Now that you understand how the product life-cycle works as well as the different extension strategies, let's see how the product life-cycle influences the 4P's (Marketing Mix) decisions:
Product Life-Cycle and PRODUCT Decisions:
- On the introduction stage, companies tend to present an introductory product to the market (base mode);
- On the growth stage, companies make adjustments to the base mode according to the market feedback;
- On the maturity stage, companies start thinking of what type of extension strategy can be implemented to take advantage of this profitable moment;
- On the decline stage companies no longer make changes to a product or package.
Product Life-Cycle and PROMOTION Decisions:
- On the introduction stage companies tend to heavily invest on promotions and ads to inform the market about the product;
- On the growth stage there is still a strong focus on ads/promotions in order to attract new customers as well as keep existing ones;
- On the maturity stage the focus of the ads is to remind people of the product and its differences from the competitors' products;
- On the decline stage companies do little to no promotion and the focus is to simply sell off remaining stocks.
Product Life-Cycle and PLACE Decisions:
- During introduction companies adopt a test market approach to sell its products;
- On the growth stage the product is widely available in numerous locations;
- When the product reaches the maturity stage it is likely that it's being sold everywhere it should be (wide distribution);
- When reaching the decline stage products are sold only in profitable locations and taken out of unprofitable ones.
How about the relationship between PRICE and the Product Life-Cycle?
This relationship will depend on the business Pricing Strategy which will impact the price level among the different stages of the Product Life-Cycle:
Price Skimming: high at introduction and lower as time goes on;
Penetration Pricing: low at introduction and higher as time goes on;
Competitive Pricing: might go up and down according to the competition;
Cost-Plus Pricing: tends to lower as the company becomes more efficient at the production of the product overtime;
Promotional Pricing: might have ups and downs depending on promotional activities.
To-Do-List:
Exam Practice Questions (p. 189)
Chapter 13 - Marketing Mix, Place and Promotion
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