The product life cycle is a time period where product introduced and removed from the market. The management desires to the product to live a happy and long life, after introducing the new product.
The management desires to gain sufficient profit to compensate all the risk and struggle that it deals while introducing the product, although it is not required the product to sell forever.
The management understands that every product will contain some life-cycle, although there is no information in advance about the exact length and shape. There are five separate stages of the product life cycle and these are as follow.
Stages of Product Life Cycle
Product Development
When the business organization finds and builds new product idea, product development stage starts. Sales become zero and the investment costs of business organization rises during product development.
Introduction Stage
When the new product is first introduced, introduction stage begins. Sales growth is ready to slow as introduction takes time.
In introduction stage, the profits are low or negative due to the reason of high promotion & distribution expenses and low sales, as compared to other stages.
Read More: New Product Development Process
It required too much amount of money to appeal distributors and develop their inventories. Higher amount is spent on promotional activities as it is expensive to communicate consumers about new product and motivate them to use it.
The business organization and its competitors develop fundamental versions of the product because the market is not prepared for product purifications at this stage. The business organization concentrate on their selling to those purchasers who are prepare to purchase.
An introduction strategy should be selected by the business organization, especially the market innovator, and that strategy is in accordance with the determined product positioning.
It should be recognized that the starting strategy is only a first measure in a broader marketing plan for the complete life-cycle of the product.
Long run benefit will be sacrificed for the sake of short run benefit by the pioneer business organization who selects its introducing strategy to make a “killing”.
The pioneer should continuously develop new promotion, marketing and other strategies as it moves through other stages of life cycle.
If the pioneer plays its cards effectively from the beginning, it has the better chance of developing and retaining market leadership.
Growth Stage
The product will move into growth stage, after satisfying the market, in which the sales will be rising rapidly.
The prior adopters keep purchasing, and later purchasers will begin complying their lead, especially if they receive favorable reactions.
New competitors will move into the market by attracted by the opportunities for profit. The market will expand because the competitors will introduce new product characteristics.
A number of distribution outlets are increased due to increase in number of competitors and this will result in jumping the sales just to develop the reseller inventories.
Prices remain stable or all little. Promotion spending remains same or little enhance by the business organizations. Although it is the objective of business organization to educate the market but at the same time it must face competition.
During the growth stage, the profits increased as promotion costs distribute over a huge volume and unit manufacturing costs decline.
The business organization utilizes many strategies to enhance quick market growth as soon as possible. Product quality is improved and new product characteristics and models are added. The business organization move into new distribution channels and new market segment
To some extent advertisement is transferred from developing product knowingness to develop product conviction and purchase, and it attracts more purchasers by lowering the prices at the right time.
Read More: What is Product
There is trade-off that is faced by the business organization in the growth stage between high current profit and high market share.
A dominant position can be captured by the business organization by spending more money on promotion, product improvement and distribution. However, in performing so it loses maximum current profit, which it can obtain in the next stage.
Maturity Stage
The sales growth of the product will decelerate at some point in which the product moves into maturity stage. Maturity stage is longest stage as compared to other stages and introduces potential challenges to marketing management.
At this stage marketing management handle mature products, because most of the products are in maturity stage of life cycle.
Competitors start cutting down their prices, enhancing their sales promotions & advertising and increasing their R&D budgets in order to get effective versions of the product.
Profit is drop in this stage. Weak competitors quit from the industry and finally only well-established competitors remain in the industry.
In maturity stage several products keep unchanged for long time, and customer changing needs are met by successful organizations which are evolving for this purpose.
Product managers should not simply defend their mature products or drive together but in fact they must adopt the strategy of better offense is better defense.
Modification in the product, market and marketing mix should be considered by the product managers. The business organization struggles to enhance the use of the current product, in modifying the market.
Different ways are considered by managers to increase the usage of product in current customers. Or the repositioning of the brand is done by the business organization in order to attract faster and larger growing segment.
The product can also be modified by the business organization by making alterations in its features like quality, style or characteristics to attract new consumers and to increase more use
The performance and quality of the product might be improved in the aspects of reliability, durability, taste or speed. Or new characteristics might be added by the business organization that widens the product’s safety, usefulness or convenience.
Finally the attractiveness and styling of the product can be improved by the business organization. The business organization selling cars to customers restyle their cars in order to make them more attractive and new looking to the desired customers.
New flavors, ingredients, colors or packages are introduced by the producers of consumer foods and household products in order to regenerate the consumer purchasing.
Finally, the business organization can change the marketing mix by enhancing sales by altering one or more marketing mix components.
Read More: Classification of Products
New users and customers of competitors are attracted towards the products of particular business organization by cutting down its prices. Aggressive sales promotions or effective advertising campaign can be launched by the business organization like cents-off, trade deals and contests.
Using mass merchandisers, the business organization can also enter into bigger market segments, if these channels are growing. Finally improved or new services to the purchasers can be offered by the business organization.
Decline Stage
The sales of most brands and product forms ultimately drop. However, there is slow decline in sales in the decline stage. There are several reasons for falling down sales like shifts in tastes of consumers, technological advances and increased competition.
As profits and sales fall down, some business organizations quit from the market. The remaining business organizations cut their product offerings.
They may let off marginal trade channels, smaller market segments or they may decreased the prices further and cut the promotion budget.
Business organization taking weak product can be very expensive, not only in terms of profit. There are several embedded costs. Too much time of management is taken by a weak product.
Frequent inventory and price adjustments are required mostly by it. Attention of sales force and advertising is needed by it while producing healthy products more profitable.
The customers concerns about the business organization and its products are affected due to failed reputation of the product. In the future the highest cost lies.
The search for replacement is holdup by maintaining weak products along with the unbalanced product mix, weakens the foothold of business organization on future and decreased current profits.
The business organizations require paying more caring to their senescent products due to these reasons. The business organization’s first activity is to specify those products in the decline stage by evenly reconsidering costs, market shares, sales and profit trends.
Then decision should be made by the management that either the declining products will be drop, harvest or maintain.
Read More: Individual Product Decisions and Its Stages
The decision may be made by the management that either the product should be harvest or not, harvesting means that decreasing the different costs and hoping that sales delays.
The profits of business organization will increase in the short run when the harvesting becomes successful. Or decision may be made by the management let off the product from the line.
It can be just liquidate it at a safe value or it can be sold to another business organization. The product is not desired to scan through harvesting if the business organization discovers the purchaser.
There are two ways of extending the product life cycle. First way is to change the target market by adding and finding new consumers etc.
The second way is to change the product by adding new product characteristics, model varieties and variations that will alter the reactions of consumers by producing more demand to appeal more consumers. In order to stop the product from passing the decline stage, it should be modified.
