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Google is spectacularly successful and wildly innovative. At Google, JOOPWBUJPOJTNPSFUIBOKVTUBQSPDFTTiJUTJOUIFBJSJOUIFTQJSJUPGUIF place.”
Eric Carr/Alamy
Objective 3
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Product life cycle (PLC)
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EFWFMPQNFOU Some products die quickly; others stay in the
mature stage for a long, long time. For example, TABASCO sauce has been around for more than 140 years. Even then, to keep the product young, the company has added a full line of flavors (such as Sweet & Spicy and Chipotle) and a kitchen cabinet full of new TABASCO products (such as spicy beans, a chili mix, and jalapeno nacho slices).
FIGURE |9.2
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The Wrigley Company
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FIGURE |9.3
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Growth Stage
If the new product satisfies the market, it will enter a growth stage, in which sales will start climbing quickly. The early adopters will continue to buy, and later buyers will start following their lead, especially if they hear favorable word of mouth. Attracted by the opportunities for profit, new competitors will enter the market. They will introduce new- product features, and the market will expand. The increase in competitors leads to an in- crease in the number of distribution outlets, and sales jump just to build reseller inventories.
Prices remain where they are or decrease only slightly. Companies keep their promotion spending at the same or a slightly higher level. Educating the market remains a goal, but now the company must also meet the competition.
Profits increase during the growth stage as promotion costs are spread over a large vol- ume and as unit manufacturing costs decrease. The firm uses several strategies to sustain rapid market growth as long as possible. It improves product quality and adds new product features and models. It enters new market segments and new distribution channels. It shifts some advertising from building product awareness to building product conviction and pur- chase, and it lowers prices at the right time to attract more buyers.
In the growth stage, the firm faces a trade-off between high market share and high current profit. By spending a lot of money on product improvement, promotion, and dis- tribution, the company can capture a dominant position. In doing so, however, it gives up maximum current profit, which it hopes to make up in the next stage.
Maturity Stage
At some point, a product’s sales growth will slow down, and it will enter the 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 marking down prices, increasing their advertising and sales promotions, and upping their product devel- opment budgets to find better versions of the product. These steps lead to a drop in profit.
Some of the weaker competitors start dropping out, and the industry eventually contains only well-established competitors.
Although many products in the mature stage appear to remain unchanged for long pe- riods, most successful ones are actually evolving to meet changing consumer needs. Product managers should do more than simply ride along with or defend their mature products—
a good offense is the best defense. They should consider modifying the market, product offering, and marketing mix.
In modifying the market, the company tries to increase consumption by finding new us- ers and new market segments for its brands. For example, brands such as Harley-Davidson and Axe fragrances, which have typically targeted male buyers, are introducing products and marketing programs aimed at women. P&G’s Swiffer household cleaning brand has developed special promotions for pet owners.
The company may also look for ways to increase usage among present customers. For example, the Glad Products Company helps customers find new uses for its Press’n Seal wrap, the handy plastic wrap that creates a Tupperware-like seal. As more and more cus- tomers contacted the company about alternative uses for the product, Glad set up a spe- cial “1000s of Uses. What’s Yours?” Web site (www.1000uses.com) at which customers can swap usage tips. Suggested uses for Press’n Seal range from protecting a computer keyboard from dirt and spills and keeping garden seeds fresh, to use by soccer moms sitting on damp benches while watching their tykes play. “We just roll out the Glad Press’n Seal over the long benches,” says the mom who shared the tip, “and everyone’s bottom stays nice and dry.”22
The company might also try modifying the product—changing characteristics such as quality, features, style, packaging, or technology platforms to retain current users or at- tract new ones. Thus, to freshen up their products for today’s technology-obsessed chil- dren, many classic toy and game makers are creating new digital versions or add-ons for old favorites. More than a third of children eight years old and younger now use devices such as iPads and smartphones. So toy makers are souping up their products to meet the tastes of the new generation. “Monopoly money can now be counted on a Growth stage
The PLC stage in which a product’s sales start climbing quickly.
Maturity stage
The PLC stage in which a product’s sales growth slows or levels off.
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