In strategic management, it is very important to take into account the life cycle of the product, as well as the product itself. When developing a marketing strategy for the development of a company, the stage that the product is currently experiencing must be taken into account.
The life cycle of a product is the time it remains on the market (from the moment the product is introduced to the market until it disappears from it).
Experts distinguish different stages of the life cycle of goods. However, we can distinguish 4 main ones that are common:
Stage of inception
The product is just student database being introduced to the market, it has no specific characteristics, the market saturation is low, so competition is low or absent altogether.
At this stage, the cost of the product is high, as the manufacturer seeks to recoup its investment faster.
It is impossible to avoid large expenses on sales promotion and product improvement at this stage. The company often suffers losses, and sales grow slowly, since the market has not yet been sufficiently developed.
What is the marketing for this stage? The company must:
study the current demand;
adapt your product to it;
tell consumers about the benefits of the product;
organize sales and promotion systems.
The company's marketing strategy at the inception stage is aimed at achieving the main goal - to conquer the market.
At this stage, management decides what strategic behavior should be. There are two main models: "skimming" and penetration. The choice in favor of one or the other depends on the price level of the product and the amount of expenses on sales promotion.
Growth stage
At this stage, sales volumes grow, demand for the product is completed, competition intensifies, and the product has been improved and adapted to the existing demand. The company's profit is highest at the final stage of the growth stage.
The task of marketing at the second stage of the product life cycle:
develop the brand;
differentiate the product to conquer different market segments;
seek more efficient distribution channels;
change the nature of advertising from informational to stimulating;
reduce the cost of goods, launch post-warranty service and other additional services.
The main objective is to strengthen the competitive position.