How does the marketing mix and strategy change at each stage of the product life cycle?
Each product has a life cycle which includes four stages.
These stages are introduction, growth, maturity and decline.
As a product passes through these life cycle stages, the company has to make changes to the marketing mix and marketing strategy to meet the changing needs of the product and the company at each stage fully.
The same strategy cannot be employed at each stage since that can cause the product sales to decline and loss of market share.
Depending on the changing needs during each stage, companies must review the marketing mix and make appropriate changes so that they can generate the best results at each stage.
Many times, products have failed at early stages of their life cycle in the market, and the main reason was that the companies failed to make appropriate changes to inject life into a failing product.
On the other hand, several products found success after companies adopted a proper strategy for each stage to drive higher excitement and consumer loyalty.
Development or introduction stage:
The product development or introduction stage is generally a stage full of risks and uncertainties.
At this stage, the company need to focus upon creating demand and driving brand awareness higher.
How much time it will take for demand to grow will depend on the product’s complexity, its innovativeness, how well it fits into consumer needs and the presence of substitutes in the market.
For example, a product that is rare and inimitable will not have to struggle for creating demand.
If a proved cure for cancer arrives in the market, the company will need to spend virtually nothing on creating demand.
However, this is generally not the case always and apart from that if the level of competition in the market or the number of substitutes is higher, the product will struggle to achieve higher demand.
In such a case, the expenditure on marketing and advertising will be higher since the company will need to focus on growing awareness about the product and drive demand for it by encouraging customers to try the product.
If the number of substitutes is higher in the market, the company will keep prices low to drive faster growth in demand.
The focus of the marketing mix and marketing strategies of the company will be on gaining market share and creating demand.
This is generally the riskiest stage for the product since it will either successfully gain market share or end up failing.
All these factors including competition and uncertainty drive the cost of marketing in the initial stage higher.
Growth Stage:
Successful products generally experience a gradual rise in demand during the initial market development stage.
At some point as demand keeps rising, a remarkable increase in consumer demand happens and sales take off from that point.
This point is the beginning of the second stage or the market growth stage.
If a company has faced lower competition in the first stage might experience higher competition in the second one since chances are higher that new competitors jump into the fray.
Some players might enter the market with carbon copies of the product and others might bring similar products with design and functional improvements.
This is the point where product and brand differentiation start developing or the focus of the marketing mix will be on differentiation.
At this stage, the focus of the marketing strategy will be on the use of techniques that help differentiate the product from rivals.
However, with the entry of competitors in the market who might have been inspired to release similar products by the success of the original product, the task of the manufacturer company might become difficult.
Rather than encouraging consumers to try the product, the company needs to offer customers compelling reasons to prefer its product over the others.
The company will need to change its marketing strategy and methods since the ones used in the initial stage will not work at this stage.
Another critical marketing related challenge at this stage is that the company will not be as free to experiment with its marketing methods as in the first stage due to the presence of competitors.
Due to the competition, the company will have limited choices in terms of pricing and distribution also.
At this stage, experimenting with prices may not be possible.
However, accelerating consumer demand and acceptance opens the scope for the adoption of new distribution channels.
The chances of competition growing at this stage are again higher since more players will see an opportunity to earn profits.
Technological advancements and production shortcuts will also allow competitors to charge lower prices for their products.
Inevitably, the product reaches a new stage of competition at this point.
Maturity Stage:
The first sign of the maturity stage is the evidence of market saturation.
In terms of marketing strategy, this is also a rather complex stage where the manufacturing company needs to appeal to the consumer on the basis of the marginal differentiators, prices, or both.
Based on the type pf product, the most effective form of differentiation at this stage will be the services and deals provided in connection with the product.
Apart from it, the company will also try to create and promote fine distinctions through packaging and advertising.
It will also try to appeal to new market segments.
Especially, in the case of branded products, the manufacturer will be forced to communicate more directly with the customer.
The market maturity stage can pass rapidly or it can sustain for long where demand will neither rise nor fall.
The focus of the marketing mix will be on building customer loyalty through promotions and special incentives and encouraging brand switching.
Decline Stage:
When the product maturity stage has come to an end, the product reaches the decline stage.
This is also the stage where the expenditure of the company on marketing declines.
Marketing related efforts also decline at this stage.
While attracting new sales from new customers might not be possible at this stage, the company can still retain its loyal customers.
It has achieved customer loyalty in the previous stages and the focus will be on reinforcing the product’s and the brand’s image in a manner that the product stays in light and the company is able to retain its loyal customers.
Companies can also avoid market decline in many cases through the use of carefully orchestrated marketing techniques and by being innovative in their approach to marketing the product.
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