Life Cycle Management

Introduction
 Begins with the launch of the Product
 Monitored by Product Management Team
 Responsibilities:
 Product Reaches its Potential as
 Particular Product Item
 Emerging Product Line in the Company’s Product Mix
 Decisions
 Fine tuning Product’s Marketing Strategy
 Defending Against Competitors
 Innovating Product
 Brand Management
 The Product Life Cycle (PLC)
Sales and
Profits Sales

Profits

Time
Product Introduction Growth Maturity Decline
Develop-
ment

• The Product Life Cycle (PLC) has Five Stages

• Product Development, Introduction, Growth, Maturity, Decline
 PLC Stages

PLC
Stages
 Begins when the company develops a
Product new-product idea
Development
Introduction  Sales are zero
Growth
Maturity  Investment costs are high
Decline
 Profits are negative
 PLC Stages

PLC
Stages
 Low sales
Product
Development  High cost per customer acquired
Introduction
Growth  Negative profits
Maturity
Decline  Innovators are targeted

 Little competition
 PLC Stages

PLC
Stages
 Rapidly rising sales
Product
Development  Average cost per customer
Introduction
Growth  Rising profits
Maturity
Decline  Early adopters are targeted

 Growing competition
 PLC Stages

PLC
Stages
 Sales peak
Product
Development  Low cost per customer
Introduction
Growth  High profits
Maturity
Decline  Middle majority are targeted

 Competition begins to decline

 PLC Stages

PLC
Stages
 Declining sales
Product
Development  Low cost per customer
Introduction
Growth  Declining profits
Maturity
Decline  Laggards are targeted

 Declining competition
 Marketing Strategy
Introduction Stage
Product  Offer a basic product

Price  Use cost-plus basis to set

Distribution  Build selective distribution

Advertising  Build awareness among early adopters and

dealers/resellers
Sales
Promotion  Heavy expenditures to create trial
 Marketing Strategy
Growth Stage
Product  Offer product extensions, service, warranty

Price  Penetration pricing

Distribution  Build intensive distribution

Advertising  Build awareness and interest in the mass

market
Sales
Promotion  Reduce expenditures to take advantage of
consumer demand
 Marketing Strategy
Maturity Stage
Product  Diversify brand and models

Price  Set to match or beat competition

Distribution  Build more intensive distribution

Advertising  Stress brand differences and benefits

Sales  Increase to encourage brand switching

Promotion
 Marketing Strategy
Decline Stage
Product  Phase out weak items

Price  Cut price

Distribution  Use selective distribution: phase out

unprofitable outlets
Advertising
 Reduce to level needed to retain hard-core
loyalists
Sales
Promotion  Reduce to minimal level
 Exceptions
Not all products follow this cycle:

• Incorrectly determining the stage of PLC

– Decisions pull out resources
– Reduction in sales
– Terminating the product
 Points to Remember
 Time Cycle and Shape of the life cycle varies with products

 External Factors affect the life cycle

 Company influence the PLC

 PLC viewed as a managerial planning tool and not a

marketing forecasting tool.

 Tool for developing marketing strategy and not a tool for

making unit sales predictions.
 Strategic Considerations During
Maturity Stage
Maintenance Fine-tuning product mix to ensure Low Costs
Strategy Product Profitability High Margins

Focus on issues important to customer

Create
Defense product quality
service quality Differential
Strategy Advantage
price*

How to sustain Competitive Adv.?

Innovation - Flankers / Line Extensions*
Strategy - New uses/ Market Extensions
- Significant Innovations*
 Product Families, Platforms and Mixes

Product Platforms Common Platforms on which new products can be built

Product Families Products that share a common platform but have

specific features and functionality

Product Mixes Assortment of Product Families

 Product Mix Map
Product Mix

Product Family 1 Product Family 2 Product Family 3

Produc
t Lines

PRODUCT PLATFORM
 example

Chrysler Product Mix

Product Families
Product Families
Product Families

Chrysler Concorde Eagle Vision Dodge Intrepid New Yorker

Chrysler’s Product Platform for Mid-Level Sedans

Common Features
Basic Car Frame : Suspension : Drive Train
 Need for Product Families?
Greater Effectiveness + Efficiency in Manufacturing

How ?

1. Less Inventory of Specialized Parts

because products with share parts

2. Less Production Downtime

because products would share common processing steps

3. Greater Customer Responsiveness

because products can be half processed in batches
 Need for Product Mix Hierarchy?
1. Identify Product Family Groupings

2. Identify Gaps in Production Lines

3. Illustrate Product Development History

Structure of Product Mix

Product Mix Map
Historical Perspective of Product Line
Importance of brand management- PLC

 One of key areas of life cycle management and product

launch
 Brand helps customers to interpret and process information
about product
 Increases effectiveness and efficiency of marketing
campaign
 Brand provides strong competitive advantage through
improved profit margin, brand loyalty, assist in developing
new product via brand extension
 Brand equity
 “A set of assets and liabilities linked to a brand’s name and
symbols that adds to or subtracts from the value provided
by a product or service to a firm and/or that firm’s
customers.”

 Such value translates to a bottom line (financial ) impact.

Aaker’s Brand equity framework
Brand
association Other
proprietary
Brand Assets

Perceived
quality

Brand
Equity

Brand
awareness

Brand
Loyalty
 Brand loyalty
 A measure of customer’s attachment to the brand

 5 distinct level of loyalty-

 First level -Lowest level- No loyalty at all
 Second Level - Habitual buyer who have no reason to change
because they are satisfied
 Third level- Satisfied Buyer who will incur switching cost on
switching products.
 Forth Level – Customers who likes the brand and considers it
as friend
 Fifth Level- Customers who buy product of any reason to
change.
 Brand Awareness-
 Ability of potential buyer to recognize that the brand belongs
to a certain product category

 4 distinct level of awareness

 First level -Lowest level- No awareness at all
 Second Level – Recognition of the brand
 Third level- Brand recall
 Forth Level – Top Of Mind recall

 To create and maintain brand awareness brand should be

 Different and memorable
 Associated with a slogan or jingle - Britania
 Connected to a symbol - Apple
 Perceived quality
 Customer’s perception that a product or service overall is excellent
w.r.t. its intended purpose.

 Key influence driving perceived quality

 Product quality
 Service quality

Expectation> Expectation= Quality>

Quality Quality Expectation

Low Adequate Exceeded

Perceived Perceived Perceived
Quality Quality Quality
 Brand Associations
 A brand is a product plus values and associations
 Brand knowledge consists of a brand node in memory with a
variety of associations linked to it
 What comes in mind about a particular brand – Top of mind
 Measured by Nodal map

Macintos Innovativ
h e

Apples
Friendly Laptop

Apple
logo
 Brand equity
 Other proprietary brand assets-
 Patents , trademarks , channel relationship- Source of competitive
advantage
 11 metrics to measure brand equity
 Price premium
 Customer satisfaction
 Brand awareness
 Perceived quality
 Leadership - Popularity of the brand
 Perceived value – underlying value
 Brand personality
 Organizational associations
 Market share
 Market price
 Distribution coverage
 Brand Decision Framework
 Various decisions take place in brand management
 Framework which outlines these decisions – Brand Decision
Framework
 Brand decision, brand sponsor decision, brand name decision,
brand strategy decision, brand repositioning decision
 Branding decision
 Decide whether to brand or not brand the product or service.
 Purpose of branding a product is to give an identity to it in the
market place
 Generic or no name products need not be given a brand name.
 Branding Sponsor decision
 Concerns the channel level in which the brand will be given.
 Manufacturer brand
 Distributor brand
 Licensed brand
 Manufacturer Brand
 Is a brand that the manufacturer designates and that retains its
brand characteristics (name, mark) throughout the channel
 Examples – Tide (P&G), Colgate (Colgate – Palmolive)
 Also referred to as national brands
 Distributor Brand
 Brand that a distributor designates and sells through its outlet
 Example – Arizona Jeans (JCPenny), Sams Choice (Walmart)
 Licensed Brand
 Associate and professional groups are associated with licensed
brands.
 A group gives permission so that products can be sold with their
name/brand on them.
 Examples – Merchandise sold with logos of National Football
League, Major league Baseball.
 Brand Name Decision
 Concerns the approach of choosing a brand name
 Individual names
 Blanket family name
 Separate family name
 Company individual name
 Individual Name
 Gives the product its own identity
 If product fails the company name and other company brands do
not get affected
 Drawback is that additional resources are required for
developing a new brand name
 General mills gives individual brand names to its products – Betty
crocker, bisquick, gold medal, nature valley
 Blanket Family Name
 Emphasizes core name and connects with all the products
 Name is typically the manufacturer name
 Heinz – Heinz ketchup, Heinz 57 sauce, Heinz mustard
 Separate Family Name
 Uses different name for different families of products
 Sears – Craftsman tools, Kenmore appliances
 Company Individual Name
 Highlights both the company brand and the product brand
 Intent of the strategy is to use the company brand name to
accentuate the individual brand name
 Kellogs – Kellogs cornflakes, kellogs rasin bran
 Brand Strategy Name
 Concerns the establishment of the brand in the marketplace
 Line extension
 Brand extension
 Multi brand
 New brands
 Co brands
 License extension
 Concerns the establishment of the brand in the marketplace
 Line extension
 Brand extension
 Multi brand
 New brands
 Co brands
 Brand Extension
 Existing brand names is applied to new product categories
 Honda uses its brand across various industries – automobiles,
motorcycles, lawn mowers
 Multi Brand Strategy
 New brand names are introduced to the same product category
currently served by the company
 Company can serve multiple market segments
 Marriott uses multiple brand names strategy – mariott courtyard,
residence inn, fairfield inn, Courtyard by mariott
 New Brand Strategy
 The use of a new brand strategy would be predicted on the belief
that present brand would not provide a good association for the
new category
 Co. Brand Strategy
 Product bears two or more well known names
 Betty crocker brownies with hersheys chocolate – ingredient co
branding
 Trix Flavored Yoplait Yogurt (General mills ) – company connects
two or more of its brands into a new product – same company
cobranding
 Multi sponsor cobranding –2 or more companies brand names are
there in a product – Dow Corning
 Brand Repositioning
 After brand introduce d in the market, brand repositioning
decision.
 Decide whether to change a brand or maintain the brand
 Brands performing wont be changed and can be given more
resources to strengthen their current image
 Brands below expectations will be repositioned to meet a
different market
 BRAND SWITCHING MATRIX

 Analytical method useful for brand management

 It’s a matrix which classifies purchase behavior so to reflect the
characteristics of the market place and customer brand loyalty
 To construct BSM, conduct survey of customers previous brand
purchases and current brand purchases
 An additional use of brand switching matrix is to estimate market
share over time
 Can be used to estimate long run market share over time
Thank You