Name: ___________________
Product Life Cycle
The PLC can help decide if and when it will be to a company’s advantage to add, change,
or drop a given product. Further, where a product is along its life cycle suggests a
workable blend of the marketing mix.
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Draw and label the product life cycle:
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Read the following and for each one:
1. Decide which stage of the PLC best describes the situation in the case.
2. Explain your answer, including such factors as profitability, number of
competitors, place, promotion, and pricing.
1. Aidco, Inc., the world’s largest health and beauty aid manufacturer, has just
announced plans to sell a new fluoride toothpaste called Protecto. Magazine
and TV ads will stress that Protecto is “lighter, less gooey, a better tasting and
more refreshing” than all existing brands of fluoride toothpaste. Free samples
will be delivered and magazines ads will include cents-off coupons. Despite
intense competition, Aidco expects Protecto t capture a 12% market share of
slowly flowing toothpaste market.
Stage of PLC:
Explanation:
2. Music Electric recently announced that is was pulling of the tape-cassette
business, citing the trend toward sophisticated digital music. Despite sales of
about a million units a year (about 50% of the market), Music Electric was not
able to maintain an adequate profit margin on the tape-cassettes due to
increasing costs, heavy price competition and a steady and a steady 10 year
decline in the industry sales. Those firms still making tape-cassettes were not
planning to increase production despite Music Electric’s announcement.
Stage of PLC:
Explanation
3. Sun Poultry Farms, Inc., a large regional chicken producer, is planning to
operate a new chain of “Golden Sun” fired chicken franchises in major cities
throughout the Midwest. Sun is impressed by the success of some franchisers,
such as “Captain Sanders.” Fast food chicken sales seem to have leveled off,
causing Sun’s sales to decline, so Sun feels that this move is a natural way of
increasing the firm’s sales and profits. By producing its own chickens, Sun
expects to gain a price advantage over its competitors. This could be an
important consideration, because some chains have experienced profit
declines and losses over the last few years and are cutting prices to attract
business.
Stage of PLC:
Explanation
4. First introduced about 1997, DVD players were in use in about 250,000 home
s by 1999 over 1,000,000. Despite the varied price range, this new technology
is expected to revolutionize the home movie/TV viewing. Firms such as GE,
Kenmore, and Radio Shack are competing aggressively to gain a share of this
business. Their DVD players are sold in computer stores, appliance shop,
department stores and various hi-fi shops.
Stage of PLC:
Explanation
5. What alternatives should a firm consider when it finds some or all of its
products in the market maturity stage of the product life cycle?