Marketing Mix vs. Product Life-Cycle (13.3)

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.

  
  

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To-Do-List:

• Exam Practice Questions (p. 189)

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Chapter 13 - Marketing Mix, Place and Promotion