PRODUCT LIFE CYCLE
G ROUP MEMBERS IBRAHIM FAKHRUDIN KAMR AN ALI
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TABLE OF CONTENTS
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DESCRIPTION
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INTRODUCTION TO PLC
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STAGES OF PLC
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PLC CHART
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PLC OF MOBILINK
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PLC OF LUX
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PLC STAGES OF SOME PAKISTANI PRODUCTS
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CONCLUSION
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REFERENCES
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INTRODUCTION TO PRODUCT LIFE CYCLE (PLC)
The course of a products sales and profits over its lifetime is called the product life cycle. After launching the product the management wants the product to enjoy a long and happy life. Although it does not expect the product to sell forever, the company wants a decent profit to cover all the effort and risk that went into launching it. Management is aware that each product will have a life cycle, although the exact shape and length is not known in advance. The product life cycle 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).In theory it's the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilizes and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn. However, most products fail in the introduction phase. Others have very cyclical maturity phases where declines see the product promoted to regain customers. The PLC concept can be applied by marketers as a useful framework for describing how products and markets work. But using the PLC concept for forecasting product performance or for developing marketing strategies presents some practical problems. For example mangers may have trouble identifying which stage of the PLC the product is in, pinpointing when the product moves into the next stage, and determining the factors that affect the product’s movement through the stages. In practice, it is difficult to forecast the sales level at each PLC stage, the length of each stage, and the shape of the PLC curve. Not all the product follows this product life cycle. Some products are introduced and die quickly; others stay in the mature stage for a long, long time. Some enter the decline stage and are then cycled back into the growth stage through strong promotion or repositioning The PLC concept can also be applied to what are known as styles, fashions, and fads. Style: A style style is a basic and distinctive mode of expression. For example, styles appear in homes (colonial, ranch), clothing (formal, casual), and art (realist, surrealist, abstract).Once style is invented, it may last for generations, passing in and out of vogue. Fashion: A fashion fashion is a currently accepted or popular style in a given field. Fashion tends to grow slowly, slowly, remain popular for a while, and then decline quickly. Fads: Fads are fashions the enter quickly, quickly, are adopted with great zeal, peak early, and decline very quickly. They last only a short time and tend to attract only a limited following. Most fads do not survive for long because they normally do not satisfy a strong need or satisfy it well. The PLC concept can described a product class, a product form, or a brand. The plc concept applies differently in each case. Product classes have the longest life cycles ___the sales of many product classes stay in the mature stage for a long time .product forms, in contrast tend to have the standard PLC shape. A specific life cycle can change quickly because of changing competitive attacks and responses. Using the PLC concept to develop marketing strategy also can be difficult, because strategy is both a cause and a result of the product’s life cycle. The product’s product’s current PLC position suggests the best marketing strategies, and the resulting marketing strategies affect product performance in later life-cycle stages .Yet, .Yet, when used carefully, the PLC concept can help in developing the good marketing strategies for different stages of the product life cycle.
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STAGES OF THE PLC INTRODUCTION ST STAGE AGE The introduction stage starts when the new product is first launched. Introduction takes time and the sales growth tends to be slow at this stage. Because it takes time to roll out a new product and fill dealer pipelines. Robert Buzzell identified several causes for the slow sales growth: delays in the expansion of product capacity; technical problems; delays in obtaining adequate distribution through retail outlets; and customer reluctance or well known products lingered for many years before they entered into the market. Some firms may announce their product before it is introduced, but such announcements also alert competitors and remove the element of surprise. Advertising costs typically are high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters. During the introductory stage the firm is likely to incur additional costs associated with the initial distribution of the product. These higher costs coupled with a low sales volume usually make the introduction stage a period of negative profits. Because the market is not generally ready for product refinements at this stage, the company produce basic versions of the product. The firms focus their selling on those buyers who are readiest to buy the product. Promotional expenditures are at their highest ratio to sales because of the need to inform potential consumers, induce product trial and secure distribution in retail outlets. A company especially the market pioneer must choose a launch strategy that is consistent with the intended product positioning. It should realize that the initial strategy is just the first step in a grander marketing plan for the product’s entire life cycle. If the pioneer chooses its launch strategy to make a “killing”, it will be sacrificing long -run revenue for the sake of short –run gain. It has the best chance of building and retaining market leadership if it plays its cards correctly in the start. During the introduction stage, the primary goal is to establish a market and build primary demand for the product class. In short, following are some of the marketing mix implications of the introduction stage: • •
•
•
•
undifferentiated Product - one or few products, relatively undifferentiated Price - Generally high, assuming a skim pricing strategy for a high profit margin as the early adopters buy the product and the firm seeks to recoup development costs quickly. quickly. In some cases a penetration pricing strategy is used and introductory prices are set low to gain market share rapidly. Distribution - Distribution is selective and scattered as the firm commences implementation implementation of the distribution plan. Promotion - Promotion is aimed at building brand awareness. Samples or trial incentives may be directed toward early adopters. The introductory promotion also is intended to convince potential resellers to carry the product. Adertising – Advertising Advertising is aimed to be high ad build product awareness among early adopters and dealers.
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GROWTH STAGE If the new product satisfies the market, it will enter a growth stage, in which sales will start climbing quickly. quickly. The early adopters will continue to buy, and later buyers will start following their lead, especially if they hear favorable word of mouth. Once the product has been proven a success and customers begin asking for it, sales will increase further as more retailers become interested in carrying it. The marketing team may expand the distribution at this point. Profits increase during the growth stage, as promotion costs are spread over a large volume and as unit manufacturing costs fall faster than the price declines owing to the producer learning effect. Firms have to watch for a change from an accelerating to decelerating rate of growth in order to prepare new strategies. Attracted by the opportunities for profit, new competitors will enter the market. They will introduce new product features, and the market will expand. The increase in competitors leads to an increase in the number of distribution outlets, and the sales jump just to build reseller inventories. Prices remain where they are or fall only slightly. slightly. Companies keep their promotion spending at the same or a slightly higher level. Educating the market remains a goal, but now the company must also meet the competition. The firm uses several strategies to sustain rapid market growth as long as possible. • • • • •
It improves the product quality and adds new product features and improved styling. It enter new segments It lowers prices to attract the next layer of price sensitive buyers It shifts from product awareness advertising to product preference advertising. It adds new models and flanker products (i.e., products of different sizes, flavors, and so forth that protect the main product.
In the growth stage, the firm faces a trade-off between high market share and high current profit. By spending a lot of money on product improvement, promotion, and distribution, the company can capture a dominant position. In doing so, however, it gives up maximum current profit, which hopes to make up in the next stage. During the growth stage, the goal is to gain consumer preference and increase sales. In short, the marketing mix may be modified as follows: • • •
• •
quality. Product - New product features and packaging options; improvement of product quality. Price - Maintained at a high level if demand is high, or reduced to capture additional customers. Distribution - Distribution becomes more intensive. Trade discounts are minimal if resellers show a strong interest in the product. Promotion - Promotion expenditure are at high level. Advertising- Increased advertising to build brand preference
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MATURITY STAGE The maturity stage is the most profitable. This maturity stage normally lasts longer than the previous stages and it poses strong challenges to the marketing management. Most products are in the maturity stage of the life cycle, and therefore most of the marketing management deals with the mature products. Although many products in the mature stage appear to remain unchanged for long periods, most successful ones are actually evolving to meet consumer needs. Product managers should do more than simply ride along with or defend their mature product _____a good offense is the best defense. They should consider modifying the market, product, and marketing mix. The company can try modifying the marketing mix ____improving sales by changing one or more elements. • •
• •
It can cut prices to attract new users and competitor’s customers It can launch a better advertising campaign or use aggressive sales promotions___trade deals, cents-off, premiums, and contests. The company can also move into larger market channels, using mass merchandisers. Finally, Finally, the company can offer new or improved services to bu yers.
The company might also try modifying the product__changing characteristics characteristics such as quality, quality, features, or style to attract new users and to inspire more usage. •
It might improve the product’s product’s quality and performance ____its durability, durability, reliability, speed, or taste.
•
It might add new features that expand the product’s usefulness, safety, safety, or convenience.
•
Finally the company can improve the product’s product’s styling and attractiveness.
The company might try to expand the market for its mature brand by working with the two factors that make up sales volume: Volume= number of brand users * usage rate per user It can try to expand the number of brand users: •
By converting non users
•
By entering into new segments
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By winning competitors customers.
Volume can also be increased by convincing the current customers to increase their brand usage: • • •
Use the product on more occasions. Use more of the product on each occasion. Use the product in new ways.
During the maturity stage, the primary goal is to maintain market share and extend the product life cycle. In short, marketing mix decisions may include:
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•
Product - Modifications are made and features are added in order to differentiate the product from competing products that may have been introduced.]
•
Price - Possible price reductions in response to competition while avoiding a price war.
•
Distribution - New distribution channels and incentives to resellers in order to avoid losing shelf space.
•
Promotion - Emphasis on differentiation and building of brand loyalty. Incentives to get competitors' customers to switch.
DECLINE STAGE
The sales of most product forms and brands eventually dip. The decline may be slow or may plunge to zero or they may drop a low level where they continue for many years. Sales decline for many reasons, including technological advance, shifts in consumer tastes, and increased in competition. Carrying a weak product can be very costly to a firm, and not just in profit terms. There are many hidden costs. A weak product may take up too much of management’s management’s time. It often requires frequent price and inventory adjustments. It requires advertising and sales force attention that might be better used to make “healthy” products more profitable. A product’s product’s failing reputation can cause customer concerns about the company and its other products. The biggest cost may well lie in the future. Keeping weak products delays the search for replacements, creates a lopsided product mix, hurts current profits, and weakens the company’s company’s foothold on the future. For these reasons, company need to pay more attention to their highest aging products. The firm’s first task is to identify those products in the decline stage by regularly reviewing the sales, market shares, costs, and profit trends. Then management must decide whether to maintain, harvest or drop each of these declining products. Management may decide to maintain the brand without change in the hope the competitors will leave the industry. Management may decide to reposition or reformulate the brand in hopes of moving it back into the growth stage of the product life cycle. Management may decide to harvest the product, which means educing various costs (plant and equipment, maintenance, R&D, advertising, sales force) and hoping that sales holdup. If successful harvesting will increase the company’s profits in the short run. Or management may decide to drop the product from the line. It can sell it to another firm or simply liquidate it at salvage value. In a study of company strategies in declining industries, Kathryn Harrigan identified five decline strategies available to the firm: • • •
Increasing the firm’s investment (to dominate the market or strengthen its competitive position). Maintaining the firm’s investment level until the uncertainties about the industries are revolved. Decreasing the firm’s investment level selectively, selectively, by dropping unprofitable customer groups, while simultaneously strengthening the firm’s firm’s investment to recover cash quickly. quickly.
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• •
Harvesting (“milking”) the firm’s firm’s investment to recover cash quickly. Divesting the business quickly by disposing of its assets as advantageously as possible
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In short, the marketing mix may be modified as follows: •
•
•
•
Product - The number of products in the product line may be reduced. Rejuvenate surviving products to make them look new again. Price - Prices may be lowered to liquidate inventory of discontinued products. Prices may be maintained for continued products serving a niche market. Distribution - Distribution becomes more selective. Channels that no longer are profitable are phased out. Promotion - Expenditures are lower and aimed at reinforcing the brand image for continued products.
PLC CHART
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PLC OF MOBILINK INTRODUCTON TO MOBILINK
Mobilink business Pakistan Mobile Communications Limited, better known as Mobilink GSM, is a telecommunication service provider in Pakistan. Mobilink is a private limited company. company. It started operations in 1994 as the first GSM cellular Mobile cellular Mobile service in Pakistan by Pakistan by MOTOROLA Inc., later it was sold to ORASCOM, an Egypt-based Egypt-based multi-national company. company. Mobilink was awarded the license to operate in Azad Jammu and Kashmir (AJK) Kashmir (AJK) on 27 June-2006. The concession was awarded for a payment of US$ 10 million [1]. Mobilink’s Mobilink’s competitive advantage has been its aggressive retail presence.
Mobilink products Mobilink’s products include postpaid INDIGO, prepaid JAZZ. Mobilink’s competitive advantage has been its aggressive retail presence. Mobilink’s prepaid product sold under the brand Name Jazz is widely available in more than 5000+ cities, towns and villages with service code (0300,0301,0302,0306,0307 and 0308) (a detailed list of the locations is available on the corporate website). Jazz is the most successful and popular Pakistani brand '. Mobilink another brand INDIGO is also having good recognition in the market.
Mobilink slogan The Mobilink slogan is reshaping lives (But in TV commercials, (Urdu) HUM BOLAN MUHABAT MUHABAT KI ZABAN, (English) we speak the language of love.
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MOBILINK PLC INTRODUCTION ST STAGE AGE In the initial stage Mobilink was introduced in all the major cities of Pakistan (Karachi, Lahore, Islamabad etc). There was only one competitor in the tele-communication tele-communication business that was PTCL, which provided the line-based connection whereas Mobilink provided the w ireless connections to the customers, so Mobilink was the market pioneers in the field. MARKETING OBJECTIVES
In the introduction stage the Mobilink’s marketing objectives was to create product awareness among the early adopters and those buyers who are readiest to buy buy.. Their other objective was to give awareness about wire-less connection to the customers. MARKETING STRATEGIES STRATEGIES
In the initial stage the Mobilink adopted the following marketing mix strategies:
Product: In the initial stages, Mobilink offer the GSM service to the customers and also giving the calling service to the major cities of Pakistan.
Price: They charge the higher price in the initial stages of their product; the reason is that, they want to recoup development costs quickly. quickly. Another reason is that they also want for a high profit margin as the early adopters buy the product. That is why, not only their sim price was high, but also their calling charges were high.
Distribution: Their distribution was selective to the major cities of Pakistan because their wire-less network connection was available in the major cites. Their distribution channel was based on: Manufacturer Manufacturer
Consumers Retailer
Consumers
Promotion : Promotion was high in the initial stages because the company wants to build the awareness about the brand. They gave more and more incentives incentives to the early adopters and retailers. retailers. They gave free balances to the early adopters. They also gave free gifts to the retailers.
Advertising :
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The company spends more money on advertising because of building brand awareness among early adopters and dealers. Their ads were based on hard cell (giving product awareness).
GROWTH STAGE In the growth stage, the Mobilink sales started growing. And the profits also started rising. They have the market leadership in the field. Instead of the entrance of the UFONE, which had also offered the wire-less connection. They had expanded their market to the other cities of Pakistan.
MARKETING OBJECTIVES In the growth stage the Mobilink marketing objectives was to expand their market to all the big cities of Pakistan and also to expand their network connection to the other cities of Pakistan. Their other objective is to maximize more market share.
MARKETING STRATEGIES STRATEGIES In the growth stage, they adopted the following marketing mix strategies:
Product In the growth stage, they have made the extension in their service. They offer the same GSM service and the calling service to the major cities with that they offer the calling service to all the cities where the company had expanded their network connection.
Price They have made their price lower to some extent in the growth stage, because they want to make more market share and also the UFONE had lowered down their prices.
Distribution In the growth stage, the company had made their distribution to the other cities of Pakistan, because of their expansion in the network connection. Their distribution channel was same as in the initial stages.
Advertising In this stage, the company had allocated more budgets to the advertising expenditure, expenditure, because of maximizing more market share and also to give awareness to the new market where the company had made extension in their network connection. Another reason for increasing in the advertising budget was the entrance of the UFONE.
Promotion In this stage, their promotional expenditure increased to attract more customers and to retain the existing customers.
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MATURITY STAGE Mobilink are right now in the maturity stage. Because they have got most of the market share. There has also been an increase in competition; new companies like TELENOR, WARID WARID also enter into the market. The Mobilink had made not only the product modification, but also extend their market and made changes in their marketing mix.
MARKETING OBJECTIVES In the maturity stage, the company marketing objectives is to expand their market to all the cities of Pakistan and also to maximize more profit while defending market share.
MARKEITNG STRATEGIES STRATEGIES Their marketing mix strategies are as follows:
Product In the maturity stage they have modified the brand, by coming up with new brand JAZZ and INDIGO. •
•
Jazz is widely available in more than 5000+ cities, towns and villages with service code (0300, 0301,0302,0306,0307 and 0308) (a detailed list of the locations is available on the corporate website). Jazz is the most successful and popular Pakistani brand. Mobilink another brand INDIGO is also having good recognition in the market.
Price In this stage they had not as lowered down their price of Sim and the calling charges, like their competitors (UFONE, TELENOR, and WARID) had done. Because they want to get more of the profit.
Advertising In this stage, they have made the ads in which they want to portray the image of Mobilink with the Pakistan. Recently, Recently, they have made the ad in which NAJAM SHIRAZ sung a song “Hum Bolain Mohabbat ki zaban”.
Promotion In the maturity stage, the company is using different promotional strategy to retain the exisisting customers and to attract the competitor’s customers.
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Distribution The distribution was intensive in the growth stage, because of expansion in the network connection. The distribution channel of Mobilink also extended: Manufacturer
Retailer
Consumer
Manufacturer
Franchiser
Consumer
Manufacturer
Jobber
Consumer
Promotion In the maturity stage, the company is using different promotional strategy to retain the exisisting customers and to attract the competitor’s customers.
Direct selling In this stage, the Mobilink marketing managers are also using the direct selling strategy to get the competitors customers by giving the Sims at discount or at the low rate than the market.
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PLC PLC OF LUX INTRODUCTION TO LUX
GLAMOUR FACTOR\ We all want to be pampered, to look and feel great, to enjo y that moment when anything seems possible. And that's just what Lux offers you on a daily basis at a price you can afford.
Lux is the brand of UNILEVER PAKISTAN PAKISTAN LTD. It has been winning hearts of Pakistani consumers for 50 years. Throughout this time, Lux has been closely associated with many of the most glamorous and sensual women of the age.
LUX PRODUCTS Lux had modified their product into:
Orchid touch
Almond delight
Energising fruit
Aqua sparkle
Almond delight: Lux Almond Delight comes with the deep moisturization of exotic Peach, Cream and precious Almond Oil Energizing fruit: Lux Energising Fruit incorporates the beauty secrets of Fruit Extracts, rich Milk Cream and Honey, for a fresh renewed feeling. Aqua sparkle: Lux Aqua sparkle has nourishing oil of Cade and cucumber extracts for a radiant and clear skin
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LUX PLC
INTRODUCTION ST STAGE AGE Lux had been launched in Pakistan in 1957. At that time there was only one competitor of Lux, which was LIFEBUOY. LIFEBUOY. In the initial stages Lux was introduced in the major cities of Pakistan like Karachi, Lahore etc. In the initial stages Lux was the market challenger in the field. So the marketing manager came up with different marketing strategies to attract the customers.
MARKETING OBJETIVES The Lux marketing objectives in the initial stage was to create the product awareness and to attract the customers towards the product.
MARKETING STRATEGIES STRATEGIES The Lux marketing mix strategies in the initial stages of the product were based on:
Product They offer only on product in the market. They did not come up with the differentiated product.
Price In the initial stages of the product, they offer the relatively higher price than their competitor (LIFEBUOY). Because, they want w ant to recover their cost which incurred initially in making the product. Or another reason was that they have segmented the niche market.
Advertising In the initial stages, they allocate more advertising budget to advertise the product. So that more and more customers could be attracted towards the product. In ads they targeted the early adopters, who were readiest to buy the product.
Distribution Their distribution was selective and only covers the major cities of Pakistan. Because, they initially want to get recognition in the major cities of Pakistan. Their distribution channel was: Manufacturer Manufacturer
Wholesaler
Retailer
Consumer
Retailer
Consumer
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GROWTH STAGE In the growth stage, their sales rapidly started rising. In the growth stage, they have expanded their market to the other cities of Pakistan. The marketing mangers also make changes in the marketing objectives and their marketing strategies.
MARKETING OBJECTIVES In the growth stage, the marketing objectives of the Lux were to expand their market to the other cities of Pakistan. Another objective was to maximize more market share.
MARKETING STRATEGIES STRATEGIES In the growth stage, company had the following marketing mix strategies:
Product In the growth stage, the company had offered the same product in the market.
Price In this stage, the company had changed their price to some extent because of maximizing the market share.
Advertising In the growth stage, they had increased their advertising budget as in the initial stages because of attracting the new customers or to retain the existing customers.
Distribution In this stage, company had expanded their market to the other cities of Pakistan. Their distribution channel was the same as in the initial stages of the product.
Promotion In the growth stage, the company had also used the different promotioning strategies strategies to attract the new and the exisisting customers.
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MATURITY STAGE Lux is now in the maturity stage, they modified the product by adding some changes in the product. In this stage, few competitors enter into the market like (SAFEGUARD, CAPRI etc). So the marketing managers make different strategies to handle the competition. The company has expanded their market to almost all the cities of Pakistan.
MARKETING OBJECTIVES The marketing objective of Lux is to maximize more profit while defending the market share. And to expand the market to all the cities of Pakistan.
MARKETING STRATEGIES STRATEGIES In this stage, Lux marketing mix strategies are based on:
Product The Lux has made the modification in the product by introducing: Orch Orchid id touc touch h
Almo Almond nd deli deligh ghtt
Ener Energi gisi sing ng frui fruitt
Aqua Aqua spar sparkl klee
Price The Lux products are now available at higher prices in the market, the reason behind is that the company’s company’s marketing objectives is to maximize more profit.
Distribution Now Lux products are available in almost all the cities of Pakistan. Their distribution distribution channel is same as in the initial stage.
Advertising
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In this stage Lux advertising has been reduced to some extent because of the more brand awareness in the minds of customers. Recently, they show the ad in which the Pakistani leading television and film actress were shown.
PLC STAGES OF SOME PAKISTANI PRODUCTS In Pakistan, there are some products that are just introduced in the market, some have passed the introductory stage and enter into the growth stage, some are at their peak of their stage means in the maturity stage and some are in the declining phase. We have made the chart in which, we have shown the product and their stages where they are in.
PRODUCT
STAGE IN THE PLC
TROPICANA
INTRODUCTION STAGE
WALLS CORNETTO
GROWTH STAGE
WARID
GROWTH STAGE
HEAD & SHOULDER
MATURITY STAGE
PEPSI
MATURITY STAGE
COCA-COLA
DECLING STAGE
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CONCLUSION To conclude our report, we would say that the PLC theory has its share of critics. That life cycle pattern are too variable in shape and duration. PLCs lack what living organism’s organism’s have____namely, have____namely, a fixed sequence of stages and a fixed length of stage. Critics also charge that marketers can seldom tell what stage the product is in. A product may appear to be mature when actually it has reached a plateau prior to another usage. So, in the end, we would like to say that the PLC concept helps us interpret product and market dynamics. It can be used for planning and control, although as a forecasting tool it is less useful.
REFERENCES Philip kotler, Marketing management, Eleventh edition Philip kotler, Principles of Marketing, Ninth edition Wikipedia.com Unilever.com.pk Marketing teacher.com
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