2. MEANING AND DEFINITION
A NEW PRODUCT PASSES THROUGH SET OF STAGES KNOWN AS PRODUCT LIFE CYCLE. PRODUCT
LIFE CYCLE APPLIES TO BOTH BRAND AND CATEGORY OF PRODUCTS. ITS TIME PERIOD VARY
FROM PRODUCT TO PRODUCT. MODERN PRODUCT LIFE CYCLES ARE BECOMING SHORTER AND
SHORTER AS PRODUCTS IN MATURE STAGES ARE BEING RENEWED BY MARKET
SEGMENTATION AND PRODUCT DIFFERENTIATION.
THE PRODUCT LIFE CYCLE DEFINED BY KOTLER AND ARMSTRONG IS THE;
THE PRODUCT LIFE CYCLE IS ABOUT THE FOUR MAIN STAGES FOR PRODUCTS: INTRODUCTION,
GROWTH, MATURITY AND DECLINE.
3. STAGES AND THEIR STRATEGIES:
• THE MAIN STAGES OF THE PRODUCT LIFE CYCLE ARE:
*RESEARCH & DEVELOPMENT - RESEARCHING AND DEVELOPING A PRODUCT BEFORE IT IS MADE
AVAILABLE FOR SALE IN THE MARKET
1. INTRODUCTION – LAUNCHING THE PRODUCT INTO THE MARKET
2. GROWTH – WHEN SALES ARE INCREASING AT THEIR FASTEST RATE
3. MATURITY – SALES ARE NEAR THEIR HIGHEST, BUT THE RATE OF GROWTH IS SLOWING DOWN,
E.G. NEW COMPETITORS IN MARKET OR SATURATION
4. DECLINE – FINAL STAGE OF THE CYCLE, WHEN SALES BEGIN TO FALL
5. INTRODUCTION STAGE: - IN INTRODUCTION STAGE, THE FIRM SEEKS TO BUILD PRODUCT AWARENESS
AND DEVELOP A MARKET FOR THE PRODUCT. THE IMPACT ON THE MARKET MIX AS FOLLOWS:
• PRODUCT BRANDING AND QUALITY LEVEL IS ESTABLISHED, AND INTELLECTUAL PROPERTY PROTECTION
SUCH AS PATENTAND TRADE MARKS ARE OBTAINED.
• PRICING MAY BE LOW PENETRATION PRICING TO BUILD MARKET SHARE RAPIDLY, OR HIGH SKIM PRICING TO
RECOVER DEVELOPMENT COSTS.
• DISTRIBUTION IS SELECTIVE UNTIL CONSUMERS SHOW ACCEPTANCE OF THE PRODUCT.
• PROMOTION IS AIMED AT INNOVATORS AND EARLY ADOPTERS. MARKETING COMMUNICATION SEEKS TO BUILD
PRODUCTAWARENESS AND TO EDUCATE POTENTIAL CONSUMERS ABOUT THE PRODUCT.
GROWTH STAGE: - IN THE GROWTH STAGE, THE FIRM SEEKS TO BUILD BRAND PREFERENCE AND
INCREASE MARKET SHARE.
• PRODUCT QUALITY IS MAINTAINED AND ADDITIONAL FEATURES AND SUPPORT SERVICES MAY BE ADDED.
• PRICING IS MAINTAINED AS THE FIRM ENJOYS INCREASING DEMAND WITH LITTLE COMPETITION.
• DISTRIBUTION CHANNELS ARE ADDED AS DEMAND INCREASES AND CUSTOMERS ACCEPT THE PRODUCT.
• PROMOTION IS AIMED AT A BROADER AUDIENCE.
6. MATURITY STAGES: AT MATURITY, THE STRONG GROWTH IN SALES DIMINISHES. COMPETITION MAY
APPEAR WITH SIMILAR PRODUCTS. THE PRIMARY OBJECTIVE AT THIS POINT IS TO DEFEND MARKET
SHARE WHILE MAXIMIZING PROFIT.
• PRODUCT FEATURES MAY BE ENHANCED TO DIFFERENTIATE THE PRODUCT FROM THAT OF
COMPETITORS.
• PRICING MAY BE LOWER BECAUSE OF THE FLOW OF THE NEW COMPETITION.
• DISTRIBUTION BECOMES MORE INTENSIVE AND INCEPTIVES MAY BE OFFERED TO ENCOURAGE
PREFERENCE OVER COMPETING PRODUCTS.
• PROMOTION EMPHASIZES PRODUCT DIFFERENTIATION.
DECLINE STAGE: AS SCALE DECLINE, THE FIRM HAS SEVERAL OPTIONS:
• MAINTAIN THE PRODUCT, POSSIBLY REJUVENATING IT BY ADDING NEW FEATURES AND FINDING NEW
USES.
• HARVEST THE PRODUCT – REDUCE COSTS AND CONTINUE TO OFFR=ER IT, POSSIBLY TO A LOYAL NICHE
SEGMENT.
• DISCOUNTING THE PRODUCT, LIQUIDATING REMAINING INVENTORY OR SELLING IT TO ANOTHER FIRM
THAT IS WILLING TO CONTINUE THE PRODUCT.
7. THE ADVANTAGES OF FORECASTING THE LIFE CYCLE OF A PRODUCT ARE AS FOLLOWS:
(I) WHEN THE PRODUCT LIFE-CYCLE IS PREDICTABLE, THE MANAGEMENT MUST BE CAUTIOUS IN
TAKING ADVANCE STEPS BEFORE THE DECLINE STAGE, BY ADOPTING PRODUCT MODIFICATION,
PRICING STRATEGIES, DISTINCTIVE STYLE, QUALITY CHANGE, ETC.
(II) THE FIRM CAN PREPARE AN EFFECTIVE PRODUCT PLAN BY KNOWING THE PRODUCT LIFE-CYCLE
OF A PRODUCT.
(III) THE MANAGEMENT CAN FIND NEW USES OF THE PRODUCT FOR THE EXPANSION OF MARKET
DURING GROWTH STAGE AND FOR EXTENDING THE MATURITY STAGE.
(IV) THE MANAGEMENT CAN ADOPT LATEST TECHNOLOGICAL CHANGES TO IMPROVE THE PRODUCT
QUALITY, FEATURES AND DESIGN.
(V) THE MANAGEMENT CAN ABANDON THE PRODUCT WHICH IS NOT DEMANDED BY THE
CUSTOMERS.
