Product Lifecycle and Promotional Mix Strategies

Posted on Dec 18, 2024 in Economy

Product Lifecycle

A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. A product is a physical good, service, idea, person, or place that is capable of offering tangible and intangible attributes that individuals or organizations regard as so necessary, worthwhile, or satisfying that they are prepared to exchange money, patronage, or some other unit of value in order to acquire it. This model includes four stages through which individual products develop over time and extends from introduction to obsolescence.

Stages:

  • Introduction: Low sales and high costs as the product is being introduced to the market. Competition is limited. The customer type is known as an innovator. The core objective is to generate awareness among the target audience.
  • Growth: Rising sales, costs declining, and profits being achieved. A growing number of competitors are entering the market. The customer type is known as an early adopter. The core objective is to increase demand in order to increase market share.
  • Maturity: Sales and profits reach their peak; the cost per customer is low. Competition is intense. The customer type is known as the middle majority. The core objective is to maximize profit and maintain market share.
  • Decline: Sales and profits decline. The number of competitors has reduced. The customer type is known as a laggard. The core objective is to milk the brand.
The Product Lifecycle (PLC) concept helps interpret product and market dynamics and can be used for planning and control, although as a forecasting tool it is less useful.

Some criticisms have been put forward:

  • Duration of the PLC stages is unpredictable
  • Difficult to tell which stage the product is in
  • Not marketing-oriented
  • PLC pattern is the result of marketing strategies rather than an inevitable course that sales must follow
  • Not all products follow the classic PLC curve

Promotion Mix

Advertising – TV, Radio, Press, Outdoor, Internet, Cinema, Ambient. Sales Promotion – Sales-Oriented and Trade-Oriented sales promotion. Direct Marketing – Direct mail, press and catalog, Direct broadcast response, Internet. Sponsorship – Arts, Popular Music, Sport, Broadcast, Cause-related. Public Relations and Publicity. Personal Selling.

The Promotional Mix: The Traditional Tools of IMC

Advertising

Any paid form of non-personal communication about an organization, product, service, or idea by an identified sponsor.

Advantages:
  • Cost-effective way for communicating, particularly with large audiences
  • Ability to create images and symbolic appeals and for differentiating
  • A valuable tool for creating and maintaining brand equity
  • Ability to strike a responsive chord with the audience through creative advertising
  • Ability to control the message (what, when, and how something is said and where it is delivered)
Disadvantages:
  • The cost of producing and placing ads can be very high, particularly television commercials
  • It can be difficult to determine the effectiveness of advertising
  • There are credibility and image problems associated with advertising
  • The vast number of ads has created clutter problems
  • Consumers are not paying attention to much of the advertising they see and/or hear

Direct Marketing

Direct marketing has not traditionally been considered an element of the promotional mix. However, because it has become such an integral part of the integrated marketing communications program of many organizations, this text views it as a component of the promotional mix.

Advantages:
  • Changes in society (two-income households, greater use of credit) have made consumers more receptive to the convenience of direct-marketed products
  • Allows a company to be very selective and target its marketing communications to specific customer segments
  • Messages can be customized to fit the needs of specific market segments
  • The effectiveness of direct-marketing efforts is easier to assess than other methods of promotion
Disadvantages:
  • Consumers and businesses are being bombarded with unsolicited mail and phone calls, which makes them less receptive to direct marketing
  • Direct marketing has image problems
  • Problems with clutter as there are too many direct-marketing messages competing for consumers’ attention

Sales Promotion

Sales promotion is generally broken into two major categories: consumer-oriented and trade-oriented activities.

Advantages:
  • Provides extra incentive to the consumer or intermediary to purchase or stock and promote a brand
  • A method of appealing to the price-sensitive consumer
  • A method of generating extra interest in the product or ads
  • Effects can often be more directly measured than those of advertising
  • Can be used as a way of building or reinforcing brand equity
Disadvantages:
  • Many companies are becoming too reliant on sales promotion and focusing too much attention on short-run marketing planning and performance
  • Many forms of sales promotion do not help establish or reinforce brand image, and short-term sales gains are often achieved at the expense of long-term brand equity
  • Problems with sales promotion clutter as consumers are bombarded with too many coupons, contests, sweepstakes, and other promotional offers
  • Consumers may become over-reliant on sales promotion incentives, which can undermine the development of favorable attitudes and brand loyalty
  • In some industries, promotion wars may develop whereby marketers use sales promotion incentives extensively, which results in lower profit margins and makes it difficult to sell products at full price

Publicity

A distinction is made between publicity and public relations, noting that public relations generally has a broader objective than publicity, as its purpose is to establish and maintain a positive image of the company among its various publics. Publicity is an important communications technique used in public relations; however, other tools may also be used.

Advantages:
  • The credibility of publicity is usually higher than other forms of marketing communication
  • Low-cost way of communicating
  • Often has news value and generates word-of-mouth discussion among consumers
Disadvantages:
  • Lack of control over what is said, when, where, and how it is said
  • Can be negative as well as positive

Personal Selling

Direct person-to-person communication whereby a seller attempts to assist and persuade prospective buyers to purchase a company’s product or service or act on an idea.

Advantages:
  • Direct contact between buyer and seller allows for more communication flexibility
  • Can tailor and adapt the message to the specific needs or situation of the customer
  • Allows for more immediate and direct feedback
  • Promotional efforts can be targeted to specific markets and customers who are the best prospects
Disadvantages:
  • High cost per contact; expensive way to reach large audiences
  • Difficult to have a consistent and uniform message delivered to all customers

Sponsorship

“An investment in cash or in kind in an activity in return for access to the exploitable commercial potential associated with that activity”.

Advantages:
  • Image
  • Target specific audiences
  • Media coverage
  • Endless opportunities for sales promotion
  • Prestige
Disadvantages:
  • Negative associations
  • Sponsorship clutter
  • Over-commercialization
  • Ambush Marketing