21-1 <ul><ul><li>Product Life Cycle </li></ul></ul>
A product is introduced among consumers, and if consumers perceive it as meeting their needs and want, it experiences a period of growth. Subsequently, it reaches the stage of maturity and when it loses its appeal, its decline starts and eventually is may be taken off the market (demise). The classical product life cycle curves are depicted as “S” shaped and generally divided in four stages: Introduction, growth, maturity, and decline.
Common Product Life Curves Sales Sales Sales Time Time Time (a) Growth-Decline Plateau (b) Cycle-Recycle Pattern (c) Innovative Maturity or Scalloped Pattern
Introduction Growth Maturity Decline (d) Classical Life Cycle Pattern Time Sales Profits Loss Common Product Life Curves
Pioneer and Follower Advantages Pioneer Follower <ul><li>First choice of market segments. </li></ul><ul><li>Can bring in superior technology. </li></ul><ul><li>Influence on consumer attitudes and choice criteria. </li></ul><ul><li>Can take advantage of pioneer’s product mistakes. </li></ul><ul><li>Pioneer defines the rules of the game. </li></ul><ul><li>Ability to take advantage of pioneer’s positioning mistakes. </li></ul><ul><li>Switching costs higher for early adopters of pioneer’s product. </li></ul><ul><li>Ability to take advantage of pioneer’s marketing mistakes. </li></ul><ul><li>Gaining distribution advantage. </li></ul><ul><li>Can take advantage of pioneer’s resources limitations. </li></ul><ul><li>Economies of scale and more experience. </li></ul><ul><li>Possibility of pre-empting scarce resources and suppliers. </li></ul>
Introduction Stage The introductory stage is viewed as fairly risky and quite expensive because large amounts of money is spent on advertising and other tools of marketing communications to create consumer awareness in sufficiently large numbers, and encourage trial.
Growth Stage The growth stage of life cycle is characterised by a sharp rise in sales. Only a small percentage of new products introduced survive to reach the growth stage.
Maturity Stage Most products after surviving competitive battles, winning customer confidence and successful through growth phase enter their maturity stage. The sales plateau, and this flattening of sales usually lasts for some time because most products in the category have reached their maturity stage, and there is stability in terms of demand, technology, and competition.
Product Life Cycle Stages, Characteristics and Standard Responses Introduction Growth Maturity Decline Characteristics Market Growth Rate (Rs) Moderate High Insignificant Negative Technical Change High Moderate Limited Limited In Product Design Market Segments Few Few to many Few to many Few Competitors Few Many Limited Few Profitability Negative High High for Market-share leaders Low Company’s Standard Responses Stimulate primary demand Gain market share Gain market share Harvest Product Improve quality Continue quality improvements Concentrate on features No change Product Line Narrow Broad Hold line length Reduce line length Price Skimming or Penetration Reduce Hold or reduce Reduce Promotion High High Hold or reduce Reduce Distribution Selective Intensive Intensive Selective
Decline Stage Decline stage sets in when customer preferences change due to the availability of technologically superior products and consumers’ shift in values, beliefs, and tastes to products offering more value.
Implications and Limitations of Product Life Cycle Concept Product life cycle concept shows a framework to spot the occurrence of opportunities and threats in a product market and the industry. This can help firms to reassess their objectives, strategies, and different elements of marketing programme.