Product life cycle
Contents
Introduction
Meaning of product life cycle
Factors found in the concept of product life cycle
Definitions of product life cycle
Stages of product life cycle
Strategies for the differing stages of the product life cycle
Problems with product life cycle
Factors affecting product life cycle
Utility/ importance of product life cycle
Conclusion
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Introduction
As a human life cycle is divided in babyhood, childhood, teenage, youth, adult, and the old age. The life of a product in the same fashion is divided in introduction, growth, maturity, and decline like the human life, no product is immortal. Every thing in this universe including each product is mortal like the human life and it comes in light with the flux of time with the passage of time. Each product vanishes from the market and is replaced by new products. For example, the lamp was replaced by lantern, electric bulb or tube. Similarly, transistor and television have taken the place of radio.
Due to life cycle each product has limited life and without bringing necessary changes that product cannot be sold indefinitely. The life cycle of a product begins when it enter the market for the ist time for sale. Gradually the demand for the product rises and reaches its climax. Slowly the demand falls it becomes obsolete in the market.
Meaning of product life cycle
product life cycle is based upon the biological life cycle. For example, a seed is planted (introduction) it begins to sprout (growth) it shoots out leaves and put down roots as it
becomes on adult (maturing) after a long period as an adult the plant begins to shrink and die out (decline).
In theory it’s the same for a product. The product life cycle gives through many phases, involves many professional disciplines, and requires many skill, tools and processes. Product life cycle has to do with the life of a product in the market with respect to business/ commercial costs and sales measures. Whereas product life cycle management has more to do with managing description and properties of a product through its development and useful life, mainly for a business/ engineering point of view.
Factors are found in the concept of product life cycle
There are some factors or point regarding product life cycle are given below:
1. Product has LIMITED LIFE CYCLE as that of man and animals.
2. life cycle of a PRODUCT BEGINS WITH THE ENTRY INTO THE MARKET and passes through the stages of market development and market maturity and ends by becoming obsolete.
3. The passing SPEED OF A PRODUCT is not the same in different stages of life cycle.
4. product sale passes through distinct stages, each passing different challenges, opportunities, and problems to the seller.
5. the beginning stage of a product increases the profit of commercial institution because the product is sold at a high price. After that due to competition price is reduced and profit decreases.
6. product requires different marketing, financial, manufacturing, purchasing and human resource strategies in each life cycle stage.
Definitions of product life cycle
According to ARCH PATTON
“The life cycle of a product has many points of similarity with human life cycle; the product is born, grows, attain dynamic maturity then enters its declining year”.
According to Philip kotler
“The product life cycle is an attempt to recognize distinct stages in sales history of the product. The sales histories pass through four stages known as introduction, growth, maturity, and decline”.
According to lipson and darling
“product life cycle refers to those market offering in which the stages of market introduction, market growth, market saturation, market decline and market death are included”.
On the basis of above definitions it can be said that from the time of presentation of product to the time of becoming obsolete is called the life cycle of that product.
Stages of product life cycle
A new product progresses through a sequence of stages from introduction to growth, maturity and decline. This sequence is known as the product life cycle and is associated with changes in market situation, thus impacting the market strategy and the marketing mix.
The product revenue and profits can be plotted as a function of the life cycle stages as shown in the graph below:-
Introduction stage
The firm seeks to build product awareness and develop market for the product. When the product introduced, sales will be low until customers become aware of the product and its benefits. The impact on the marketing mix is as follows:
1. Product branding and quality level is established and intellectual property protection. Such as patents and trade marks are obtained.
2. pricing may be low penetration pricing to build market share rapidly, or high skim pricing to recover development costs.
3. distribution is selective until consumers show acceptance of the product.
4. promotion is aimed at innovators. As early adopters marketing communications seek to build product awareness and to educated potential consumers about the product.
5. cost high.
6. sales volume low.
7. no/ little competition- competitive manufactures
8. watch for acceptance/ segment growth losses.
9. demand has to be created.
10. customers have to prompted to try the product.
11. firms distribute its product is limited area and increases sales gradually.
Growth stage
In growth stage, the firms seek to build brand preference and increase market shares. This stage consist of following features:
1. product quality is maintained and additional features and support services may be added.
2. pricing is maintained as the firm enjoys.
3. increasing demand with little competition.
4. distribution channels are added as demand increases and customers accept the product.
5. promotion is aimed at a broader audience.
6. cost reduced due to economics of scale.
7. sales volume increases significantly.
8. profitability
9. competition begin to increase with a few new players in establishing market.
10. prices to maximize market share.
11. consumers start accepting the products due to sales promotion, advertisement etc. and sales get boost as a result of this process.
12. more attention to be paid on kind, quality, size and shape of the product.
13. efficiency in product marketing and distribution works should be increased so that the life cycle of the products increase gradually.
Maturity stage
At maturity stage, The strong growth in sales diminishes. Competition may appears with similar products. The primary objective at this point is to defined market share while maximizing profit. The stage consists of following features:
1. product features may be enhanced to differentiate the product from that of competitors.
2. pricing may be lower because of the new competition.
3. distribution becomes more intensive and incentives may be offered to encourage.
4. preference over competing products.
5. promotion emphasizes product differentiation.
6. costa are very low as you are well established in market and no need for publicity.
7. sales volume peaks.
8. increase in competitive offerings.
9. price tend to drop due to proliferation of competing products.
10. brand differentiation features diversification as each player seeks to differentiate from competition with how much product offered.
11. industrial profit goes down
12. supply for goods is more as compared to their demand.
13. competitive firms too start incurring more expenses on sales promotion.
14. advertisement expenses increase, but sales prices became less.
Decline stage
This is the last stage of the product life cycle. The sale of product becomes less at this stages because some new and advanced products make their appearance in the market. The stage consist of following features:
1. maintain the product, possibly rejuvenating it by adding new features and finding new uses.
2. harvest the product, reduce costs and continue to offer it, possibly to a loyal niche segment.
3. discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product.
4. costs become counter- optimal.
5. sales volume decline or stabilize.
6. prices, profitability diminish.
7. profit become more a challenge of production/ distribution efficiency than increased sales.
The marketing mix decisions in the decline phase will depend on the selected strategy. For example the product may be changed if it is being rejuvenated, or or left unchanged. If it is being harvested or liquidated. The price may be maintain if the product is harvest, or reduced drastically if liquidated.
Strategies of product life cycle
The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming pricing strategy is applied limited number of product are available in few channels of distribution.
Growth stage
Competitors are attracted into the market with very similar offering. Products become more profitable and companies from alliance, joint ventures and take each other over. Advertising spend is high and focuses upon building brand, market share tends to stabilize.
Maturity stage
Those products that survive the earlier stages tend to spend longest in this phase, sales grow at a decreasing rate and then stabilize, producers attempt to differentiate products and brands are key to this price war and intense competition occur. At this point the market reaches saturation, producers begins to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.
Decline stage
At this point there is downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intensive price cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.
Problems with product life cycle
In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage. For example from maturity to decline by price cutting not all products go through each stage. Some go from introduction to decline and is not easy to tell which stage the product is in, remember that product life cycle like all other tools. Use it to inform your got feeling.
Rate of technical change
The life cycle of product will be long if technical changes are introduced slowly in the country while it will short if technical changes are introduced rapidly.
Rate of market acceptance
If the customers accept any product easily or fastly, the life cycle of such product shall short and it will longer if accepted slowly.
Easy of competitive entry
The life cycle of product will short if several new products are launched in the market rapidly. In the life cycle of the product shall be longer if they are launched after a long interval of time.
Rate of bearing capacity
The business undertaking having excess risk bearing capacity provide their products a longer life cycle while it is shorter in the reverse circumstances.
Economic and managerial forces
The business undertaking with strong economic and managerial powers provide their products longer life cycle and it is shorter in converse position.
Protection by patents
The spam of life cycle of the products is longer if their patent is registered and it is shorter if patent is unregistered.
Personnel strategy
Product life cycle is also affected by the personnel strategy used in marketing.
Business reputation
If the reputation is good in the market as producer of good quality products, its products will last long in the market as compared to the products of those enterprise whose goodwill is not good or which are not much known to the public.
Conclusion
Concept of product life cycle is important planning device and the firm or company can achieve expected profits by exploiting its marketing. Capacities and sources if this devices is properly utilized. It can earn profit by systematically adjustment of the rates.
A new product progress through a sequence of stages from introduction, growth, maturity and decline. This sequence is known as product life cycle and is associated with changes in the marketing situation, this impacting the market strategy and the marketing mix.
Contents
Introduction
Meaning of product life cycle
Factors found in the concept of product life cycle
Definitions of product life cycle
Stages of product life cycle
Strategies for the differing stages of the product life cycle
Problems with product life cycle
Factors affecting product life cycle
Utility/ importance of product life cycle
Conclusion
if you like my post then pls click on advertisment and add as you in my follower list.
Its beneficial for you and me both.
Introduction
As a human life cycle is divided in babyhood, childhood, teenage, youth, adult, and the old age. The life of a product in the same fashion is divided in introduction, growth, maturity, and decline like the human life, no product is immortal. Every thing in this universe including each product is mortal like the human life and it comes in light with the flux of time with the passage of time. Each product vanishes from the market and is replaced by new products. For example, the lamp was replaced by lantern, electric bulb or tube. Similarly, transistor and television have taken the place of radio.
Due to life cycle each product has limited life and without bringing necessary changes that product cannot be sold indefinitely. The life cycle of a product begins when it enter the market for the ist time for sale. Gradually the demand for the product rises and reaches its climax. Slowly the demand falls it becomes obsolete in the market.
Meaning of product life cycle
product life cycle is based upon the biological life cycle. For example, a seed is planted (introduction) it begins to sprout (growth) it shoots out leaves and put down roots as it
becomes on adult (maturing) after a long period as an adult the plant begins to shrink and die out (decline).
In theory it’s the same for a product. The product life cycle gives through many phases, involves many professional disciplines, and requires many skill, tools and processes. Product life cycle has to do with the life of a product in the market with respect to business/ commercial costs and sales measures. Whereas product life cycle management has more to do with managing description and properties of a product through its development and useful life, mainly for a business/ engineering point of view.
Factors are found in the concept of product life cycle
There are some factors or point regarding product life cycle are given below:
1. Product has LIMITED LIFE CYCLE as that of man and animals.
2. life cycle of a PRODUCT BEGINS WITH THE ENTRY INTO THE MARKET and passes through the stages of market development and market maturity and ends by becoming obsolete.
3. The passing SPEED OF A PRODUCT is not the same in different stages of life cycle.
4. product sale passes through distinct stages, each passing different challenges, opportunities, and problems to the seller.
5. the beginning stage of a product increases the profit of commercial institution because the product is sold at a high price. After that due to competition price is reduced and profit decreases.
6. product requires different marketing, financial, manufacturing, purchasing and human resource strategies in each life cycle stage.
Definitions of product life cycle
According to ARCH PATTON
“The life cycle of a product has many points of similarity with human life cycle; the product is born, grows, attain dynamic maturity then enters its declining year”.
According to Philip kotler
“The product life cycle is an attempt to recognize distinct stages in sales history of the product. The sales histories pass through four stages known as introduction, growth, maturity, and decline”.
According to lipson and darling
“product life cycle refers to those market offering in which the stages of market introduction, market growth, market saturation, market decline and market death are included”.
On the basis of above definitions it can be said that from the time of presentation of product to the time of becoming obsolete is called the life cycle of that product.
Stages of product life cycle
A new product progresses through a sequence of stages from introduction to growth, maturity and decline. This sequence is known as the product life cycle and is associated with changes in market situation, thus impacting the market strategy and the marketing mix.
The product revenue and profits can be plotted as a function of the life cycle stages as shown in the graph below:-
Introduction stage
The firm seeks to build product awareness and develop market for the product. When the product introduced, sales will be low until customers become aware of the product and its benefits. The impact on the marketing mix is as follows:
1. Product branding and quality level is established and intellectual property protection. Such as patents and trade marks are obtained.
2. pricing may be low penetration pricing to build market share rapidly, or high skim pricing to recover development costs.
3. distribution is selective until consumers show acceptance of the product.
4. promotion is aimed at innovators. As early adopters marketing communications seek to build product awareness and to educated potential consumers about the product.
5. cost high.
6. sales volume low.
7. no/ little competition- competitive manufactures
8. watch for acceptance/ segment growth losses.
9. demand has to be created.
10. customers have to prompted to try the product.
11. firms distribute its product is limited area and increases sales gradually.
Growth stage
In growth stage, the firms seek to build brand preference and increase market shares. This stage consist of following features:
1. product quality is maintained and additional features and support services may be added.
2. pricing is maintained as the firm enjoys.
3. increasing demand with little competition.
4. distribution channels are added as demand increases and customers accept the product.
5. promotion is aimed at a broader audience.
6. cost reduced due to economics of scale.
7. sales volume increases significantly.
8. profitability
9. competition begin to increase with a few new players in establishing market.
10. prices to maximize market share.
11. consumers start accepting the products due to sales promotion, advertisement etc. and sales get boost as a result of this process.
12. more attention to be paid on kind, quality, size and shape of the product.
13. efficiency in product marketing and distribution works should be increased so that the life cycle of the products increase gradually.
Maturity stage
At maturity stage, The strong growth in sales diminishes. Competition may appears with similar products. The primary objective at this point is to defined market share while maximizing profit. The stage consists of following features:
1. product features may be enhanced to differentiate the product from that of competitors.
2. pricing may be lower because of the new competition.
3. distribution becomes more intensive and incentives may be offered to encourage.
4. preference over competing products.
5. promotion emphasizes product differentiation.
6. costa are very low as you are well established in market and no need for publicity.
7. sales volume peaks.
8. increase in competitive offerings.
9. price tend to drop due to proliferation of competing products.
10. brand differentiation features diversification as each player seeks to differentiate from competition with how much product offered.
11. industrial profit goes down
12. supply for goods is more as compared to their demand.
13. competitive firms too start incurring more expenses on sales promotion.
14. advertisement expenses increase, but sales prices became less.
Decline stage
This is the last stage of the product life cycle. The sale of product becomes less at this stages because some new and advanced products make their appearance in the market. The stage consist of following features:
1. maintain the product, possibly rejuvenating it by adding new features and finding new uses.
2. harvest the product, reduce costs and continue to offer it, possibly to a loyal niche segment.
3. discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product.
4. costs become counter- optimal.
5. sales volume decline or stabilize.
6. prices, profitability diminish.
7. profit become more a challenge of production/ distribution efficiency than increased sales.
The marketing mix decisions in the decline phase will depend on the selected strategy. For example the product may be changed if it is being rejuvenated, or or left unchanged. If it is being harvested or liquidated. The price may be maintain if the product is harvest, or reduced drastically if liquidated.
Strategies of product life cycle
The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming pricing strategy is applied limited number of product are available in few channels of distribution.
Growth stage
Competitors are attracted into the market with very similar offering. Products become more profitable and companies from alliance, joint ventures and take each other over. Advertising spend is high and focuses upon building brand, market share tends to stabilize.
Maturity stage
Those products that survive the earlier stages tend to spend longest in this phase, sales grow at a decreasing rate and then stabilize, producers attempt to differentiate products and brands are key to this price war and intense competition occur. At this point the market reaches saturation, producers begins to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.
Decline stage
At this point there is downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intensive price cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.
Problems with product life cycle
In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage. For example from maturity to decline by price cutting not all products go through each stage. Some go from introduction to decline and is not easy to tell which stage the product is in, remember that product life cycle like all other tools. Use it to inform your got feeling.
Rate of technical change
The life cycle of product will be long if technical changes are introduced slowly in the country while it will short if technical changes are introduced rapidly.
Rate of market acceptance
If the customers accept any product easily or fastly, the life cycle of such product shall short and it will longer if accepted slowly.
Easy of competitive entry
The life cycle of product will short if several new products are launched in the market rapidly. In the life cycle of the product shall be longer if they are launched after a long interval of time.
Rate of bearing capacity
The business undertaking having excess risk bearing capacity provide their products a longer life cycle while it is shorter in the reverse circumstances.
Economic and managerial forces
The business undertaking with strong economic and managerial powers provide their products longer life cycle and it is shorter in converse position.
Protection by patents
The spam of life cycle of the products is longer if their patent is registered and it is shorter if patent is unregistered.
Personnel strategy
Product life cycle is also affected by the personnel strategy used in marketing.
Business reputation
If the reputation is good in the market as producer of good quality products, its products will last long in the market as compared to the products of those enterprise whose goodwill is not good or which are not much known to the public.
Conclusion
Concept of product life cycle is important planning device and the firm or company can achieve expected profits by exploiting its marketing. Capacities and sources if this devices is properly utilized. It can earn profit by systematically adjustment of the rates.
A new product progress through a sequence of stages from introduction, growth, maturity and decline. This sequence is known as product life cycle and is associated with changes in the marketing situation, this impacting the market strategy and the marketing mix.
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