Product Life Cycle NESTLE MAGGI
Submitted by: PAVAN S GHODKE
Product Life Cycle (PLC): The Product Life Cycle
(PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline). Each product may have a different life cycle PLC determines revenue earned Contributes to strategic marketing planning May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc. May help in new product development planning May help in forecasting and managing cash flow
The PLC curve is typically divided into four stages:
Introduction A period of slow sales growth as the product is launched in the market. This phase is characterized by high operational costs and so incurs initial losses. Growth A period of rapid market acceptance and substantial profit improvement. Maturity A slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased competition. Decline Sales show a downward drift and profits erode.
Maturity
60
50
Sales/Profits
Decline
Growth
40
30
Introduction
Profits
Sales Sales
20 Profit
Profit 10
Break-even
0
-10
Loss
point Time
-20
Features
Introduction
Growth
Maturity
Decline
Low High Negative Innovators
Peak Low High Middle majority Stable no.
Declining Low Declining Laggards
Few
Rising Average Rising Early adopters Growing no.
Declining no.
Create product awareness & trial.
Maximize market share.
Maximize profit while defending mkt. share.
Reduce expenditure & milk the brand.
Basic product
Product extension To penetrate Market Intensive
Diversify brands To match competitors More intensive
Phase out weak Cut price
Characteristics: Sales Costs Profits Customers Competitors
Marketing Objectives Strategies: Product Price Distribution
Cost plus charge Selective
Selective
Introduction To Nestle 2-Minute Maggi Noodles It was
found by the Nestle f amily based in Switzerland in the 19th century. Nestle
launched Maggi in India in year 1982.
Nestle
wanted to explore the potential for inst ant food among the Indian consumers. It took
several years and invest ment on part of Nestle to est ablish itself in India. Now
it enjoys a 90% market share in this segment .
Product Life Cycle concept that provides a way to trace the stages of a product's acceptance , from it's introduction {birth} to it's decline {death}. A
Introductory St age High
failure rates No competition Frequent modifications High production costs Nestle India limited , an Indian subsidiary of the global FMCG major , Nestle introduced the Maggi brand in India with it's Maggi 2-minute noodles With the launch of Maggi 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
Market Penetration Promotional
campaigns in schools Advertising strategies : focus on young children New product innovations according to the needs of customers : veget able Att a noodles , Cuppa mania , Dal Att a noodles Different packaging : 50grms , 100grms packs
Some Maggi Noodles Advertisements
Growth Stage Increasing
rates of sales Entrance of competitors Initial healthy profits Development costs are recovered In early 1990's the demand for Maggi noodles st arted to f all due to launch of Top Ramen ,another inst ant noodle product 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
Maturity Stage Declining
sales growth Saturated market Extending product lines Heavy promotions to dealers and consumers Prices and profits f all In 2003 HLL introduced Knorr Annapurna , a liquid snack segment in competition to NIL's Maggi range The new product by HLL was priced at rs.5 and came in 4 variants Like Maggi ,Soupy Snax t argeted all age-groups ,particularly office goers
Segmentation To Differentiation Classic
Noodles - 5 to 10 yrs Veg. Atta Noodles - health conscious Rice Mania - teenagers Cuppa Mania - office goers
Decline St age {if no innovations are made} Long
drop in sales Large inventories of unsold items Elimination of all non-essential marketing expenses
The PLC concept can be used to analyze: o o o o
a product category (e.g. liquor) a product form (e.g. white liquor) a product (e.g. vodka), or a brand (e.g. Smirnoff)
Not all products exhibit an s-shaped curve. Three common alternate patterns are described here
Sales Volume
Time
Sales grow rapidly when the product is introduced, then fall to a petrified level that is sustained by late adopters buying the product for the first time and early adopters replacing the product. Often characteristic of small kitchen appliances such as handheld mixers and bread makers.
Sales Volume Primary Cycle
Recycle
Time
A company aggressively promotes its new product and this produces the first cycle. Later the sales starts declining & the company gives its product another promotion push, which produces a second cycle of smaller magnitude & duration. E.g. sales of new drugs of a pharmaceutical company.
Sales Volume
Time
Here, sales pass through a succession of life-cycles based on the discovery of a new product characteristics, uses & users. The sales of nylon, for example, show a scalloped pattern because of the many new uses parachutes, hosiery, shirts, carpeting, boat sails, automobile tires, that continue to be discovered over time.
THE END
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