The Marketing Program Life Cycle for NFP’s

The Marketing Program Life Cycle for Not-For-Profits

The Product Life Cycle (PLC) concept is one of the most familiar concepts in marketing.  Its potential contribution to public agency management is considerable.

The concept is derived from an analogy with human biological development, which may be described as a period of ascending, a period of maturing, and a period of decline .  “)

(The Product Life Cycle model can be closely associated with the AD (Adoption and Diffusion) Curve, as well as the BCG (Boston Consulting Group) model)

The physiological life cycle is fixed, with one stage remorselessly following another in an immutable and irreversible sequence that medical progress has been unable to change substantially.  However, it has been suggested that human psychological development does not follow such an unequivocal pattern; it does not necessarily parallel biological development.  A decrease in psychological performance does not occur automatically after the age of 40 or 45, as is the case with biological performance.

Some people at this stage of their life cycle rise to a new level of creativity based on prior experience and a wider horizon.  The creativity can last for a long period of time before it finally succumbs to the onslaught of old age or actual physical infirmity.  This additional dimension of renewed growth has been incorporated into the product life cycle model.”

The life cycle concept has been adopted as a way to trace the stages of a program’s acceptance from its introduction to its demise.  Like the human life cycle, the course of program life cycles can be modified by careful management, but the inevitability of finite end cannot be changed.  The services offered by public agencies should change constantly in response to clientele demand and hence exhibit distinctive life cycle forms.

Program Life Cycle

The life cycle through which programs are likely to pass consists of five stages. (perhaps we should remember there is an earlier stage – Conception and Gestation.  But we will move past that in this paper.  In application, the vertical axis can be measured in terms of the number of program participants.  The horizontal axis represents the passage of time.

The first stage is introduction, in which clientele acceptance is slow;

second is the take-off stage, which is a period of rapid growth;

third is maturity, during which the growth rate slows down; fourth is saturation, in which no further growth takes place and clientele acceptance begins to wane; and finally,

decline, resulting either in death, which means usually removal from the marketplace, or petrification, which is a substantially reduced level of market acceptance remaining constant over a period of time.  At the point of onset of decline, some modification to the program may be made to enable it to renew its growth rather than to decline; and hence it may extend its useful life.

Characteristics of the Program Life Cycle Stages

Introduction stage

In the introduction stage, considerable effort is needed to generate support and acceptance for a new program.  Targeted client groups need to be made aware of the want satisfaction potential of the program.  A management effort and commitment of resources disproportionate to the number of program participants is often necessary.  Such substantial promotional effort is required because there are few people in the program who can “spread the word.” Much of the promotional effort will be in the form of personal selling, with agency personnel seeking to persuade the leading participants or opinion leaders in the community to join the program or to solicit the participation of others.

Most new programs require modification during the introduction stage of their life cycle.  It is important to solicit feedback from early users so that any initial sources of irritation are quickly removed.  Considerable effort must be made to ensure a high-quality program.  The newer the program the more important it is that the user has a good first impression of it, because others will be awaiting initial users’ reactions and will be greatly influenced by them.  Early participants are the key to success.  Their trial and approval is a necessary condition to acceptance from others who are not willing to take a blind risk:

If their first experience is unfavourable in some crucial way, this may have repercussions far out of proportion to the actual extent of the under-fulfilment of the customer’s expectation.  But a favourable first experience or application will, for the same reason, get a lot of disproportionately favourable publicity.”

Take-off

Take-off is the market acceptance stage at which the number of participants in the program grows rapidly.  This may be partially the result of introducing the program to additional target markets.  Less management effort is required during this stage, for all the problems of starting the program have been resolved.  Participants in the program begin promoting it through their social contacts and new participants quickly enroll.  The end of this stage is reached when the rate at which participation increases begins to slow down.

The length of the introduction and take-off stages will vary according to (1) the newness of the program, (2) its complexity in terms of the level of skill required to use it, (3) the cost of any required equipment, (4) the presence of other suppliers offering substitute programs such as private groups or commercial organizations, (5) the ease with which it is possible to participate in it, (6) the degree of promotion undertaken and the visibility the program has achieved in the community, and (7) the extent to which it is compatible with other programs offered.

Maturity stage

During the maturity stage the number of participants will continue to increase, but typically the rate of increase declines.  No program can expect to gain an ever-increasing number of new participants.  All members of the target client group(s) are aware of the program and, by the end of this stage, have made a decision as to whether or not they wish to participate in it.

At the end of the maturity stage there is a tendency for managers to believe that’s the way it’s always going to be.” Often this causes agencies to assume its clientele will always use a service and they shift focus from the clientele to concentrate on efficient delivery of the service.  This shift from a marketing to a product orientation is likely to contribute to demand for a service levelling off or beginning to decline.

Saturation

The most important characteristic of the saturation stage is the program’s reliance on repeat usage.  No new participants seek out the service except newcomers to the community.  Hence, if existing participants drop out, few others take their place.  At this stage, the program is highly vulnerable to new opportunities offered elsewhere that may attract existing users.  These participants are unlikely to be replaced.  Typically, this stage lasts much longer than the previous stages.

It is at this point that management should consider strategies for extending or stretching the program life cycle.  Four strategies are available:

Market penetration seeks to increase usage from the existing target market without modifying the program.  This is likely to be the least useful.  By the time the saturation stage has been reached ‘ all members of a target market who are interested in the program are likely to have made a final evaluation of its usefulness.

Market development involves offering an existing program to a different target market.  Program development consists of making calculated modifications to the program or its marketing mix to increase usage by existing client groups.  This may involve new leadership or equipment, an alternate facility, a reduction in user price, or changes in location, scheduling, or communication efforts. Diversification entails some major form of program modification to adapt it to the particular benefits sought by new and different target markets.  Figure 1 is an example how an organisation could successfully stretch the life cycles of its services through market penetration, market development, and program development.

The lowest risk of these market-stretching strategies is increased market penetration, because the agency has experience with both the service and the target markets. It is more difficult and risky to offer existing services to a new target market, and it is also more difficult to offer new services to an existing market.  The highest risk of failure comes when a new service is offered to a new market.

1.         Market Penetration-Increase the use of present services.

a.         Increase the present consumers’ rate of service usage.

i.          Give fee incentives or rewards for increased use.

ii.         Promote other uses of the service.

iii.        Offer more service for the same price.  Longer swim lessons, longer day care period, counselling for the entire family, more gym time.

b.         Attract some competitors’ consumers to your service.

i.          Increase promotional effort.

ii.         Establish sharper differences between the values of your services and those of your competitors.

c.         Attract non-users.

i.          Induce trial uses, sampling.

ii.         Offer fee inducements.

iii.        Advertise new uses.

2.         Market Development

a.         Open new geographical markets.

b.         Develop different versions of the same service to appeal to other market segments.

i.          Counselling: easy in and out, when one just wants to talk things over, nothing heavy.

ii.         Swimming pool for those who just want to relax during their noon hours.

c.         Advertise in other media than those you have been using.

i.          College newspapers, rock radio stations, national magazines, grocery stores.

3.         Program Development-Develop modified or new services for the markets you are already serving.

a.         Develop new program service features.

i.          Front door pick-up and delivery.

ii.         Check cashing and mini-legal services.

iii.        Temporary babysitting service.

iv.        Free meals.

v.         Photocopying, laundry, or similar service while they are here.

b.         Develop quality variations.

i.          Medium, high, and low.

C.        Develop additional modules and time segments.  This is known as product proliferation.

Figure 1.. How a YMCA Might Implement Market Stretching. (Source: Herron, D. B., Marketing Management for Social Service Agencies.  Columbus, OH: The Association of Professional YMCA Directors, 1978, pp. 17-18.)

Not all programs can be revitalised.  Some will have become redundant because of basic changes in client group wants or the emergence of a superior program by other providers.  In such cases, it is important to acknowledge the tell-tale signs and to reduce the time and money invested in the program.

In the decline stage other programs or activities have become more attractive to users and the number using the service declines.  Decline may be due either to (1) the introduction of new services by the agency or others that better deliver sought benefits, or (2) a growing disinterest with the familiar and a search for new experiences by targeted clientele.  This latter response may be referred to as “psychological obsolescence.”

During the decline stage the program is no longer a subject of social conversation and participants are no longer exercising a positive influence on others.  If an attempt is made to arrest the decline, a primary promotional effort aimed directly at potential client group members has to be initiated.  Management and promotional efforts typically become disproportionate to the number of participants in the program.  A decision has to be made regarding when the service should be terminated.  An alternative may be to offer the program intermittently or less frequently.  The decline may arrest itself and participation remain at the petrification level rather than disappear altogether.  This level is characterised by a relatively small number of enthusiastic participants remaining in the program who may take over responsibility for running it.

Core and Fringe Participants

In all programs clients can be categorised as either “core” or “fringe” users.  The core members of a clientele consist of enthusiasts committed to supporting the program whatever may happen.  However, they are likely to be a relatively small proportion of the total number of potential users.  The majority of participants are fringe members.

It is unlikely that a program will be deemed successful if it attracts only core users; the fringe participants are usually also required for program success.  It is the fringe clientele who constitute the greatest challenge to the manager because their involvement is more difficult to retain.  Fringe participants are relatively fickle and are not really committed; if a substitute or alternative opportunity for use of their time and energy emerges, they may take advantage of it.  Those out at the extreme fringe margin may exist in a “zone of indifference.” A slight change in circumstances will cause them to foresake Program A and drift into Program B or vice-versa.  Hence, the farther out toward the fringe the participants are located, the more difficult they arc to retain in a program.

This core-fringe concept is reflected in the nature of market acceptance traced by a program’s life cycle. The early users are typically core enthusiasts.  As momentum grows there is a movement out toward the fringe.  The maximum number of participants is reached at the Saturation stage.  It has been found that later adopters of a service are more likely to discontinue using it than are earlier adopters.” Thus, decline reflects a movement back toward the core, with fringe participants departing from the program.  The petrification level is reached when all of the fringe market has disappeared and only the core market of dedicated enthusiasts remains.

Implications for Managing Programs

The life cycle concept encourages preplanning so that managers can take the initiative instead of having to react to events that have already happened.  Program development can be systematically planned in advance, rather than thrown together as a stop gap response to an immediate situation.  This is possible because the program life cycle identifies in advance the characteristic pattern that client group acceptance of a new program is likely to follow.

A significant value of the program life cycle is its usefulness as a predictive or forecasting tool.  Since programs pass through distinctive stages, then a framework for prediction is available.  Prediction of the profile of a proposed program’s cycle is hazardous, but nevertheless necessary; and it makes possible the formulation of underlying plans and strategies in response to the projected situation.  When a new program is inaugurated an attempt should be made at the outset to plan a series of actions for the various stages in the program’s life.

Each stage of a program’s life cycle requires a different marketing strategy and different emphasis on the allocation of resources.  For example, any decision as to how much to spend on promotion and the appropriate type of promotion for a particular program should include consideration of its life cycle stage.  Clearly, considerable promotional effort is needed at the introduction stage, while relatively little value is likely to accrue from promotional expenditures in the saturation stage.  Further, in the introduction stage promotional efforts are concerned with creating new demand, while in the saturation stage promotion should be directed toward reminding the existing participants of the value of their choice.

Did you find this article useful?  Please let us know.  And spead the ideas to your asociates

These articles are usually taken from notes from a MAANZ course.  If you are interested in obtaining the full set of notes (and a PowerPoint presentation) please contact us – info@marketing.org.au

Also check out other articles on http://smartamarketing2.wordpress.com

MAANZ International website http://www.marketing.org.au

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