And just like us, these products have a life cycle.
This is a valuable tool for marketers to manage the product as it progresses through its life cycle. Managers are encouraged to anticipate industry changes and have strategies in place for each stage — it promotes a proactive planning approach.
There are five key stages of the product life cycle: It is at this stage that profits are first generated. As expected, sales begin to decline until the product is no longer profitable. At each stage, marketers should adapt their marketing strategies to the external changes in the market place.
Product Life Cycle of Pepsi: The origins of Pepsi are very similar to that of Lucozadewhich was also first produced for medicinal purposes. This highlights the difficulties companies have in the pre-launch phases with surviving periods of negative cash-flow, large research costs and development expenditure.
Brad aimed to generate initial awareness and trial of his product, and far exceeded his targets! Only a basic product was launched — Pepsi-Cola was initially sold even without bottles.
Initially a simple cost-plus pricing strategy was used. It is likely that Pepsi-Cola started with a skimming strategy, to quickly recuperate start-up costs. To generate awareness, a celebrity endorsement with race-car driver Barney Oldfield above was utilised. Pepsi-Cola was not launched with any promotions.
However, if promotions are used at this stage they should aim to encourage consumers to trial the product. Consumers were attracted by the value-for-money competitive positioning: During growth, gaining market share is critical. Hence, Pepsi-Cola was marketed aggressively against Coca-Cola to encourage consumers to defect.
As the market becomes increasingly competitive it is important to continually improve the product. Hence, Pepsi-Cola now came in bottles, rather than just soda fountains. To support the aim of gaining market share, the low price penetration strategy was one of the key reasons why the brand grew massively in this time period.
An extensive distribution network is needed to support rapid sales growth; therefore exclusivity to pharmacies ended and the product became a mainstream consumer good.
It is vital to capture the early majority stage, requiring that advertising was designed to effectively reach a mass audience.
For example, Radio was selected as a medium because of its low cost-per reach — click here to listen to an ad from the s! Lastly, the Pepsi Challenge marketing campaign was so effective it almost destroyed the Coca-Cola brand!
Due to the overwhelming success of the drink, no sales promotion was used given that the price was already highly competitive and the company struggled to keep-up with demand. At this stage products are most profitable, which is why PepsiCo are likely to consider Pepsi as a Cash Cow and aim to make as much profit as possible from the brand.
These include the highly successful Pepsi Max, to the disastrous Pepsi Raw. PepsiCo and Coca-Cola clearly do not want to enter price-wars, which is a high risk during this very competitive stage.
As a result, the price rarely fluctuates away from the market average. The product now has a global distribution to penetrate emerging economies. This has been mainly achieved through the use of celebrity endorsements — like Beyonce and Michael Jackson — to position the product as a younger and edgier alternative to Coca-Cola Sales-promotion: Regardless of this, it is recommended that Pepsico have the following strategies ready to be be implemented in the event of the product entering decline.
Cost-reduction is key at this stage to help the brand remain profitable despite generating fewer sales. The range should become rationalized, and may be reduced to just Pepsi to leverage economies of scale and minimize costs.
The price could be reduced further to increase sales among price-sensitive consumers and be an effective advertising cue for this low involvement product.
The product now returns back to selective distribution to focus efforts on just the few remaining outlets that generate profits on Pepsi. Advertising and Sales Promotion: It can be recommended that PepsiCo could go as far as completely cutting advertising and sales promotion to further reduce overheads.
In summary, the product life cycle of Pepsi is a great business case study that both students and managers can learn from.Introduction to SQL Prompt Pro. Writing and formatting SQL code by hand, even with IntelliSense, is frankly pretty dull. So we made SQL Prompt Pro, which isn’t.
The Decline Stage Sales decrease and continue to drop to lower levels. Companies decide whether to harvest the product or divesting the product. By: Azzeza Mussa The Product Life Cycle of Coca-Cola The Growth Stage The Maturity Stage Number of potential new customers decline and the sales of a.
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Product life-cycle management 1. Product life-cycle (PLC) Like human beings, products also have an arc. From birth to death, human beings pass through various stages e.g. birth, growth, maturity, decline and death.