3 Unit 2

Product Life Cycles• Product life cycles describe the

changes in consumer demand over a time. No product can be in demand forever. Trends, technology and lifestyles change, which affects consumer demand.

4 Unit 2

Product Life Cycles

• The traditional product life cycle consists of five stages.

Sales

Time

introduction

growth

maturity

decline

decisionpoint

5 Unit 2

Product Life Cycles• Introduction Stage• When a product is first

introduced a product launch occurs. It may occur regionally, provincially, or nationally, depending on predicted demand.

6 Unit 2

Product Life Cycles• Introduction Stage• Launching a new product is very

expensive, so initially the price is high. Costs involved include: machinery, set-up, training, promotion, storage, packaging, market research.

7 Unit 2

Product Life Cycles

• Introduction Stage• Who buys at this stage?• Curious people, those

who always want new things first:

- early adopters- trendsetters.

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Product Life Cycles• Introduction Stage• Main purpose of marketing is

to inform the consumer about new products and to establish the value equation as early as possible.

Product Life Cycle• Products currently in introduction

Growth StageSales

Time

growth

11 Unit 2

Product Life Cycles• Growth Stage• After adopters find and use a

product, others will follow. The product is visible, consumers see/hear others use it. Reputation spreads through word of mouth and advertising.

12 Unit 2

Product Life Cycles• Growth Stage• The faster a product reaches the

growth stage, the sooner it starts making a profit.

• The first company to enter a market will pay the most for development and advertising, but it will have a major advantage: No competition.

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Product Life Cycles

• Growth Stage• As competitors enter the market,

companies strive to maintain their market share: the company’s sales as a percentage of the total for the market.

Growth Stage

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Product Life Cycles

• Maturity Stage• The period during which

sales start to level offSales

Time

maturity

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Product Life Cycles

• Maturity Stage• Marketers keep the brand

name in front of consumers. Often the success and longevity of the product is highlighted.

17 Unit 2

Product Life Cycles

• Maturity Stage• Because major costs have been

recuperated and the cost of sales and distribution is low, products usually make large profits during this stage.

18 Unit 2

Product Life Cycles• Maturity Stage• Often times companies will take this

profit to develop new products and product launches.

• EXAMPLE: Disney took profits from its amusement parks to launch a cruise ship line. This also expands their brand name into a new market.

Maturity Stage (LONG TIME)

Maturity Stage (Shorter Time)

21 Unit 2

Product Life Cycles• Decline Stage• Occurs when a company cannot find

new consumers for their product. Profits decrease; marketers try to find the reason for the decline.

Sales

Time

decline

22 Unit 2

Product Life Cycles• Decline Stage• If it is a temporary decline– it may be reversed by a small price – change in the design – new ad campaign– Change in the packaging

23 Unit 2

Decline Stage

24 Unit 2

Product Life Cycles• Decision Point Stage• The final stage of the product

life cycle. Marketers must make important decisions regarding a product’s future.

Sales

Time

decisionpoint

25 Unit 2

Product Life Cycles• Decision Point Stage• A product may be reformulated,

repackaged, and reintroduced.• Most often maintenance of a product

involves new promotion and new pricing.