MKT 421 week 3
re.bertyh.elpsfuben.t
MKT421Week3TheProductLifeCycleFitbit.pptxThe Product Life Cycle (PLC)
MKT/421
Outline
Define and discuss the PLC concept and its importance to marketing managers.
Discuss why the PLC is important to marketing managers, and provide examples of the possible implications if the PLC is not monitored.
Describe the selected company/organization, product/service, the target market for this product, and how the product/service is presented to the selected target market.
Describe how brand equity can be used to create a positive customer image of your product.
Describe each stage of the PLC, and analyze the implications that each stage may have on pricing, product definition, competition, and profitability for your selected product/service.
Theme and goals
Looking at the Fitbit and it’s PLC. The goals for the assignment will to increase the frequency of use by the current customers, finding ways to add new customers and improve the product quality.
3
What is the Product Life Cycle?
The concept of the product life cycle describes the stages a new product goes through in the marketplace.
The product life cycle describes the period of time over which an item is developed, brought to market and eventually removed from the market. The cycle is broken into four stages: introduction, growth, maturity and decline. The idea of the product life cycle is used in marketing to decide when it is appropriate to advertise, reduce prices, explore new markets or create new packaging.
The product life cycle is an important concept in marketing. It describes the stages a product goes through from when it was first thought of until it finally is removed from the market. Not all products reach this final stage. Some continue to grow and others rise and fall.
4
Importance of the Product Life Cycle
Assists in sales forecasting and price determination
Framing marketing programmed
Development of new products
Comparison of different products
Increase profits and longevity of the product
Reduce market entry cost
Serves as a predictive, planning, and control tool
“The concept of the product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline”(Roger & Hartley, 2017, Chapter 11). It is important to managers because it helps them to understand the phase of the products. The PLC has several important factors which includes extending the life cycle as it go through the stages. The marketing team can reinvent the product along the phases.
5
Pricing Strategy
Has the ability to:
Determine the price point to maximize profits
Price skim
Bundle price
Use pricing psychology
Economy pricing
Assists to determine factors such as:
Production
Distribution costs
Competitor offerings
Positioning strategies
Business target customer base
Pricing strategy is the ability to determine the price point at which marketing managers can maximize profits on sales of products or services (Maguire, 2018). Pricing strategy covers the ability to price skim, bundle price, use pricing psychology, economy pricing, etc. to determine the right pricing range for any product or service being provide to businesses and/or consumers.
6
Fitbit
Products: Activity trackers and wireless-enabled wearable technology devices
Industry: Consumer Electronics
Founded in 2007 by James Park and Eric Friedman
Headquarters: San Francisco, California
Fitbit is an American company that is known for its products of activity trackers, wireless-enabled wearable technology devices that measure number of steps walked, heart rate, quality of sleep, steps climbed, and other personal metrics involved in fitness.
7
Four Stages of the PLC Concept
Stage 1: Introduction
Stage 2: Growth
Stage 3: Maturity
Stage 4: Decline
Stage 1: Introduction
Researching market
Developing the product
Investments are done
Launching the product
May have little to no market
Advertisements and promotions begin off slow
Entering into a market with other companies like Apple, UnderArmour and Nike, Fitbit had a lot to overcome to make a name for themselves.
9
Stage 2: Growth
Rapid sales increase
Repeated customers
Growth of distribution
Battle of shelf space and display
Production increases
Rapid increase in sales are now seen in the growth stage. Profit usually begin to peak during this stage which causes competition to become more apparent than in the introduction stage. Product sales begin to grow at an increasing rate due to consumers trying the product, liking it and purchasing it again. This is called repeat purchasers. This is the stage where word of mouth is constant. The growth stage the product will go through changes. A company will either make changes to suit the needs of the consumer or make changes to differentiate the brand from the competitors brands (Kerin & Hartley, 2017).
Unlike the introduction stage, the product will now go through a growth of distributions causing a battle of shelf space and display. Manufacturers will begin see an increase in profits during the Growth stage. As production increases to meet demand, manufacturers are able to reduce their costs through economies of scale, and established routes to market will also become a lot more efficient (Product Life Cycle Stages, 2017).
10
Stage 3: Maturity
Competition not high
Marginal competitors drop out
New designs and techniques are created
Differentiation begins to make products unique
Sales increase-profit decrease
During this stage the sales of the company are still high but they are decreasing due to other competitors coming out with the same type of products. The prices start to fall and the weaker competitors will start to leave the market. The key is to try and maximize the return during this stage. Trying to find new users that are late to the market that can still bring profit to the company is something else you try and expand on in the maturity stage.
11
Stage 4: Decline
Final stage
Consumers purchase will decline
Cheaper production & markets
Declining stage due to environmental changes
At this stage the competitors and market as a whole start to fall. Sales drop and you see a decline in users of the products. They try to get as much profits they can out of the products before they leave the market for good. Technological advances have made products sales fall on products that were once thriving in the market. If companies fail to innovate and expand then they will most likely end up in this stage faster. FitBit is currently in this stage as market decreases while apple watches regain control of the activewear market.
12
Why is the PLC Important?
Reduced time to market
More efficient and profitable distribution channels
Higher return on investment from promotional campaigns
Orderly and profitable end of life product management
What happens if PLC is not monitored?
Making sure the company is on track gives your company more life and profitability. If this is not monitored then the company will start to lose money and eventually just fail. Keeping up with the market and competitors is key because if your product does not get the consumers interests then it will start to lose money.
13
References
Designer. (n.d.). Retrieved from https://www.fitbit.com/about
Kerin, R. A., & Hartley, S. W. (2017). Marketing (13th ed.). New York, New York: McGraw-Hill.
Maguire, A. (2018, July 10). 6 Different Pricing Strategies: Which Is Right for Your Business? Retrieved from https://quickbooks.intuit.com/r/pricing-strategy/6-different-pricing-strategies-which-is-right-for-your-business/
(n.d.). Retrieved from http://productlifecyclestages.com/
