Wednesday, 11 September 2013

Product Life Cycle


The Product Life Cycle maps the various stages of development any product undergoes: introduction, growth, maturity to decline/renewal. 

The introduction stage is marked by the launch of the product through its early period. By the growth stage, the product is gaining market share and is developing over its competitors. The product has reached the scope of its market share and customer share by maturity stage and typically the business runs in profit. The decline period is categorised by a irreversible decline in sales. By contrast, a product may be renewed. 

Characteristic of the stages:

Introduction:
(a) The product sales are the lowest and move up very slowly at snail's pace
(b) Highest promotional Stage: During this period of introduction or the development ,promotional expenses bear the highest proportion of sales
(b) Highest Product prices:Lower input and sales absorbing fixed costs.

Growth(a) The product sales are soaring. Awareness of the product is gaining at this stage
(b) Promotions serve to increase customer awareness and profits. It is aimed at building brand

Maturity
(a) Market at peak: Sales at this stage will be in its peak. 
(b) The market will have many competitors; competition is fierce
(c) Companies aim to retain customers and win new customers from rival brands
(c) Promotions aim to maintain customer loyalty

Decline
(a) Brand kills off fringe products that are non-profit making, narrowing down to the best -selling products
(b) Brand brings down costs to retain loyal customers

 
We see here a Product Life Cycle (PLC) model.


Industry Life Cycle

Industry life cycle follows the sames stages. As it comprises all the brands in the industry, the ILC is distinct to each product life cycle. 



Vicks VapoRub's launch in the US was careful proposed to the US market. It was not until 1918, when the Spanish flu broke out, that people used it en masse. The introduction in India was comparatively effortless considering Indians were familiar and comfortable using topical balms and ointments.Surprisingly, however, Vicks decided against promoting itself as an all-purpose balm, as was possible, as had its competitors. It positioned itself as a Cold and Flu relief OTC.


Introduction Stage - Early 1950s


Vicks VapoRub was introduced in the marketed in 1951 as a function-specific balm - a cold rub. There were many competitors in the market from herbal and home remedies to all-purpose ointments and balms and prescription medicine. Vicks' direct competition were Amrutanjan and Zandu (namely) and indirect competition was home remedies. 

Growth Stage - 1950s - 1960s

Vicks was penetrating further. To increase sales and awareness they: 

1. promoted themselves as a winter remedy. (This was the marketing strategy in the remainder of the world). Vicks observed that the monsoon season too could be exploited likewise. There was a heightened need for cold remedies in this season. 

2. attracted the rural market. Vicks VapoRub was not accessible to the rural communities the 19g bottles priced at 2 Rs was too expensive. The company later produced 5g tins for the rural market who were favourably disposed to buying the product. This promoted Vicks in the rural market, much to their success. 

The aim in this period is to increase awareness and market share. Vicks VapoRub had comfortably perpetrated most of the Indian market by this time. 1970s were also spent attracting customers who had not yet engaged with the product. By then most users of alternative remedies were switching to Vicks.  

Maturity Stage - 1970 - present

1.Class Differentiation - Indians perceive a differentiation that is strengthened by brand loyalty
2. Diversified innovative products –  Vicks had expanded in product range
3. Vicks owns about 50% of the market - it is P&G's best selling brand in India

Possible Threats to Vicks VapoRub[1] in future
 1. Increasing availability of prescription strength OTC
 2.Top pharmaceutical players are joining forces
 3. Expiration of patents

The task now was to maintain this position.

Renewal Stage - Present 

Vicks is continuously expanding its range of products that it is renewing its brand image as a comprehensive store supplying Cold/Flu/


Assessment of Porters Five Forces - To Study Dynamcis 




New Entrants pose less of a threat as[2]:
1. They are low
2. Vicks owns a large market Share
3. P&G invests heavily in R&D
4. Vicks maintains a strong relationship with retailers

Substitute Products are an increasing threat as product differentiation (between Vicks and other products) is narrowing. This is because they provide the same relief.

Vicks VapoRub is doing very well in India, if the market shares are anything to go by. However, to remain in the market, it must bring differentiate itself once again from all other substitute products. The Indian Vicks VapoRub market is quite mature, but soon enough substitute products available in Western countries will become available in India. In that even this rub will run the risk of dying.


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