WHAT IS PRODUCT LIFE CYCLE ?

PRODUCT LIFE CYCLE

Every product has its life. Industrial goods may have a longer life than consumer goods. When a product idea is commercialized, the product enters into the market and competes with the rivals for making sales earning profits.. Products, like human beings have length of life. This has been described as life-cycle in human beings and when applied to products, it is called as product life-cycle.  The product life cycle is generally termed, as product market life cycle because it is called to particular market. For, instance, an old product in the market of Mumbai, may have a new life in a remote village. The product life-cycle may be short for some products and long for some other products. The period may differ from product to product. Every product posses through certain stages collectively, knew as product life cycle stages. These stages include.

(i)  Introduction
(ii) Growth
(iii) Maturity
(iv) Decline

SIGNIFICANCE OF PRODUCT LIFE CYCLE

        The concept of product life cycle highlights that sooner or, later all products die and that if management wishes to sustain' its revenues, it must replace .the declining products with the new ones. The product lifecycle concept 'indicates as to what can be expected in the market for a new product at various stages i.e., introduction, growth, maturity and decline.  Thus, the concept of product life-cycle can be used as a forecasting tool. It can alert management that its product will inevitably face saturation and decline, and the host of problems these stages pose. The product life-cycle is also a useful framework for describing' the typical evolution of marketing strategy over the stages of product lifecycle. This will help in taking sound marketing decisions at different stages of the product lifecycle.

After a product has been developed, it is launched in the market with the help of various promotional devices such 'as 'advertising, sales promotion, publicity and personal selling. In other words, product development (some people call it incubation, stage of product life-cycle) must be followed by the successful introduction of the product ill, the market. For this, planning\for introduction of the product starts during the process of product development itself. Every firm makes sale projections during introduction" growth and maturity stage of the product life-cycle. To achieve the projected sales target, ' it formulates promotional, pricing and distribution policies. Thus, the concept of product life-cycle facilitates integrated marketing policies relating to product, price, promotion and distribution.

       

The advantages of "Product Life Cycle" to a firm are as follows:  

1. 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, style, quality change, etc.
2. The firm can prepare an effective product, plan by known the product life-cycle of a product.

3. The management can find new uses of the product for the expansion of market during growth stage and for extending the maturity stage.

4. The management can adopt latest technological changes to improve the product quality, features and design.

PRODUCT LIFE CYCLE

With the development of product and start of commercial production, life-cycle of the product begins with its introduction in the market. As shown, in Fig. 1, every product moves through the four stages, namely, introduction, growth, maturity, and decline. As the product moves through different stages of its life-cycle, sales volume and profitability change from stage to stage. The management emphasis on the marketing mix elements also undergoes sub­stantial changes from stage to stage. A brief discussion of the marketing strategies in different stages of the product life-cycle is given below:

                                        (Stages of Product Life Cycle)

1. Introduction Stage

The first stage of a product life-cycle' is the introduction or pioneering stage. Under this stage, competition is almost or non-existent prices are relatively high, markets are limited and the product, innovation in not known much. The growth in sales volume is at a lower rate because of lack of knowledge on the part of the customers and difficulties in making, the product available to the customers. During this stage, high expenditure has to be incurred on advertising and other promotional techniques.  Prices are usually high during the introduction stage because of small scale of production, technological problems-and heavy promotional expenditure.

            To introduce the product successfully the following strategies may be adopted:
 (i) Advertisement and publicity of the product Money back guarantee may be offered to stimulate the people try the product.

(ii) Attractive gift to customers as an ‘introductory offer’.

(iii) Selective distribution and attractive discount to dealers.

(iv) Higher price of product to earn greater profit during the initial stages i.e., skimming the cream pricing policy.

2. Growth Stage.

 As the product grows in popularity it moves into the second phase of its life-cycle, i.e., the growth stage. In this stage, the demand expands rapidly, prices fall, competition increases, and distribution is greatly widened the marketing management focuses its attention on improving the market share by deeper penetration into the existing markets and entry into new markets.  The falling ratio of promotional expenditure to sale leads to increase in profitability during this stage.
(i) The product is advertised heavily it to stimulate sales.

(ii) New versions of the product are introduced-to cater to the require­ments of different types of customers.

(iii) The channels of distribution are strengthened so that the product is easily available wherever required.

(iv) Brand image if product is created through Promotional activities

(v) The price of product is competitive

(vi) There is greater emphasis on customer service.

3. Maturity Stage. 

The product enters into maturity stage as competition intensifies further and market gets stabilized. Profits come down because of stiff competition, and marketing expenditures rise. The prices are decreased because of competition and innovations in technology. There is saturation in the market as there is no possibility of sales increase. This-stage may last for a long period as in the case of many products with long-run demand characteristics. But sooner or later, demand of the product starts declining as new products are introduced in the market. Product differentiation, identification of new, segments and product improvement are emphasized during this stage.  In order to lengthen-the period of maturity stage, the following strategies may be adopted:
(1) Product may be differentiated from the competitive products and brand image may be emphasized more.

(ii) The warranty period may be extended. For instance manufacturers of typewriters have introduced the concept' of life-time warranty.

(iii) Reusable packaging may be introduced.

(iv) New market may be developed.

(v) New uses of the product may be developed.

4. Decline Stage.

This stage is characterized by either the product's gradual displacement by some new products or change in consumer buying behavior. The sales fall down sharply and the expenditure on promotion has to be cut down dramatically. The decline may be rapid with the product soon passing out of market or slow if new uses of the product are found. To avoid sharp decline in sales, to following strategies may be used:

(i) New features may be added to the product and its packaging may be made more attractive.

(ii) Economy packs or models maybe introduced to revive the market.

(iii) The promotion of the product should be selective to reduce dis­tribution costs;

5. Abandonment of Product.

 Many firms abandon the product-in order to put their resources to better use.  The demands of the people change and, new innovations come to the market to take place of the abandoned products, As, far as possible, attempts should be made to ,postpone the decline stage. But if the decline is rapid, the product model may be abandoned and the new model with unique features may be introduced. Lt it is not possible or there are heavy losses, the manufacturer may seek merger with a strong firm.

Tag: Product Life cycle, Product life, stages of Project life cycle, Product decline stage, Product maturity stage , Product growth stage, MBA marketing, MBA marketing Notes