Product Life Cycle and Sustainability Management - Assignment Example

Lecturer Product life cycle (PLC) I have chosen the food and beverage industry. I believe that companies in this industry face numerous challenges, for example, the stiff competition in the industry. Another key challenge is the ever-increasing regulatory requirement. Retailers demand high quality and cheap products from the industry. There is as well pressure from consumers who insist on food safety and healthy products. This paper will look into a couple of products in the food and beverage industry belonging to different stages of the product life cycle. Introduction Stage Pepsi Next is a beverage drink manufactured by Pepsi. Pepsi introduced it into the United States market in 2012, and therefore, it is at the introduction stage. Ever since, Pepsi has introduced the product to the international market. The company had a strong launch for the product. This shows it commitment to making the product globally recognizable. Its target market includes lapse cola drinkers. According to Pilger,”the company had lost a significant number of cola drinkers to competitors and the main aim of Pepsi Next was to win them back” (54). The company used “drink it to believe it” tag line in launching the product. The philosophy has worked well for the company. In terms of promotion mix, the company applied television adverts, direct mail, digital marketing, and heavy free trials. The product is at the introduction stage because of the high cost per a new customer acquired. The high cost is associated with the marketing costs, for example, the heavy free trials. The company offered free samples for the product including the over 800 Wal-Mart stores. Although the company’s top leadership believes that the product has performed beyond expectation, it has registered low sales. For example, because of a strong launch and promotional activities, the product had acquired a market share of 1 percent. However, the market share has declined to 0.6 percent because of low repeat sales. However, the management is convinced that the product would perform better in future. Growth stage Coke Zero is a soft drink manufactured by Coca-Cola. The company launched the product in 2006. It is at the growth stage in the product life cycle. Since the product was introduced into the market, it has been registering increasing sales. It has contributed a lot to the company’s profitability. For example, within the two years of the introduction into the UK market, the product sales reached ?75 million. Hays states that “the drink has been launched in over 70 countries and is experiencing growth in over 80 percent of its new markets” (98). The target market for the product is young men and women who are concerned about their sugar intake. After the product was introduced into the market, Pepsi sugar free drinks experienced decreased demand within the first two years. Diet Pepsi and Pepsi Max, for example registered a demand of 129 million liters for the seven months after the product was launched. This was a decline compared to the demand of 138 million liters registered within the same period the previous year. Coke zero currently is registering increasing profit and an average cost per customer. This is because there are no costly promotional activities going on as the product is already established. Maturity Stage Sprite manufactured by Coca-cola is at maturity stage. The soft drink has been in existence since 1961. The product is at the sales peak, which cannot grow further. Baldwin states “Sprite has a low cost per customer (32)”. One reason behind this is the fact that the product is already globally recognizable and there are no costly promotional methods used in marketing it. There are as well high profits associated with the product now. Additionally, Sprite does not face a stiff competition as it was facing during the growth stage. Decline stage Diet Dr. Pepper, on the other hand is a soft drink that was introduced in 1963. After it was introduced, the product enjoyed increased support from its target market and was known by the name Dietetic Dr Pepper. The product has gone through all the stages of product life cycle including product development, introduction, growth, maturity, and is currently in its final stage of decline. Through out its lifetime, the product has been rebranded for a couple of times as a marketing strategy. It was launched with the name Dietetic Dr Pepper, which changed to Diet Dr. Pepper, due to sales decrease, and later it was renamed to Sugar Free Dr. Pepper, then back to its current name. The product is currently faced by declining profitability, declining competition, declining sales, as well as, low cost per customer. Question 2 Ideal Marketing Strategies for the Product Since Pepsi Next is still at the introduction stage, the company needs to design an aggressive marketing strategy to ensure that it benefit substantially from the new product in terms of increased revenue and profitability. It as well needs to focus on ensuring that the product counter effectively to the new entrants in the market seeking to acquire some of its market shares. The company should expand its market segmentation to take advantage of those people who want to cut down their sugar intake, but are not gain satisfaction by consuming diet sodas. This is through introducing other brands within Pepsi Next. The company should as well differentiate its product effectively to ensure difficulty in imitation, which might dilute its revenue. In terms of pricing, the company should utilize cost plus method of pricing to ensure that it sets competitive prices for its new product. This would help in ensuring that it does not overcharge customers, which might hurt the product’s performance in terms of decline in sales. It should as well take advantage of soft drink automated selling machines in selling its new product. The machines should be located in strategic locations, for example, social gathering places. For the marketing, the company should utilize media with a wide coverage, for example, the social media that would reach a wide audience (Haig 67). Growth stage Coca-Cola Company should as well expand its target market for the Coke Zero. Its launching target market, were young adults seeking for sugar free, but a tasty drink. It should expand its target market to include men and women who are as well worried about sugar intake. The company should use penetration pricing to attract new customers. According to Baldwin, “penetration pricing helps in setting prices low thus attracting new customers to buy the product so that they can learn more about it (101)”. To reach its target market of young adults, the company should use television advertisements especially during sports coverage. This is because most young adults enjoy watching sports, which would guarantee wide audience coverage. The company should also build an intensive distribution. Since the product is at growth stage, and is attracting many consumers, the company must ensure wide distribution to meet the growing demand. It should take advantage of automated selling machines located in strategic locations to serve the growing market. Maturity stage Sprite is now at maturity stage, which as well needs an aggressive marketing strategy that would prolong the product’s life span. This would ensure that the company takes advantage of high profitability for a lengthy period. It should set prices equal to the competing brands or lower prices. This would ensure that the product does not lose its market share. It should take advantage of visual advertisement channels like television, as well as, the social media. It should focus on telling customers about the product differences with the competing products as well as the quality. The company should utilize sales promotions, for example, gifts to make customers switch from the competing products, and to maintain the existing customers. Coca-Cola should also introduce a couple of Sprite flavors as a way of reinventing the product. Decline stage Diet Dr. Pepper is at decline stage in its life cycle. An aggressive marketing strategy may contribute to prolonging the product’s life cycle. One of the key strategies applicable at this stage is cutting the prices of the product. According to Onkvisit, “this would help in preventing the existing customers from switching to competing products (98)”. Advertisement budget should as well be cut. The company should focus on promoting the products in those markets that are still profitable. The company should use only selective distribution. It should focus on those localities that register reasonable demand for the product. It should as well narrow down its market segmentation by eliminating those segments that are not profitable. Product differentiation is not critical because the company would be focusing only on the loyal customers. Works Cited Baldwin, Cheryl. Towards life cycle sustainability management. Ames, Iowa: Wiley-Blackwell/IFT Press, 2009. Print. Haig, Matt. Brand failures : the truth about the 100 biggest branding mistakes of all time. London ; Sterling, VA: Kogan Page, 2011. print. —. Brand royalty : how the world's top 100 brands thrive and survive. London ; Sterling, Va: Kogan Page, 2004. Print. Hays, Constance L. Coca-Cola Case Study : The Worlds Most Recognisble Brand. New York: Random House, 2004. Print. Onkvisit, Sak. Product life cycles and product management. New York: Quorum Books, 2008. Print. Pilger, John. Burp! : Pepsi v Coke in the ice cold war. by John Pilger . London: Central Independent Television, 2007. Print. Read More