In the old days, people may simply treat marketing as a tool to boost sales. They think the ultimate goal of marketing was driving brand awareness. We cannot deny the effect of marketing brings to sales but actually marketing doesn’t ends with sales. However, selling is not the sole motive of marketing. Marketing is a long journey. It should be along with the the brand or product’s life cycle. Matching brand marketing to its life cycle will turn existing customers into assets that last a lifetime. This can be called as “life cycle marketing” (Kotler, 2010).
What is Product Life Cycle?
A product’s life cycle (PLC) can be divided into several stages characterized by the revenue generated by the product (Thietart, 1984). It is the cycle through which every product goes through from introduction to withdrawal or eventual demise. The life cycle concept may apply to a brand or to a category of product. Its duration may be as short as a few months or a century or more. Product development is the incubation stage of the product life cycle. As the product progresses through its life cycle, changes in the marketing strategy usually are required in order to adjust to the evolving challenges and opportunities (Rink, 1979).
Figure 1. Product Life Cycle
Lifecycle Marketing – Introduction Stage
Launching a new brand or introducing a new product is a key milestone. When the product is introduced, sales will be low until customers become aware of the product and its benefits. In this early stage, the most common question is “What is it?”. This question isn’t asked just by customers but also by potential investors, partners, and vendors. That is to say, the primary goal of this stage it to increase brand awareness. Therefore, advertising costs typically are high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters. These higher costs coupled with low sales usually brings a period of negative profits during the introduction stage.
The key to find a market entry point during the introduction stage is to clearly differentiate a brand from competitors (Schmalensee,1982). One example that can support this view is TOMS shoes. When TOMS firstly introduced, the shoes market was heavily competitive. In order to compete against competitors like Convers, Nike, Adidas, TOMS certainly couldn’t compete on cost, quality or even design. It need to create a singular point of differentiation.
Figure 2. TOMS – One for One
Their solution was simple but effect. It provided a simple statement to customers: “With every pair you purchase, TOMS will give a pair of new shoes to a child in need. One for One”. This statement easily reached consumers’ touch point. Distinct, simple and viral differentiation created the potential for the explosive growth of TOMS.
Figure 3 TOMS Campaign
Lifecycle Marketing – Growth Stage
The growth stage is a period of rapid revenue growth. Sales increase as more customers become aware of the product and its benefits. Sales will increase further as more retailers become interested in carrying it. And in the mean time, more competitors will enter the market and will bring a price competition. This will increase promotion cost in order to convince consumers that our product is better than others. Therefore, during this stage, the goal is to gain consumer preference and increase sales. The goal can be reached by increasing advertising to build brand preference as well as improving product quality (Smallwood, 1973).
Lifecycle Marketing – Maturity Stage
The maturity stage is the most profitable. While sales continue to increase but at a slower pace. Because brand awareness is strong, advertising expenditures will be reduced, and competition may cause a market share decrease. At this stage, growth becomes difficult to maintain because the brand’s size and awareness makes it challenging to constantly refresh. Accordingly, marketers should seek a new way to increase brand relevance among changing demographics and to find new revenue streams.
During the maturity stage, the primary goal is to maintain market share and extend product life cycle. Sales promotion may be offered to encourage retailers to give the product more shelf space over competing products. In addition, reducing the price, developing new distribution channels and emphasizing on differentiation and building of brand loyalty can also help to reach the goal.
Lifecycle Marketing – Decline Stage
Once a product market is over saturated, the product enters into the decline stage of the product life cycle. Customers who will buy the product have already purchased it or some of them are switching to a different type of product. This is the stage where the marketing mix and marketing efforts decline. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets. Also, if the product generated loyalty from customers, the company can retain customers during this stage, but does not attract new sales from new customers. The focus for this stage is generally on reinforcing the brand image of the product to stay in a positive light in the eyes of the product’s loyal customers.
Understanding a brand’s stage of life can serve as a relevant takeoff point for campaign planning. The key to successful marketing is not just understanding this life cycle, but also proactively managing products throughout their lifetime, applying the appropriate resources and marketing strategies, depending on what stage products are in the cycle. By focusing of what is most critical for a brand’s current circumstance, marketers can use their resources most effectively.