The Promotional Mix vs.Product Life Cycle

The product life cycle is broken down into five different stages, which include the development, introduction, growth, maturity and decline stages of the product. Characteristics for each stage differ and in response to the different needs of the product as it moves through its life cycle, the market mix used during these stages differ as well. It can help business owners and marketing managers plan a marketing mix to address each stage fully. So briefly, The Promotional Mix is a specific combination of promotional methods used for a product or for family of products.There exist 5 different stages of the product life cycle:

First stage is Product Introduction Stage:  As the product hits the market, it enters the introduction stage of the product life cycle. Because it is a new product that customers are not yet aware of, the product sales during the introduction stage are generally low. At this time, marketing expenses are generally high because it requires a lot of effort to bring awareness to the product. The marketing mix during this stage of the product life cycle entails strategies to establish a market and create a demand for the product.

When the product is introduced, sales will be low until customers become aware of the product and its benefits. Advertising costs are high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters. The goal is to establish a market and build primary demand for the product class. The marketing mix may be modified as follows:

• 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. 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 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.

Second stage is Growth Stage:  As customers become aware of the product and sales increase, the product enters into the growth stage of the product life cycle. Marketing tactics during the growth stage requires branding that differentiates the product from other products in the market. Marketing the product involves showing customers how this product benefits them over the products sold by the competition also known as building a brand preference. When competitors enter the market, often during the later part of the growth stage, there may be price competition in order to convince consumers that the firm's product is better than that of the competition. Sales increase as more customers become aware of the product. The goal is to gain consumer preference and increase sales. The marketing mix may be modified as follows:

• Product - New product features and packaging options and 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 - Increased advertising to build brand preference.

Third stage is Maturity Stage:  As the product gains over its competition, the product enters the maturity stage of the product life cycle. The marketing mix during this stage involves efforts to build customer loyalty with special promotions and incentives to customers who switch from a competitor to your company.

The maturity stage is the most profitable stage. While sales continue to increase into this stage, they do so at a slower pace. Because brand awareness is strong, advertising expenditures will be reduced. Competition may result in decreased market share and prices. The competing products may be very similar at this point, increasing the difficulty of differentiating the product. The firm places effort into encouraging competitors' customers to switch, increasing usage per customer, and converting non-users into customers.

The primary goal is to maintain market share and extend the product life cycle. The marketing mix decisions may include:

• 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.

Fourth stage is Decline Stage: Once a product market is over saturated, the product enters into the decline stage of the product life cycle. This is the stage where the marketing mix and marketing efforts decline. If the product generated loyalty from customers, the profitability may be maintained longer. For the marketing mix that remains during the decline stage, the focus is generally on reinforcing the brand image of the product to stay in a positive light in the eyes of the product of loyal customers. The product becomes technologically obsolete.  Unit costs may increase with the declining production volumes and eventually no more profit can be made.

During the decline phase, the firm generally has three options:

• Maintain the product in hopes that competitors will exit. Reduce costs and find new uses for the product.
• Reducing marketing support and coasting along until no more profit can be made.
• Discontinue the product when no more profit can be made or there is a successor product.

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.