Product life cycles

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Product life cycles

  1. 1. PRODUCT LIFE CYCLE
  2. 2. Stages of the Product Life Cycle Time Sales Intro- duction Growth Mature Decline
  3. 3. Other Shapes of the Product Life Cycle
  4. 4. Benefits of Predictability <ul><li>Resource allocation </li></ul><ul><li>Choice of strategy </li></ul><ul><li>Timing </li></ul>
  5. 5. Criticism of the Product Life Cycle <ul><li>Patterns are too variable </li></ul><ul><li>Unexpected changes </li></ul><ul><li>Self-fulfilling prophecy </li></ul>
  6. 6. Sales Low Rising Peak, Flattening Declining Cost <ul><ul><ul><ul><li>Highest Average Lowest Depends </li></ul></ul></ul></ul>Profits Negative Rising Higher Declining Intro Growth Mature Decline
  7. 7. Customers Innovators Early Middle Laggards Adopters Majority Competitors Few Growing Many Few Intro Growth Mature Decline
  8. 8. Introduction Stage ISSUES <ul><li>Supply side </li></ul><ul><ul><li>Technological leap-froging </li></ul></ul><ul><ul><li>Assume industry-wide start-up costs </li></ul></ul><ul><li>Demand side </li></ul><ul><ul><li>High uncertainty in market size </li></ul></ul><ul><ul><li>High uncertainty in market tastes </li></ul></ul>
  9. 9. Introduction Stage STRATEGIES <ul><li>Market pioneers </li></ul><ul><ul><li>Very risky </li></ul></ul><ul><ul><li>Need financial resources </li></ul></ul><ul><ul><ul><li>The “bleeding edge” </li></ul></ul></ul><ul><li>Pricing </li></ul><ul><ul><li>Skimming </li></ul></ul><ul><ul><li>Penetration </li></ul></ul>
  10. 10. Growth Stage STRATEGIES <ul><li>Early followers </li></ul><ul><li>Options </li></ul><ul><ul><li>Imitate </li></ul></ul><ul><ul><li>Innovate </li></ul></ul><ul><ul><li>Differentiate </li></ul></ul>
  11. 11. Maturity Stage ISSUES <ul><li>Technical certainty </li></ul><ul><li>Initial costs covered </li></ul><ul><li>High fixed costs </li></ul><ul><li>Experienced, well-informed buyers </li></ul><ul><li>Replacement sales greater than initial sales </li></ul><ul><li>Commoditization </li></ul>
  12. 12. Maturity Stage STRATEGIES <ul><li>Pioneer new segment </li></ul><ul><li>Head-to-head competition with leader </li></ul><ul><li>Low cost strategy </li></ul><ul><li>Catch leader asleep </li></ul>
  13. 13. Decline Stage STRATEGIES <ul><li>Reasons for decline </li></ul><ul><li>In order... </li></ul><ul><ul><li>Maintain </li></ul></ul><ul><ul><li>Harvest </li></ul></ul><ul><ul><li>Drop </li></ul></ul>

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