Product Life Cycle
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The document discusses product life cycles, which trace a product's stages from introduction to decline. It identifies four main stages: introductory, growth, maturity, and decline. Each stage is characterized by different sales patterns, levels of competition, and marketing strategies. Extending a product's life cycle involves modifying either the product itself, such as adding new features, or the market, like finding new groups of customers. Managing products effectively requires understanding where they are in their life cycle stages.
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Product Life Cycle
- 1. Explains the concept of product life cycles Product Life CyclesProduct Life Cycles 1
- 2. Product Life Cycle (PLC) Product Life Cycle (PLC) A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death). Product Life Cycle 2 5
- 3. Four Stages of the Product Life CycleFour Stages of the Product Life Cycle 3
- 4. Life-Cycle Management Entry Strategies Managing on the Rise Surviving the Decline GrowthGrowthIntroductionIntroduction MaturityMaturity DeclineDecline Managing during Maturity
- 5. Introductory Stage High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits with slow sales increases Promotion focuses on awareness and information Communication challenge is to stimulate primary demand 5 5
- 6. Growth Stage Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Aggressive advertising of the differences between brands Wider distribution 6 5
- 7. Maturity Stage Sales increase at a decreasing rate Saturated markets Annual models appear Lengthened product lines Service and repair assume important roles Heavy promotions to consumers and dealers Marginal competitors drop out Niche marketers emerge 7 5
- 8. Decline Stage Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses “Organized abandonment” 8 5
- 11. The BCG Matrix
- 12. The GE Business Screen
- 13. Length of Product Life-Cycle Product life-cycle variations
- 16. Relationships between the Diffusion Process and theRelationships between the Diffusion Process and the Product Life CycleProduct Life Cycle Product life cycle curve Diffusion curve 16
- 17. 1. Increase frequency of use by present customers 2. Add new users 3. Find new uses Extending the Product Life Cycle Market Modification Product Modification Purpose: to sell more product and cover original investment 4. Change product quality or packaging
- 18. Extending the product Cycle • to prevent the product going into decline you need to modify the market MARKET MODIFICATION • you look for new consumers by changing the product so it has new users
- 19. • to prevent the product going into decline you need to modify the product PRODUCT MODIFICATION • adding new features, variations, model varieties will change the consumer reaction - create more demand Extending the product Cycle
- 20. Some cases
Editor's Notes
- Notes: The product life cycle (PLC) is a widely familiar concept in marketing and is considered a useful marketing management tool. However, some critics have challenged the theoretical basis and managerial value of the PLC. The product life cycle traces the stages of a product’s acceptance from its introduction to its decline. The PLC concept can be used to analyze a brand, a product form, or a product category.
- Notes: Exhibit 11.2 illustrates the four major stages of the PLC for a consumer durable good: introduction, growth, maturity, and decline. The time a product spends in any one stage of the PLC may vary.
- Notes: The introductory stage represents the full-scale launch of a new product. During the introductory stage, sales normally increase slowly. Marketing costs are high due to higher dealer margins required to obtain adequate distribution and the cost of consumer incentives to try a product. Production costs are high. Advertising expenses are high because consumers must be educated about the product’s benefits. Promotion strategy focuses on developing product awareness and informing consumers about the product’s potential benefits. Intensive personal selling is often required. Promotion of convenience products often requires heavy consumer sampling and couponing. Shopping and specialty products demand educational advertising and personal selling to the final consumer.
- Notes: In the growth stage, sales grow at an increasing rate, many competitors enter the market, and larger companies may acquire small pioneering firms. Profits rise rapidly, peak, and begin declining as competition increases. Aggressive brand advertising and communication of the differences between brands is the preferred promotion strategy. Adequate distribution is a major key to establish a strong market position and product success.
- Notes: The maturity stage begins when sales increase at a decreasing rate, and the market approaches saturation. This is normally the longest stage of the PLC. Annual models may appear during the maturity stage for shopping and specialty products. Product lines are lengthened to appeal to additional market segments. Service and repair help manufacturers distinguish their products from others. As prices and profits continue to fall, marginal competitors drop out of the market. Heavy promotion is required to maintain market share. Niche marketers that target narrow, well-defined segments of a market emerge.
- Notes: The rate of decline depends on how rapidly consumer tastes change or substitute products are adopted. Many convenience products and fad items lose their market overnight. Some firms eliminate all nonessential marketing expenses and let sales decline as more and more customers discontinue purchasing the products. Other firms practice “organized abandonment,” which is based upon a periodic audit of all goods and services that a firm markets.
- Notes: Exhibit 11.4 shows the relationship between the adopter categories and the PLC. Note that the various categories of adopters buy products in different stages of the product life cycle. Almost all sales in the maturity and decline stages represent repeat purchases.