Maturity Stage

At some point, a product's sales growth will slow down and the product will enter a maturity stage. This maturity stage normally lasts longer than the previous stages, and it poses strong challenges to marketing management. Most products are in the maturity stage of the life cycle, and, therefore, most of marketing management deals with the mature product.

The slowdown in sales growth results in many producers with many products to sell. In turn, this overcapacity leads to greater competition. Competitors begin to cut prices, increase their advertising and sale promotions, and increase their R & D budgets to find better versions of the product. These steps lead to a drop in profit. Often some of the weaker competitors start to lag behind and soon drop out of the industry, which eventually contains only well-established competitors.

Although many products in the mature stage appear to remain unchanged lor long periods, most successful ones stay alive through continually evolving to meet changing consumer needs. Product managers should do more than simply ride along with or defend their mature products - a good offensive is the best defence. They should stretch their imagination and look for new ways to innovate in the market (market development), or to modify the product (product development) and the marketing mix (marketing innovation).

• Market Development

Here, the company tries to increase the consumption of the current product. It looks for new users or market segments which the company is not currently serving, as when Johnson & Johnson targeted the adult market with its baby growth stage The product life-cycle stage at which a product's safes start climbing quickly.

maturity stage The stage in the product lift: cycle where sales growth slows or levels off.

Adding value to a product in the late stage of its PLC is important. Swatch, eager to demonstrate their commitment to finding solutions to consumer problems, never cease to innovate.

powder and shampoo. The company may want to reposition the brand to appeal to a larger or faster-growing segment, as Lucozade did when it introduced its new line of drinks aimed at younger users, not convalescents, the original target segment for the brand.

• Product Development

The product manager can also modify the product by changing characteristics, such as quality, features or style, to attract new users and to inspire more usage. It might improve the product's quality and performance - its durability, reliability, speed, taste. Or, it might add new features that expand the product's usefulness, safety or convenience. For example, Nokia keeps adding new functions to its line of mobile phones, the mobile communications network operator Orange adds new services to inspire more usage of its network and Club Med has modified some of its holiday villages around the world specifically for business clients (see Marketing Highlight 14.4). Finally, firms can improve the product's styling and attractiveness. Thus car manufacturers restyle their cars to attract buyers who want a new look. • The makers of consumer food and household products frequently introduce new flavours, colours, ingredients or packages to revitalize consumer buying. And Sony keeps adding new styles and features to its Walkman and Discman lines.

Club Med Corporate: The Ultimate incentive for Ihmian Capita]

Marketing

Highlight

Marketing

Highlight

rapidly expanding Club Med Affaires division a rapidly growing turnover, providing a healthy percentage of the company's total turnover. 'The aim is to double Club Med Affaires turnover by the end of the decade' says European Club Med Affaires Director Patrick Calvet.

'In today's economic climate, companies have come to discover that people are their great est assets. There is a genuine need to invest in people. Staff and customer loyalty, efficient communication and team motivation have become major corporate issues facing companies of all sizes. Working in the sun is highly motivating and Club Med's unique relaxed environment provides the right opportunity for today's organizations to meet these kev issues' says Galvet.

• Marketing Innovation

Marketers can also try to improve sales by changing one or more marketing-mix elements. Price cuts attract new users and competitors' customers. They can launch a better advertising campaign or use aggressive sales promotions - trade deals, discounts, premiums and contests. The company can also move into larger market channels as Dell Computers did with mail-order selling of personal computers, or use mass merchandisers, if these channels are growing. Finally, the company can deliver even better value by offering new or improved services to buyers. For example, as the European market for MBA degree programmes matures, many European Business Schools are seeking to sustain their competitiveness through offering highly specific and custom-built management education and training programmes for corporate customers. By forging ongoing co-operation agreements, joint ventures and 'learning' partnerships with major business clients, institutions like IMD in Lausanne, Switzerland, INSEAD in Fontainebleau, France, and Manchester Business School in the United Kingdom seek to attract and retain customers by offering products and services that meet their needs more precisely than rival management schools.2"

decline stage The product life-cycle stage at which a product's sales decline.

Decline Stage

The sales of most product forms and brands eventually dip. The decline may be slow, as in the case of oatmeal cereal, or rapid, as in the case of phonograph records. Sales may plunge to zero, or they may drop to a !ow level where they continue for many years. This is the decline stage.

Sales decline for many reasons, including technological advances, shifts in consumer tastes and increased competition. As sales and profits decline, some firms withdraw from die market. Those remaining may reduce the number of their product offerings. They may drop smaller market segments and marginal trade channels, or they may cut the promotion budget and reduce their prices further.

Carrying a weak product can be very costly to a firm, and not just in profit terms. There are many hidden costs. A weak product may take up too much of management's time. It often requires frequent price and inventory adjustments. It requires advertising and sales force attention that might be better used to make 'healthy' products more profitable or to create new ones. A product's failing reputation can cause customer concerns about the company and its other products. The biggest cost may well lie in the future. Keeping weak products delays the search for replacements, creates a lopsided product mix, hurts current profits and weakens the company's foothold on the future.

Table 14.4

Summary of product life-cycle characteristics, objectives and

Table 14.4

Summary of product life-cycle characteristics, objectives and

strategics

INTRODUCTION

GROWTH

MATURITY

DECLINE

Characteristics

Sales

Low sales

Rapidly rising sales

Peak sales

Declining sales

Costs

High cost per

Average cost per

Low cost per

Low cost per

customer

customer

customer

customer

Profits

Negative

Rising profits

High profits

Declining profits

Customers

Innovators

Early adopters

Middle majority

Laggards

Competitors

Few

Growing number

Stable number

Declining

beginning to decline

number

Marketing

objectives

Create product

Maximize'

Maximize profit

Reduce

awareness and

market share

while defending

expenditure and

trial

market share

milk tlie brand

Strategies

Product

Offer a basic

Offer product

Diversify brand and

Phase out

product

extensions,

models

weak

service, warranty

items

Price

Use cost-plus

Price to penetrate

1'rice to match or

Cut price

market

beat competitors

Distribution

Build selective

Build intensive

Build more intensive

Go selective:

distribution

distribution

distribution

phase our

unprofitable outlets

Advertising

Build product

Build awareness

Stress brand

Reduce to level

awareness among

and interest in

differences and

needed to retain

early adopters

the mass market

benefits

hard-core loyals

and dealers

Sales

Use heavy sales

Reduce to take

Increase to encourage

Reduce to

promotion

promotion

advantage of heavy

brand switching

minimal level

to entice trial

consumer demand

SasïECB: Philip Kotler, Marketing Management: Analysis, planning, implementation, and'control. 9th edn (Tipper Saddle River, NJ: Prentice Hall, 1997), ch.12.

SasïECB: Philip Kotler, Marketing Management: Analysis, planning, implementation, and'control. 9th edn (Tipper Saddle River, NJ: Prentice Hall, 1997), ch.12.

For these reasons, companies need to pay more attention to their ageing products. The firm's first task is to identify those products in the decline stage by regularly reviewing sales, market shares, eosts and profit trends. Then management must decide whether to maintain, harvest for cash or drop each of these declining products.

Management may decide to maintain its brand without change in the hope that competitors will leave the industry. For example, Procter & Gambit; made good profits by remaining in the declining liquid soap business as others withdrew. Or management may decide to reposition the brand in hopes of moving it back into the growth stage of the product life cycle.

Management may decide to harvest the product, which means reducing various costs (plant and equipment, maintenance, R & D, advertising, sales force) and hoping that sales hold up. If successful, harvesting will release cash and increase the company's profits in the short run. Or management may decide to drop the product from the line. It can sell it to another firm or simply liquidate it at salvage value. If the company plans to find a buyer, it will not want to run down the product through harvesting.2"

Table 14.4 summarizes the key characteristics of each stage of the product life cycle. The table also lists the marketing objectives and strategies for each stage.27

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