At this point, there is a downturn in the market. For example, more innovative products are introduced or consumer tastes have changed. There is intense price cutting, and many more products are withdrawn from the market. Profits can be improved by reducing marketing spending and cost cutting. As sales decline, the firm has several options:
* Maintain the product, possibly rejuvenating it by adding new features and finding new uses. * Harvest the product–reduce costs and continue to offer it, possibly to a loyal niche segment. * Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product. By imaginatively repositioning their products, companies can change how customers mentally categorize them. They can rescue products struggling in the maturity phase of their life cycles and get them back to the growth phase. And in some cases, they might be able take their new products forward straight into the growth phase.
The five strategies available to the marketer looking to revitalize a product through its stage of decline include:
1. Increasing the firm’s investments. 2. Maintaining investment levels until the industry uncertainties are resolved. 3. Decreasing investment levels selectively by dropping unprofitable customer groups while strengthening the investments in profitable niches. 4. Harvesting the firm’s investments. 5. Divesting the business quickly by disposing of its assets as advantageously as possible.
The Term Paper on Product life cycle and its stages
In today’s world, where market is unpredictable, strategies play crucial role in defending a firm’s product position. “The main reason why companies must continually develop new products is because products have life cycle”, (Bittel, 1980). Just as operation managers must be prepared to develop new products, they must also be prepared to develop strategies for both new and ...
Selecting the appropriate strategy to implement depends on the industry’s relative attractiveness and the competitive strength of the company within that industry. For example, a company with high competitive strength in an otherwise unattractive industry may purse a strategy to decrease the firm’s investments in unprofitable customer groups.
