole market & make their
profits mainly through high volume & lower costs.
Surrounding them are market nichers, including
market specialists, product specialists and
customising firms.

11.
 Market Modifications :
The Company can try to expand the number
of brand users in three ways:
 Convert non users
 Enter new market segments
 Win competitors customers.

12.
 Product Modification :
Managers also stimulate sales by modifying the
product characteristics through quality
improvements, feature improvements or style
improvement.
 Quality Improvement : Aims at increasing
products’ functional performance - its durability,
reliability, speed, taste etc.
This strategy is effective when buyers accept the
claim of improved quality and are willing to pay
higher quality.

13.
 Feature Improvements : Aims at adding new
features (eg. size, weight, additions, accessories) that
expand the products’ versatility, safety or
convenience. New features build company image
but can be easily imitated ; unless there is a
permanent gain from being first.
 Style Improvement : Aims at increasing the
products’ aesthetic appeal (introduce new colours,
texture, restyle package etc.)

14.
 Marketing - Mix Modifications :
Price
Distribution
Advertising
Sales Promotion
Personal Selling
Services

15. DECLINE STAGE :
The decline may be slow, may plunge to zero, they may
petrify at a low level.
 Sales decline for a number of reasons, including
technological advances, shifts in consumer tastes, increase
domestic & foreign competition. All lead to over capacity,
increased price cutting, profit erosion.
 Those firms in market place may withdraw from
smaller segment, weak trade channels, cut their
promotional budget and further reduce prices.
 Failing to eliminate weak products delay the aggressive
search for replacement products.
 The lower the exit barriers, the easier it is for firms to
stay and attract the withdrawal firms’ customers.

16. Company Strategies in declining industries :
1. Harvesting (milking) the firm’s investment
to recover cash quickly,
2. Diversify the business quickly by disposing
of its assets.