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Tuesday, May 15, 2012

Product Life Cycle - The Marketing Communication Perspective

A lot of marketers have a hard time assessing what they need to do in order to successfully promote a product. Some would even go as far as using all marketing communication tools in order to achieve their business goal. Although marketing is an area at which practitioners can be creative, there is actually a scientific approach that a marketer can take in order to cut on cost and boost profit. 

Like what I posted a few weeks ago, I will be starting a Product Life Cycle (PLC) series that focuses on the promotion aspect. This means that I'll be discussing which tools are effective in each stage and what are some of the real life application of these tools. 

For those of you who doesn't know PLC, this is a framework that you can use to determine the things you need to do in each stage. The framework is a function of company revenue or profit over time. This framework can help you define strategy as well as your marketing mix. You can learn more from visiting other business websites but I find this site a bit easy to understand what it is

Also as a side note, the term "product" does not refer to individual products alone but this framework can also be used in general (like pertaining to industry, brand, category, company, etc) as long as the item you will analyze can be quantified in terms of profit or total sales. 

Product Life Cycle as a Function of Profit vs Time

PHASE 1: Introduction

Let's start analyzing the first stage - Introduction. As the name suggests, it is a stage where the product enters the market. Common sense will tell you that this stage is where you will spend a lot. Why? Here are a few reasons:

  1. Products at this stage has ZERO awareness.
  2. Products at this stage DEMANDS time, attention and resources.
  3. Products at this stage REQUIRES a market.
As you can see, one common characteristic of products in this stage is that it requires a demand from a market segment and this can only be achieve by letting the product be known to the target market. And how do we do that? By using specific marketing communication tools for tactical purposes to support the overall strategy. 

Some questions you might ask at this stage:

  • What promotional tools can I use to introduce my product that is cost-effective and resources-efficient?
  • What level of pressure I need to use for each of these tools? Light, Moderate or Heavy use?
  • How do I measure success for each tool?
  • how much should I allocate per tool?
  • When should I stop using it?
I find these questions helpful in terms of determining what tool to use. But as beginners guide, this stage requires the following:

1. Advertising 
2. Sales Promotion
3. Event Marketing
4. Public Relations

Marketing Communication Tool Matrix

Here's a simple matrix that you can follow for each tool:

AdvertisingHeavyTV, Radio, Print, OOH, Merchandising (Trade Level, POP), Guerrilla Marketing
Sales PromotionHeavyIntroductory Price, Coupons, Price Offs, Contests, Raffle, Buy one Get One
Event MarketingModerateBrand activations, barangay (village) events, city events, mall tours, school tours, trade shows
Public RelationsModeratePress conference, press releases, brand ambassadors or endorsers, community tie-ups

As you can see, each tool has it's own purpose and if you have a very limited budget, you can choose these tools specifically to launch your product. Of course you need to work with your media planner to determine which sites to advertise in order to maximize  your budget. 

I'll be discussing each tool at this level in the next posts so stay tuned!