Product Life Cycle-Marketing Strategies

Product life cycle

A concept that provides a way to trace the stages of a product's acceptance , from it's introduction (birth) to it's decline (death). Product life cycle shows how sales of a product change overtime

Product life-Cycle Marketing Strategies

A Companys positioning and differentiation strategies must change as the product, market and competitors change over the product life cycle.

Reasons why we say that a product has a life cycle: It has a limited life. Product sale passes through different stages. Profits rise and fall at different stages of the product life cycle. Product requires different strategies in each life cycle stage

Introduction To Nestle 2-Minute Maggi Noodles

It's a brand of instant noodles made by Nestle India Limited. It was found by the Nestle family based in Switzerland in the 19th century. Nestle launched Maggi in India in year 1982. Nestle wanted to explore the potential for instant food among the Indian consumers. It took several years and investment on part of Nestle to establish itself in India. Now it enjoys a 90% market share in this segment .

The 4 stages in Product life Cycle

Introduction Growth Maturity Decline

Introduction

Features

Marketing Strategies

Nestle introduced the Maggie brand in India with it's Maggie 2-minute noodles With the launch of Maggie noodles , NIL create an entirely new food category instant food in the Indian packaged food market .Since then NIL has been able to retain it's leadership in the instant noodles food category High production costs Low sales growth Negative or low profits High failure rates

Product promotion: Inform potential consumers Induce product trial Secure Distribution in retail outlets

Speeding up innovation time Pioneer Advantage

Growth Stage

Features

Strategies

Rapid climb in sales Early adopters like the product Profits increase since promotion cost are spread over a larger volume New competitors enter the market Prices remain same or fall slightly Promotional expenditure is maintained or slightly increased . Decline in promotion-sales ratio.

Improves product quality Add new features Add new models and flanker products Enter new market segments Increase its distribution coverage Shifts from product-awareness advertising to product-preference Advertising Lowers prices

Maggi Noodles

In early 1990s HLL entered into the instant noodles market as the first competitor to maggi. The demand for Maggi noodles started to fall due to launch of Top Ramen ,another instant noodle product from HLL. So in order to increase sales , NIL formulated the flavor of Maggi noodles which was not accepted by the consumers In March 1999 NIL re- launched the old version of Maggi noodles , after which the sales revived

To cope up with this NIL came up with the following strategies:

Promotional campaigns in schools Advertising strategies : focus on young children, Office goers , etc New product innovations according to the needs of customers : vegetable Atta noodles , Cuppa mania , Dal Atta noodles Different packaging : 50grms , 100grms packs

Maturity Stage

Features

Marketing Strategies

Three Stages: Growth, stable & decaying maturity. Sales decline due to market saturation Sales slowdown leads to overcapacity, intensified competition Frequent Markdowns Increase Advertising & trade and Consumer promotion Increase R&D budgets Industry eventually consists of well established competitors.

Market Modification Volume=No.of brand users*usage rate per user

Product Modification a. Quality improvement b. feature Improvement c . Style improvement

Marketing program modification-trying to stimulate sales by modifying marketing program elements: a. Prices b. Distribution c. Advertising d. Sales promotion e. Services f. Personal selling

Intensified Competition

HLL Launched Various products which posed a threat to Maggis Market

The new product by HLL was priced at Rs.5 and came in 4 variants Like Maggi , HLLs Soupy noodles targeted all age groups particularly office goers. In 2003 HLL introduced Knorr Annapurna , a liquid snack segment in competition to NIL's Maggi range.

Maggi Noodles

Maggis strategies against HLL

Classic Noodles - 5 to 10 yrs Veg. Atta Noodles - Health conscious Rice Mania Teenagers Cuppa Mania - Office goers

Decline stage

Features

Marketing Strategies

Sales and profits decline Some firms withdraw from the market Remaining ones may reduce the number of products they offer Cut promotion budget and reduce prices further

Increasing the firms investment Maintaining the firms investment level until the uncertainties about the industry are resolved Decreasing the firms investment level selectively Harvesting the firms investment to recover cash. Divesting the business quickly

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