Product Life Cycle (PLC):

The Product Life Cycle is a concept used in marketing to illustrate the stages a product goes
through from its introduction to its eventual decline in the market. It helps marketers
understand how to manage products at different stages and make informed marketing
decisions.

Development introductory growth maturity decline

Stage stage stage stage stage

Diagram: Product life cycle

Introduction Growth Maturity Decline

Characteristics

Sales Low sales Rapidly rising Peak sales Declining sales

sales

Cost High cost per Average cost per Low cost per Low cost per
customer Customer customer customer

Profit Negative Rising profits High Profits Declining profits

Customers Innovators Early adopters Middle majority Laggards

Competitors Few Growing number Stable number Declining

beginning to Number
decline

Marketing Create product Maximize Maximize profit Reduce

objectives awareness and market share while defending expenditure and
trial market share milk brand

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 Strategies Offer product Diversify brands Phase out weak
Offer a basic extensions, and items models ones
Product product service warranty

Price to penetrate Price to match or Cut price

Charge cost-plus market best competitors
Price
Build intensive Build more Go selective:
Build selective distribution intensive phase out
Distribution distribution distribution unprofitable
outlets
Build awareness Stressed brand
Build product and interest in differences and Reduce to level
Advertising awareness among the mass market benefits needed to
early adopters and retained hard-
dealers core loyalist
Increase to
Reduce to take
Use heavy sales advantage of
encourage Reduce to
Sales promotion promotion to heavy consumer brand switching minimal level
entice trial demand

The Various Stages of the Product Life Cycle:

Introduction Stage:
This is the stage when a new product is introduced to the market. Sales are typically low, and
marketing efforts are focused on creating awareness and educating consumers.
What it Means to the Marketer: Marketers need to invest heavily in promotion and
advertising to build brand awareness and establish a market presence. Pricing strategies may
involve penetration pricing to attract early adopters. Example: When Apple launched the first
iPhone in 2007, it was in the introduction stage. Extensive marketing and buzz were created
to introduce the innovative product to consumers.
Growth Stage:
In this stage, the product experiences rapid sales growth. Consumer acceptance increases, and
competitors start entering the market. Profit margins may also improve.
What it Means to the Marketer: Marketers should focus on maintaining and expanding
market share. This stage often requires investment in product improvement and distribution
expansion. Example: Tesla's electric cars saw rapid growth in sales as awareness of
sustainable transportation increased, and the company expanded its product line.

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Maturity Stage:
Sales growth slows down in the maturity stage, and the market becomes saturated.
Competition is fierce, and pricing may become more competitive. Companies often look for
ways to differentiate their products.
What it Means to the Marketer: Marketers need to focus on retaining market share through
branding, product diversification, and efficient cost management. Advertising may emphasize
product differentiation. Example: The soft drink industry is in the maturity stage. Brands like
Coca-Cola and Pepsi continually innovate with new flavours and marketing campaigns to
maintain market share.
Decline Stage:
In the decline stage, sales and profits decrease as consumer preferences shift, and newer
products or technologies emerge. Companies must decide whether to discontinue, harvest, or
rejuvenate the product.
What it Means to the Marketer: Marketers may consider discontinuation, cost reduction, or
repositioning the product to extend its life. Resources may be shifted to newer product lines.
Example: Traditional film cameras are in the decline stage due to digital photography. Some
companies discontinued film camera production, while others focused on digital technology.

The Importance of Product Life Cycle:

The Product Life Cycle is a valuable framework for marketers to understand the dynamics of
product evolution and make strategic decisions accordingly. It helps them allocate resources
effectively, plan marketing campaigns, and adapt to changing market conditions at each
stage.
a. Strategic Planning: It assists marketers in developing long-term strategic plans for a
product, helping them allocate resources and make informed decisions about product
development, promotion, pricing, and distribution.

b. Resource Allocation: By identifying the stage of the product life cycle, marketers
can allocate resources effectively. For example, in the growth stage, investments in
marketing and production capacity may be necessary, while in the decline stage, cost-
cutting measures might be more appropriate.

c. Competitive Analysis: Marketers can assess the competitive landscape at each stage
and adjust their strategies accordingly. Understanding where the product stands in its
life cycle helps in positioning and differentiating it from competitors.

d. Sales Forecasting: It aids in forecasting sales and revenue more accurately, allowing
for better financial planning and risk management. Marketers can estimate when sales
will peak and when they might decline.

e. Product Development: Knowing the life cycle stage informs decisions about product
improvements and innovations. In the growth stage, for example, it may be wise to

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 invest in new features, while in maturity, cost efficiencies could take precedence.

f. Marketing Mix Adaptation: Marketers can tailor their marketing mix (product,
price, place, and promotion) to suit the needs of the product's current life cycle stage.
For instance, in the introduction stage, heavy promotional efforts may be required,
whereas in maturity, price adjustments or product line extensions could be more
relevant.

In summary, the Product Life Cycle is a crucial concept for marketers because it guides their
strategic thinking and helps them make informed decisions across all aspects of the marketing
process. It facilitates effective planning, resource management, and adaptation to changing
market conditions, ultimately contributing to the success of a product in the marketplace.

New Product Development Process Stages

New product development (NPD) is a systematic process that involves several stages to bring
a new product or service to the market.

Stage 1: Idea Generation The process begins with idea generation, where concepts and
potential product ideas are brainstormed. This can involve internal sources, such as
employees, or external sources like customers, competitors, or market research.
Example: Apple's idea generation led to the development of the iPod, inspired by the need for
a portable music player with a vast digital music library.
Stage 2: Idea Screening: In this stage, ideas are evaluated based on feasibility, alignment
with company goals, and market potential. Unsuitable ideas are eliminated, and promising
concepts move forward. Example: Google's idea screening process led to the selection of the
Android operating system for development, aligning with the company's mobile strategy.
Stage 3: Concept Development and Testing: Product concepts are refined, and prototypes
may be created. These concepts are then presented to target consumers for feedback to assess
their interest and perception. Example: Before launching the Tesla Model 3, Tesla conducted
concept tests and received feedback on features and design preferences from potential buyers.
Stage 4: Business Analysis: A detailed business analysis is conducted to assess the financial
viability of the product. This includes cost projections, revenue forecasts, and potential return
on investment (ROI). Example: Before releasing a new video game console, like the Xbox
Series X, Microsoft analyzes costs, pricing, and expected sales to determine profitability.
Stage 5: Product Development: At this stage, the actual product or service is developed. It
involves designing, engineering, and prototyping, as well as addressing technical challenges.
Example: Pharmaceutical companies like Pfizer invest heavily in research and development
to create new drugs and vaccines, including the development of the COVID-19 vaccine.
Stage 6: Market Testing: The product is introduced to a limited market to gather real-world
data on customer acceptance, usage patterns, and potential issues. Example: Fast-food chains

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like McDonald's often pilot test new menu items in select regions to gauge customer response
before a nationwide launch.
Stage 7: Commercialization: If the product performs well in testing, it moves to the
commercialization stage, where it is launched to the broader market. This involves marketing,
distribution, and scaling production. Example: Apple's iPhone commercialization process
involves global marketing campaigns, partnerships with carriers, and mass production to
meet demand upon launch.
Stage 8: Post-Launch Review and Evaluation: After the product is in the market, ongoing
evaluation and monitoring occur. This includes assessing sales performance, customer
feedback, and potential adjustments. Example: Social media platforms like Facebook
continuously gather user feedback and data to make updates and improvements to their
interface and features.

Reasons for New Product Failures:

New products can fail in the market for various reasons. Here are eight common factors:
Lack of Market Research: Insufficient understanding of customer needs and market
dynamics.

Poor Timing: Launching a product at the wrong time or in a saturated market.

Ineffective Marketing: Failing to create awareness or communicate the product's value
effectively.
Quality Issues: Products that don't meet quality expectations or have reliability problems.
Competitive Pressure: Intense competition or disruptive competitors can overshadow a new
product.
Cost Overruns: Unexpected development or production costs can harm profitability.
Misalignment with Strategy: When a new product doesn't align with the company's overall
strategy or core competencies.
Changing Consumer Preferences: Rapid shifts in consumer preferences can make a product
obsolete.

To avoid these pitfalls, companies must conduct thorough market research, maintain quality
control, align products with their strategy, and adapt to changing market conditions.

Packaging:
Packaging is a crucial element of marketing that involves designing and creating the external
covering or container for a product. It serves multiple functions beyond just holding the
product; it is a powerful marketing tool that can influence consumer perception, enhance
brand identity, and even impact purchasing decisions.
Functions of Packaging:
Protection: Packaging safeguards the product from damage during transportation, handling,
and storage. It prevents contamination and extends the product's shelf life.

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Identification: Packaging conveys essential information about the product, such as its name,
brand, ingredients, usage instructions, and nutritional information. This helps consumers
make informed choices.
Differentiation: Packaging design and branding set a product apart from competitors. It's an
opportunity to create a unique visual identity that captures the essence of the brand and
product.
Convenience: Packaging should be user-friendly, making it easy for consumers to access and
use the product. Features like resealable bags or easy-pour spouts enhance convenience.
Marketing Communication: Packaging communicates the product's value, benefits, and
intended use through visuals, colors, logos, and taglines. It can evoke emotions and trigger
brand loyalty.
Environmental Sustainability: In recent years, eco-friendly packaging has gained
importance. Companies are increasingly using sustainable materials and designs to reduce
their environmental footprint.

Types of Packaging:
Packaging comes in various forms to suit different products and marketing strategies. Here
are some common types of packaging:
Primary Packaging: This is the immediate layer of packaging that directly encases the
product. It is the packaging consumers see when they pick up a product from a store shelf.
Examples include: Bottles: Used for beverages like Coca-Cola. Cans: Commonly used for
canned foods like beans or soda. Boxes: Used for products like smartphones or cosmetics.
Secondary Packaging: This packaging is used to group primary packages together for easy
handling and distribution. It often includes branding and product information. Examples
include: Cardboard boxes: Used to bundle multiple cereal boxes. Shrink wrap: Used to
hold together several packs of bottled water. Example: A multi-pack of Coca-Cola cans
shrink-wrapped together is secondary packaging. It helps retailers organize and display the
cans while providing space for branding and pricing information.
Tertiary Packaging: Tertiary packaging is used for bulk handling and transportation of
products. It is not intended for direct consumer interaction. Examples include: Pallets: Used
to stack and transport multiple boxes of products. Stretch wrap: Used to secure palletized
goods. Example: A pallet loaded with cases of iPhones is tertiary packaging. It allows
efficient handling and transportation of a large quantity of products from the manufacturer to
distribution centres.
Effective packaging design considers the product's nature, the target audience, and marketing
objectives to create a compelling and functional solution that enhances the overall consumer
experience.

Labelling

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Labelling in marketing refers to the presentation of information, graphics, or branding
elements on a product's packaging or the product itself. It serves multiple functions, including
providing essential product information, conveying branding and identity, complying with
regulations, and influencing consumer purchasing decisions.

Functions of Labelling:
Identification: Labels help consumers identify a product, its brand, and its manufacturer.
They often include the product name, logo, and brand colours.
Information: Labels provide critical product information such as ingredients, nutritional
facts, usage instructions, manufacturing and expiry dates, and safety warnings.
Promotion: Labels can serve as a promotional tool by featuring marketing messages,
slogans, or call-to-action statements that encourage consumers to buy the product.
Legal Compliance: Labels ensure that products adhere to regulatory requirements and
standards. For example, food products must display nutritional information and allergen
warnings.
Differentiation: Effective labeling sets a product apart from competitors. It can communicate
unique selling points, product benefits, or eco-friendly attributes.
Consumer Trust: Labels can enhance consumer trust by displaying certifications (e.g.,
organic, fair trade) and quality assurance marks.
Security: Certain labels, like tamper-evident seals or serial numbers, enhance product
security and help prevent counterfeiting.

Types of Labeling:
There are several types of labeling used in marketing, each serving specific purposes.
Descriptive Labels: These labels provide essential information about the product, such as its
name, ingredients, usage instructions, and nutritional facts. They are commonly found on
food, pharmaceutical, and personal care products. Example: The nutrition label on a cereal
box that provides information about calories content, fat, vitamins, protein, and other
nutritional details.
Brand Labels: Brand labels prominently display the product's brand name and logo. They
reinforce brand identity and recognition. Example: The Nike Swoosh logo on a pair of
sneakers. The iconic Coca-Cola label prominently displays the brand name and red and white
colour scheme, making it instantly recognizable worldwide.
Promotional Labels: These labels contain marketing messages, special offers, discounts, or
contests to entice consumers to purchase the product. Example: A sticker on a shampoo bottle
offering a "Buy One, Get One Free" promotion.
Environmental Labels: These labels communicate a product's eco-friendly attributes, such
as recycling symbols, energy efficiency ratings, or certifications like "organic" or "fair trade."

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Example: The recycling symbol indicating a product's recyclability. :** Products with the
"Energy Star" label indicate they meet energy-efficiency standards set by the Environmental
Protection Agency (EPA).
Warning Labels: Warning labels provide safety information and precautions, especially on
products that could pose risks to consumers if not used correctly. Example: The warning label
on a bottle of bleach indicating that it can cause harm if ingested and should be kept out of
reach of children. Cigarette packages have warning labels that inform consumers of the health
risks associated with smoking.
In summary, labeling is an integral part of marketing that serves various functions, including
product identification, information dissemination, brand promotion, and legal compliance.
Marketers must carefully design labels to convey the intended message and comply with
industry regulations and consumer expectations.

Warranty and Guarantee:

A warranty is a promise or assurance made by a manufacturer or seller to stand behind the
quality, performance, and reliability of a product. It outlines the terms and conditions under
which the manufacturer or seller will repair, replace, or refund a product if it doesn't meet the
specified standards or if it fails to function as expected within a certain period after purchase.
Warranties are essential in building consumer trust and confidence in a product.
Guarantee:
A guarantee is similar to a warranty, but it is typically a more informal commitment to the
quality and performance of a product or service. Guarantees are often provided directly by
the manufacturer or seller, and they can vary in terms of what is guaranteed and for how long.
While warranties are often legally binding, guarantees may be more of a company's pledge to
ensure customer satisfaction.

Types Warranties:
Express Warranty: This is a written or verbal promise made by the manufacturer or seller
regarding the product's quality, features, or performance. Express warranties are legally
binding and must be honoured. Example: An express warranty for a smartphone may promise
that the device will be free from defects for one year.
Implied Warranty of Merchantability: This warranty is implied by law, stating that a
product must be fit for its intended purpose and meet a reasonable level of quality and
performance.
Example: If you buy a new toaster, there's an implied warranty that it will toast bread
properly.
Implied Warranty of Fitness for a Particular Purpose: Implied by law, this warranty
states that a product must be suitable for a specific purpose, even if that purpose is not
explicitly stated in the warranty. Example: If you ask a salesperson for a specific type of paint
for outdoor use, and they recommend one, an implied warranty of fitness for that purpose
applies.

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Guarantees:
Satisfaction Guarantee: This type of guarantee promises that the customer will be satisfied
with the product or service, and if not, they can receive a refund or replacement.
Example: Many online retailers offer a "30-day satisfaction guarantee" on their products.
Money-Back Guarantee: This guarantee assures customers that if they are not happy with
their purchase, they can return the product and receive a full refund. Example: A fitness
equipment manufacturer may offer a "90-day money-back guarantee" if customers aren't
satisfied with their results.
Lowest Price Guarantee: Companies may guarantee that they offer the lowest price on a
particular product, promising to match or beat any lower price found elsewhere.
Example: Electronics retailers often offer a "lowest price guarantee" to attract price-conscious
shoppers.

External Business Environment:

Macro Environment in Marketing:
In marketing, the macro environment refers to the larger societal forces and factors that
influence an organization's operating environment but are beyond its direct control.
Understanding the macro environment is essential for marketing professionals because it
helps them identify opportunities and threats that can impact their strategies and decision-
making. The macro environment is typically analysed using a framework called PESTEL
analysis, which stands for Political, Economic, Sociocultural, Technological, Environmental,
and Legal factors.
Political Factors: Political factors encompass the impact of government policies,
regulations, and stability on marketing activities. Changes in government leadership, trade
policies, taxation, and industry-specific regulations can significantly affect marketing
strategies. Example: The introduction of stricter environmental regulations can compel
automobile manufacturers to invest in eco-friendly technologies and promote these features
in their marketing campaigns.
Economic Factors: Economic factors relate to the economic conditions of a country or
region, such as inflation, unemployment rates, exchange rates, and economic growth. These
factors directly influence consumer spending patterns and purchasing power.
Example: During a recession, consumers may become more price-sensitive, leading
companies to adjust their pricing and promotional strategies to maintain sales.
Sociocultural Factors: Sociocultural factors pertain to the values, beliefs, demographics, and
cultural trends of a society. Understanding these factors is crucial for tailoring marketing
messages and products to specific target audiences. Example: The popularity of sustainable
and eco-friendly products has grown in response to increased environmental awareness
among consumers. Companies like Patagonia have capitalized on this trend in their marketing
efforts.

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Technological Factors: Technological factors encompass advancements in technology,
innovation, and the adoption of new technologies. These can create opportunities for new
marketing channels and product development. Example: The rise of smartphones and social
media has revolutionized digital marketing. Companies leverage platforms like Facebook and
Instagram for targeted advertising and engagement with customers.
Environmental Factors: Environmental factors involve sustainability concerns and the
impact of an organization's activities on the environment. Consumers and regulators
increasingly scrutinize companies for their environmental practices. Example: The demand
for electric vehicles (EVs) has surged due to concerns about air pollution and climate change.
Companies like Tesla have capitalized on this trend in their marketing campaigns.
Legal Factors: Legal factors refer to laws and regulations that affect business operations and
marketing practices. Compliance with these regulations is essential to avoid legal issues and
reputation damage. Example: The General Data Protection Regulation (GDPR) in Europe has
had a significant impact on how companies handle customer data and conduct digital
marketing to ensure data privacy.
In summary, the macro environment in marketing is a complex interplay of various external
factors that can shape an organization's marketing strategies and outcomes. Marketing
students and professionals need to continually monitor and adapt to changes in the macro
environment to remain competitive and responsive to evolving consumer needs and societal
trends. By conducting a thorough PESTEL analysis, marketers can gain valuable insights and
make informed decisions that align with the broader forces at play in their business
environment.

Micro Environment:
The micro environment in marketing refers to the immediate and specific factors and forces
that directly impact an organization's marketing activities and decision-making processes.
Unlike the macro environment, which encompasses larger societal factors, the micro
environment focuses on elements that are closer to the organization and within its control.
Understanding the micro environment is crucial for marketers as it helps them analyse and
respond to factors that can directly influence their strategies and operations. Key components
of the micro environment include customers, competitors, suppliers, intermediaries, and
stakeholders.
Customers: Customers are at the core of any marketing effort. Understanding customer
needs, preferences, behaviour, and demographics is fundamental for tailoring products,
services, and marketing campaigns effectively. Example: An e-commerce company like
Amazon constantly analyses customer data to personalize product recommendations and
offers based on past purchases and browsing history.
Competitors: Competitors are organizations that offer similar products or services and vie
for the same target market. Analysing competitors helps marketers identify strengths,
weaknesses, opportunities, and threats. Example: Coca-Cola and PepsiCo are fierce
competitors in the soft drink industry. Both companies continually launch advertising and
promotional campaigns to gain a competitive edge.

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Suppliers: Suppliers provide the necessary inputs for an organization's products or services.
The relationship with suppliers can impact the cost, quality, and availability of these inputs.
Example: An automotive manufacturer relies on various suppliers for components like
engines, tires, and electronics. A reliable supplier network is crucial to ensure the production
process runs smoothly.
Intermediaries: Intermediaries are entities that help distribute and sell an organization's
products to customers. These can include wholesalers, retailers, and distributors. Example:
Apple uses a network of authorized retailers and carriers to distribute its products worldwide.
These intermediaries play a vital role in reaching customers in different markets.
Stakeholders: Stakeholders are individuals or groups with a vested interest in the
organization's success. This can include investors, employees, local communities, and
advocacy groups. Example: A sustainable fashion brand's stakeholders may include socially
responsible investors who support ethical manufacturing practices, leading the company to
adopt transparent and eco-friendly production methods
Internal Environment: This includes factors within the organization, such as its culture,
leadership, employees, and resources. The internal environment shapes the organization's
capacity to execute its marketing strategies. Example: Google's internal environment fosters a
culture of innovation, which has led to the development of products like Google Search,
Google Maps, and Android.
In summary, the micro environment in marketing consists of factors that are immediate and
directly impact an organization's marketing efforts. Marketers need to continuously assess
and adapt to changes in their micro environment, whether it's understanding customer
preferences, monitoring competitor strategies, optimizing supplier relationships, or engaging
with stakeholders. By carefully analysing and responding to these micro-level factors,
marketers can enhance their ability to compete effectively in their respective industries and
achieve their marketing objectives.

Internal Environment:
Internal Factors: The internal environment refers to factors that exist within the
organization itself. These factors are under the direct control or influence of the
organization's management.
Company-Specific: The internal environment is unique to each organization and is shaped
by its culture, leadership, resources, policies, and operational processes.
Components: The internal environment includes elements like the organizational culture,
employees, leadership style, financial resources, technology infrastructure, and the company's
mission, vision, and values.
Direct Control: Marketers and the organization's leadership have direct control and influence
over the internal environment. They can shape and adjust these factors to align with strategic
goals.
Examples of internal factors include hiring and training employees, setting marketing
budgets, establishing company policies, and implementing quality control measures.

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In summary, the micro environment in marketing encompasses external factors that directly
affect an organization's marketing efforts, while the internal environment consists of factors
that are internal to the organization and under its direct control. Marketers must carefully
manage both environments to create effective marketing strategies and achieve organizational
objectives. Balancing the internal and external factors is crucial for long-term success in
today's competitive business landscape.

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