Marketing Mix and Product Life Cycle Explained
The Marketing Mix
A company has four instruments on which to decide, and which are known as the 4Ps of the marketing mix:
- Product: The first decision that the company has to make concerns the characteristics that the product must have to attract potential customers’ demand. This includes the design, quality, branding, packaging, and guarantees. It is a long-term decision.
- Price: Pricing decisions are critical to the response of consumers, hence their importance in setting or modifying them. To make these decisions, companies study the costs of the product. It is a short-term policy and, in most cases, the first and only information available to the client.
- Distribution: This refers to the decisions and activities that companies perform to bring their products to the consumer centers so that they are in the right place at the time that consumers need them. It involves deciding whether the distribution is made directly or through intermediaries, supermarkets or specialty stores, traditional e-commerce, etc. Also called distribution logistics, these decisions are long-term.
- Promotion or communication: Once the product is designed, prices are set, and the points of distribution and sale are chosen, the company only has to publicize and motivate consumers with adequate communication on product characteristics and the advantages over competing products. Various means of promotion are used, such as advertising, public relations, or activities of the company’s vendors.
The marketing mix integrates and combines the decisions the company must take on the attributes of their products, pricing, distribution channels, and communication or promotion that will take place to be known and appreciated by the market.
The Product Life Cycle
This model states that the sales of a product go through four stages from its launch until it disappears: introduction, growth, maturity, and decline. The model also establishes the relationship of sales to the benefits derived and the response of competitors.
Phases of the Product Life Cycle
Introduction or Release Stage
When a new product appears, in general, the company has previously done some market research and made expenditures and investments for production and release. Moreover, as the product is unknown to consumers, it requires heavy investment in promotion and advertising. Because it is unknown to the general public, sales are small and growth is slow. In this period, the company records losses since the reduced sales revenue does not offset the initial costs. (No competition)Growth Stage
Once the product begins to be known and is successful, another phase begins, characterized by an increase in sales. This growth ends up generating profits for the company, and competitors immediately begin to appear with substitute products intended to capture a share of the benefits provided by the market. Marketing campaigns are often renewed.Maturity Stage
Decline Stage
Gradually, the market becomes saturated with the substitutes that have emerged, sales fall, and profits are reduced in parallel, which will cause some competitors to leave the market. This phase ends when sales are so small that they disappear along with the profits, and losses begin. At this time, the company must decide whether to stop marketing the product or if they should make a marketing effort to renovate it and keep it on the market.
Strategies to Extend the Product Life Cycle
Once the product has reached the stage of maturity, sales start to decline. To extend the stay of the product on the market, various strategies can be used, some focused on the product and others on the market, but in both cases designed to revitalize demand.