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PRODUCT LIFE CYCLE

Page 1

INTRODUCTION

The product life cycle describes the sale pattern of a product over time. After

launching the product the management wants the product to enjoy a long and happy life.

Although it does not expect the product to sell forever, the company wants a decent profit

to cover all the effort and risk that went into launching it. Management is aware that each

product will have a life cycle, although the exact shape and length is not known in

advance.Generally the time span begins with products introduction in the market and ends

with its obsolescence and replacement. While the form of the life cycle is fairly standard

and is subject to variations.

The product life cycle is based upon the biological life cycle. For example, a seed

is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down

roots as it becomes an adult (maturity); after a long period as an adult the plant begins to

shrink and die out (decline).some products may have a short life cycle, whereas others

may enjoy a longer life. Product life cycle refers to the progression or products sales and

profits over its lifetime.



PRODUCT LIFE CYCLE

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History

Inspiration for the burgeoning business process now known as PLM came when American

Motors Corporation (AMC) was looking for a way to speed up its product development

process to compete better against its larger competitors in 1985, according to François

Castaing, Vice President for Product Engineering and Development.[9]

After introducing

its compact Jeep Cherokee (XJ), the vehicle that launched the modern sport utility

vehicle (SUV) market, AMC began development of a new model, that later came out as

the Jeep Grand Cherokee. The first part in its quest for faster product development

was computer-aided design(CAD) software system that make engineers more productive.

The second part in this effort was the new communication system that allowed conflicts to

be resolved faster, as well as reducing costly engineering changes because all drawings

and documents were in a central database. The product data management was so effective,

that after AMC was purchased by Chrysler, the system was expanded throughout the

enterprise connecting everyone involved in designing and building products. While

an early adopter of PLM technology, Chrysler was able to become the auto

industry's lowest-cost producer, recording development costs that were half of the industry

average by the mid-1990s



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It¶s said that a product has a life cycle is to assert f our things:

1. Products have limited life.

2. Product sales pass through distinct stages, each posing different challenge

opportunities, and problems to seller.

3. Profits rise and fall at different stages of product life cycle.

4. Product requires different marketing, financial, manufacturing, purchasing, and

human resource strategies in each life cycle stage.

The concept underlying the premises of product life cycle is that all products

pass through the stages outlined below:

1. Introduction stage.

2. Growth stage.

3. Maturity stage.

4. Decline stage.



PRODUCT LIFE CYCLE

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GRAPHICAL REPRESENTATION OF STAGES OF PRODUCT LIFE

CYCLE.



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BASIC STAGES IN PRODUCT LIFE CYCLE

The first and foremost stage of products life cycle is the INTRODUCTION stage. The

INTRODUCTION stage starts when the new product is first launched. Introduction takes

time and the sales growth tends to be slow at this stage. Because it takes time to roll out a

new product and fill dealer pipelines .if the product introduction proved to be successful,

rapid GROWTH stages are reached and sales increase markedly. According to the

concept of life cycle, the market for any product is limited, and sales will generally fall

short of their potential. When this point is reached, the market enters the maturation stage.

The life cycle goes on further to assume that each product eventually is replaced by

another or that initial rapid growth will end in decline.

If a product enters a market that has already moved into MATURE stage.

Competition is intense because the product must compete for share of an existing market

Thai is not experiencing growth. Once the market enters the DECLINE stage, new

products are not entering the market and demand levels are falling. At this, the objective is

to increase market share to maintain stable sales levels.



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INTRODUCTION STAGE

Introductory stage is (also called as mark et pioneering stage)is the first stage in the

life cycle of the product.

During the introduction stage, the product is just introduced to the market . In this stage,

the firm seeks to build product awareness and develop a market for the product. Sales

revenue begins to grow along with demand but rate of growth is rather slow. There may

not be ready market for product. Sales are low, the product undergoes teething troubles;

profit seems remote possibility; demands have to be created & developed; & the

customers have to be prompted to try out the product. The profit during this stage may be

less due to low sales that also supplemented by heavy production & distribution cost. The

expenditure on advertising will also be heavy. Consumer will purchase on trail basis. The

impact on the marketing mix is as follows:

y Product branding and quality level is established and intellectual property

protection such as patents and trademarks are obtained.

y Pricing may be low penetration pricing to build market share rapidly, or high skim

pricing to recover development costs.

y

Distribution is selective until consumers show acceptance of the product.

y Promotion is aimed at innovators and early adopters. Marketing communications

seeks to build product awareness and to educate potential consumers about the

product.



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Sales revenue begins to grow along with demand but the rate of growth is rather slow.

There may not be ready market for the product .Sales are low, the product undergoes

teething troubles; profit seems a remote possibility; demands have to be created &

developed; &the customer have to be promoted to try out the product. The profit during

this stage may be less due to low sales that also supplemented by heavy production &

distribution costs. The expenditure on advertising will also be heavy .Consumer will

purchase the product on trail basis.

The stage poses several problems for the marketer. The complexity of the problems & the

duration of the stage depend upon the nature of the product, its price, its technological

newness & the consumer¶s view of the product. In this stage , the demand has to be

created & developed so the firm has to invest heavily in the promotion & wait for the

reward.

Introduction stage is characterized by:

*Low sales.

*High promotional expenditure.

*Low or no competition if the product is innovative.

*Loss or negligible profits.

*Survival problems, if there is strong competition.

*Higher dealer¶s incentives.



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GROWTH STAGE:

Growth stage is the second stage in the life cycle of the product.

During the growth stage, the product is accepted by the consumer and traders. The market

demand for the product increase and the size of the market grows and the sales increase

with speed. The profit from the sales also increases. The firm gives special attention to

raise the volume of sales.

Then when during this stages, the introductory is setting down with is product,

competitors enter into scene with similar or slightly improved version of the product. The

introductory may have to alter his product at this stage. He has to stay ahead of his

competitors and persuade the customer to prefer his brand.

For this, sales promotion measures at consumer level and dealer level should be given

consideration. Advertisement should also be made extensively so as to have new customer

for the product .The dealers should be encouraged to repeat orders. Competition-oriented

pricing is useful during this stage. Similarly, marketing and distribution efficiency

becomes decisive factors at this stage.

In this way, during the growth stage, the volume of sale increases with speed. The new

customers join the existing users of the product. As a result, the sales and profits of the

company keep on increasing.



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The impact on the mark eting mix in growth stage is as f ollows:

Product: New product features and packaging options are introduced and the product

is diversified. There is improvement of product quality.

Price: The price usually remains high due to entry of competitors.

Distribution: Distribution becomes more intensive. Trade discounts are minimal if

resellers show a strong interest in the product.

Promotion: Increased advertising to build brand preference.

Growth stage is characterized by:

* Rapid growth in sales.

* Rise in profits.

* Repeat purchases and brand loyalty.

* Increasing competition.

* Introduction of more product models.

* Intensive promotional effort.



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MATURITY STAGE

Maturity stage is the f ourth stage in life cycle of the product

In maturity stage, sales turnover reaches to the highest level. Demand tends to reach a

saturation point. This maturity stage normally lasts longer than the previous stages and it

poses strong challenges to the marketing management. Most products are in the maturity

stage of the life cycle, and therefore most of the marketing management deals with the

mature products. Price competition becomes intense. The marketing expenditure goes on

increasing and this brings the margin of profit down. Additional expenditure is also

incurred for product modification, improvement, differentiation and development. Even

broadening of the product line will be necessary in order to face pressure of competition.

Along with this, special sales promotion measures are necessary in order to stimulate

demand and face market competition. Thus special attention needs to be given for raising

marketing effectiveness.In short, relatively low price, increased marketing costs, keener

competition and lesser profits are faced in this stage. This situation continues for some

period and this leads to saturation position.

It¶s a stage when sales turnover reaches to a specific level, which is a saturation point.

Orders are only of replacement orders. Consumption achieves a constant rate. It is not

possible to raise the volume of sales to higher level. Efforts are required to be made to

maintain the position in the market by facing the competitiors effectively.



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Maturity stage is characterized by:

*Stagnation of sales.

*Decline in profits.

*Intense competition.

*Retentive or reminder advertising.

Although many products in the mature stage appear to remain unchanged for long periods,

most successful ones are actually evolving to meet consumer needs. Product managers

should do more than simply ride along with or defend their mature product a good offense

is the best defense. They should consider modifying the market, product, and marketing

mix.The company can try modifying the marketing mix improving sales by changing one

or more elements.

y It can cut prices to attract new users and competitor¶s customers.

y It can launch a better advertising campaign or use aggressive sales promotions

trade deals, cents-off, premiums, and contests.

y The company can also move into larger market channels, using mass

merchandisers.

y Finally, the company can offer new or improved services to buyers.



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The company might also try modifying the product changing characteristics such as

quality, features, or style to attract new users and to inspire more usage.

y It might improve the product¶s quality and performance its durability, reliability,

speed, or taste.

y It might add new features that expand the product¶s usefulness, safety, or

convenience.

y Finally the company can improve the product¶s styling and attractiveness.

The company might try to expand the market for its mature brand by working with the two

factors that make up sales volume:

Volume= number of brand users * usage rate per user

It can try to expand the number of brand users:

y By converting non users

y By entering into new segments.

y By winning competitors customers.



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The impact on the mark eting mix in maturity stage is as f ollows:

Product:

Products are modified again, this time in reaction to competitor products. The

packaging may also change to exploit new segments sometimes (e.g. shampoo sachets

introduced to make shampoo accessible to lower income groups).

Price:

Since sales volumes are high, prices come down and discounts are more frequent.

Pricing wars break out among competitors as they vie for the ever shrinking new-

customer base in a saturating market. Sometimes a product may not reduce prices but

increase them to distinguish themselves as a superior product.

Distribution:

New distribution channels are explored and incentives are provided to resellers in

order to avoid losing shelf space to competitors.

Promotion:

Emphasis on differentiation and building of brand loyalty. The promotion budget may

be a little lesser than previous stages.



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DECLINE STAGE

Decline stage is the f ourth and last stage of product life cycle.

The sales of most product forms and brands eventually decline. Sales decline for many

reasons, including technological advance, shifts in consumer tastes, and increased in

competition, entry of new products or due to reduction of the support of customer. Sales

drops severely in due course and the product fail to get support from the market.

Carrying a weak product can be very costly to a firm, and not just in profit terms. There

are many hidden costs. A weak product may take up too much of management¶s time. It

often requires frequent price and inventory adjustments. It requires advertising and sales

force attention that might be better used to make ³healthy´ products more profitable. A

product¶s failing reputation can cause customer concerns about the company and its other

products. The biggest cost may well lie in the future. Keeping weak products delays the

search for replacements, creates a lopsided product mix, hurts current profits, and weakens

the company¶s foothold on the future.

For these reasons, company need to pay more attention to their highest aging products.

The firm¶s first task is to identify those products in the decline stage by regularly

reviewing the sales, market shares, costs, and profit trends. Then management must decide

whether to maintain, harvest or drop each of these declining products.Management may

decide to maintain the brand without change in the hope the competitors will leave the

industry.



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Management may decide to reposition or reformulate the brand in hopes of moving it back

into the growth stage of the product life cycle. For that the firm has to reduce the price to

maintain the support of the customers. Expenditure on advertising and sales promotion

will have to be bought down as such expenditure is not adequately rewarded.

In a study of company strategies in declining industries, Kathryn Harrigan identified five

decline strategies available to the firm:

y Increasing the firm¶s investment (to dominate the market or strengthen its

competitive position).

y Maintaining the firm¶s investment level until the uncertainties about the industries

are revolved.

y Decreasing the firm¶s investment level selectively, by dropping unprofitable

customer groups, while simultaneously strengthening the firm¶s investment to

recover cash quickly.

y Harvesting (³milking´) the firm¶s investment to recover cash quickly.

y Divesting the business quickly by disposing of its assets as advantageously as

possible.



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In short, the mark eting mix may be modified as f ollows:

y Product ±

The number of products in the product line may be reduced. Rejuvenate surviving

products to make them look new again.

y Price ±

Prices may be lowered to liquidate inventory of discontinued products.

y Prices-

Prices may be maintained for continued products serving a niche market.

y Distribution ±

Distribution becomes more selective. Channels that no longer are profitable are

phased out.

y Promotion ±

Expenditures are lower and aimed at reinforcing the brand image for continued

products.



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Decline stage is characterized by:

y Entry of substitute.

y Decline in sales.

y Decline in profits at a rapid pace.

y Minimum promotional effort.

y Withdrawal or modification in products.

y Repositioning of product.



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INTRODUCTION STAGE

The f ollowing are the various strategies at the introduction stage:-

1. Product strategies:

Normally, the firm will concentrate on the single product which is introduced. The

firm may not go for product line extension. Again, the firm may not come up with

various models to cater the different market segments.

The firm may spend additional funds on research and development to further

improve the product, if need to be more so in the case of consumer durable such as

automobiles, in order to correct the defects, if any, noticed after launching the

product.

2. Price and promotion strategies:

In relation to price and promotion, a firm may follow one of the following four

strategies.

a) Rapid sk imming:

The product can be launched at high price and with high promotional expenditure.



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This strategies is suitable:

y When the market is large in size.

y When a large part of the market is unaware of the product and therefore, high

promotion, is required.

y When the buyers are willing to pay a higher price.

y Where there is a need to build brand image or preferences as competition are likely

in near future.

This strategy brings certain benefits:

y The firm may generate profit at the introduction stage, which will enable the firm

to cover up either partly or wholly the development expenses.

y This strategy will enable the firm to build a good brand image which will enable to

face competition effectively as and when the competitors enter the market.

b) Slow sk imming:

The product can be launched at high price and with low promotional expenditure.

This strategy is suitable:

y When the market size is limited

y When the potential buyers are aware of the products features, uses, etc. and

therefore, low promotion.

y Where buyers are willing to pay a high price.



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y The firm may generate profits at the introductory stage.

y It requires less promotional expenditure and as such low marketing overheads.

c) Rapid penetration:

The firm can launch the product at low price and with high promotional

expenditure.


y When the market is large in size

y When a large part of the market is unaware of the product, and therefore high

promotion.

y Where the buyers are price sensitive.

y Where there is possibility of strong competition in near future, so high promotional

expenditure to build brand image or preference

y Where the company is in a position to achieve economic of large scale production

and distribution.



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y The firm can capture a large market share.

y It may build good brand image, which will enable to face competition effectively

as and when the competitors enter the market.

d) Slow penetration:

The product can be launched at a low price and with low promotional

expenditure.


y When the market is large in size, so low pricing.

y When the large part of the market is aware of the product¶s feature, uses, etc and so

low promotion.

y Where the buyers are sensitive.

y When there is possibility of limited competition in future may be due to high

development expenditure for new entrants.

y Where the company is in a position to achieve economies of large scale production

and distribution.


y It will enable the firm to capture a large share of the market

y It requires less promotional expenditure and as such low marketing overheads.



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3. Distribution strategies:

a) Concentrated distribution strategy:

The firm may follow concentrated distribution strategy, i.e distribution of the

product through specific dealers in a particular market area. Distribution efforts are

directed to satisfy market segments.

b) Mass distribution strategy:

The firm may also follow mass distribution strategy i.e distribution of the product

through all the possible dealers over a large market area, even at the national level.

However it makes sense to go for concentrated, distribution strategy at the

introduction stage.



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GROWTH STAGE

The growth stage is characterized by the entry of competitors, sales grow, profits increase,

and price and promotion may remain the same or may change depending upon demand,

competition and other market forces.

During this stage, the firm may follow several strategies to sustain rapid growth as long as

possible.

1. Product strategies:

a) Product improvement:

The firm may undertake product improvement so as to face the competition

effectively. Product improvement can be in terms of its features, packing, design,

shape, quality, etc.

b) Introduction of new models:

The firm may introduce different models of the product, targeting to different

market segments. Each model may have different brand name or there may be

brand extension with certain addition to the brand name, such as model number.



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2. Price and promotion strategy:

a) Penetration pricing:

The firm may reduce the price due to economic of large scale production and

distribution. The low pricing strategy is followed so as to face the competition

effectively. New entrants may find it difficult to compete with low prices.

b) Push and pull promotion strategies:

The firm may adopt push and pull promotion strategy. A push promotion strategy

requires trade promotion activities (incentives) so as to induce dealers to stock and

push the product in the market.

A pull promotion strategy requires promotional efforts directed at customers, such

as various sales promotion schemes and advertising so that the consumers demand

the product from the dealers.



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a) New mark et segments:

The firm may look for new segments to increase the sales. For instance, if the is

directed mainly as young generation, the firm may also direct it to order

generation, as in the case of pepsi and cadbury¶s dairy milk.

b) Increase in distribution converge:

The firm may increase distribution coverage from local to regional and from

regional to national level. The increase in distribution coverage will enable the

firm to have rapid growth in its sales.

c) New distribution channels:

The firm may also introduce new distribution channels to increase its sales. The

firm may go for setting up chain stores or enter into franchise agreements to

increase the sales.



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MATURITY STAGE:

A majority of the products are in the maturity stage. At this stage, the sales remain more or

less the same. This stage normally lasts longer as compared to the previous two stages,

and marketers have to come up with various strategies to stay in the market. The following

are the marketing strategies at maturity stage.

1. Product modification:

The marketers may place lot of emphases on product improvement in respect of

quality, features, design, etc. The product modifications are intended to increase

product¶s performance such as greater speed, longer durability, etc and to generate

enhanced customer satisfaction.

Therefore, the company has to place a lot of focus on Research & Development for

the purpose of product improvement.

2. Price and promotion strategies:

The firm may follow the same (price and promotion) strategies as followed

during the growth stage, i.e.

a) Penetration pricing:

The firm may reduce the price due to economies of large-scale production and

distribution. The low pricing strategy is followed as to face the competition

effectively. New entrants may find it difficult to compete with low prices.



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b) Push and pull promotion strategies:

The firm may adopt push and pull promotion strategy. A push promotion

strategy requires trade promotion activities (incentives) so as to induce dealers

to stock and push the product in the market.

A pull promotion strategy requires promotional efforts directed at customers,

such as various sales promotion schemes, and advertising so that the customers

demand the product from the dealers.

The firm has to come up with innovative promotion schemes such as:

Exchange offers, exchanging old products with a new one as in the case of

TVs, washing machines etc.

Sales on installment facility at low or no interest charges.

Extending warranty for longer period.

Providing quick and efficient after-sale-services.

Maintaining and enhancing customer and dealer relationship through gift,

contest, etc.



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a) Focus on profitable segments:

The marketers may concentrate on profitable market segment, and may exit from

unprofitable segments. This enables the firm to reduce its overheads and increase

the profits.

b) Focus on improvement channels of distributions:

The firm may have to concentrate on important channels of distributions and

discard expensive or unprofitable channels of distribution.This would enable the

firm to maintain and enhance good relation with important channels of

distribution. This would enable the firm to maintain and enhance good relation

with important channels of distribution.

c) Exit f rom un-profitable mark et areas:

The firm may also exit from unprofitable market areas and concentrate on those

market areas, which generate good sales and profits.



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DECLINE STAGE

The decline stage is characterized by decline in sales at low level, and also profits decline

considerably. The firm may follow the following strategies at the decline stage:

1. Product strategies :

a) Withdrawal of weak er brands:

The firm may withdraw weaker brands and concentrates on selectively brands,

which generate sales and profits.

b) Introduction of new product:

The firm may also introduce a new product, which has a good potential in the

market, and market it profitably.

c) Wait and watch strategy:

At times the firm may adopt a wait and watch policy. The firm may not withdraw

the weaker brand, but wait for other firms who are facing the same problem of

lower sales to withdraw the then getting the bigger share of the market.



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2. Price and promotion strategies :

The firm has to maintain the same price, as lowering the price may not be feasible.

The promotional expenditure may reduced depending upon the availability of

funds and market situation.


The firm may follow the distribution strategies:

Continued focus on profitable segments.

Emphasis on selective segments.

Distributions through selective channels.



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The four main stages of a product's life cycle and the accompanying characteristics are:

Stage Characteristics

1.Mark et

introduction stage

1. costs are high

2. slow sales volumes to start

3. little or no competition

4. demand has to be created

5. customers have to be prompted to try the product

6. makes no money at this stage

2. Growth stage

1. costs reduced due to economies of scale

2. sales volume increases significantly

3. profitability begins to rise

4. public awareness increases

5. competition begins to increase with a few new players in

establishing market

6. increased competition leads to price decreases

3. Maturity stage

1. costs are lowered as a result of production volumes

increasing and experience curve effects

2. sales volume peaks and market saturation is reached

3. increase in competitors entering the market



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4. prices tend to drop due to the proliferation of competing

products

5.

brand differentiation and feature diversification is

emphasized to maintain or increase market share

6. Industrial profits go down

4. Saturation and

decline stage

1. costs become counter-optimal

2. sales volume decline or stabilize

3. prices, profitability diminish

4. profit becomes more a challenge of production/distribution

efficiency than increased sales



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Product lifecycle management

This article is about the term that refers to managing product design and production

details. For the marketing term, see Product life cycle management (marketing).

A generic lifecycle of products

In industry, product lifecycle management (PLM) is the process of managing the entire

lifecycle of a product from its conception, through design and manufacture, to service and



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disposal. PLM integrates people, data, processes and business systems and provides a

product information backbone for companies and their extended enterprise.

'Product lifecycle management' (PLM) should be distinguished from 'Product life cycle

management (marketing)' (PLCM). PLM describes the engineering aspect of a product,

from managing descriptions and properties of a product through its development and

useful life; whereas, PLCM refers to the commercial management of life of a product in

the business market with respect to costs and sales measures.

Product lifecycle management is one of the four cornerstones of a

corporation's information technology structure. All companies need to manage

communications and information with their customers (CRM-Customer Relationship

Management), their suppliers (SCM-Supply Chain Management), their resources within

the enterprise (ERP-Enterprise Resource Planning) and their planning (SDLC-Systems

Development Life Cycle). In addition, manufacturing engineering companies must also

develop, describe, manage and communicate information about their products.

A form of PLM called people-centric PLM. While traditional PLM tools have been

deployed only on release or during the release phase, people-centric PLM targets the

design phase.

Recent (as of 2009) ICT development (EU funded PROMISE project 2004-2008) has

allowed PLM to extend beyond traditional PLM and integrate sensor data and real time

'lifecycle event data' into PLM, as well as allowing this information to be made available

to different players in the total lifecycle of an individual product (closing the information

loop). This has resulted in the extension of PLM into Closed Loop Lifecycle

Management (CL2M).



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Benefits

Documented benefits of product lifecycle management include:

Reduced time to market

Improved product quality

Reduced prototyping costs

More accurate and timely Request For Quote generation

Ability to quickly identify potential sales opportunities and revenue contributions

Savings through the re-use of original data

A framework for product optimization

Reduced waste

Savings through the complete integration of engineering workflows

Documentation that can assist in proving Compliance for RoHS or Title 21 CFR Part

11

Ability to provide Contract Manufacturers with access to a centralized product record

Within PLM there are five primary areas;

1. Systems Engineering (SE)

2. Product and Portfolio Management (PPM)

3. Product Design (CAx)

4. Manufacturing Process Management (MPM)

5. Product Data Management (PDM)



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Phases of product lifecycle and corresponding technologies

Many software solutions have developed to organize and integrate the different phases of

a product¶s lifecycle. PLM should not be seen as a single software product but a collection

of software tools and working methods integrated together to address either single stages

of the lifecycle or connect different tasks or manage the whole process. Some software

providers cover the whole PLM range while others a single niche application. Some

applications can span many fields of PLM with different modules within the same data

model. An overview of the fields within PLM is covered here. It should be noted however

that the simple classifications do not always fit exactly, many areas overlap and many

software products cover more than one area or do not fit easily into one category. It should

also not be forgotten that one of the main goals of PLM is to collect knowledge that can be

reused for other projects and to coordinate simultaneous concurrent development of many

products. It is about business processes, people and methods as much as software

application solutions. Although PLM is mainly associated with engineering tasks it also

involves marketing activities such as Product Portfolio Management (PPM), particularly

with regards to New product introduction (NPI).



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Phase 1: Conceive

Imagine, specify, plan, innovate

The first stage in idea is the definition of its requirements based on customer, company,

market and regulatory bodies¶ viewpoints. From this specification of the products major

technical parameters can be defined. Parallel to the requirements specification the initial

concept design work is carried out defining the visual aesthetics of the product together

with its main functional aspects. For the Industrial Design, Styling, work many different

media are used from pencil and paper, clay models to 3D CAID Computer-aided industrial

design software.

Phase 2: Design

Describe, define, develop, test, analyze and validate

This is where the detailed design and development of the product¶s form starts,

progressing to prototype testing, through pilot release to full product launch. It can also

involve redesign and ramp for improvement to existing products as well as planned

obsolescence. The main tool used for design and development is CAD Computer-aided

design. This can be simple 2D Drawing / Drafting or 3D Parametric Feature Based

Solid/Surface Modeling. Such software includes technology such as Hybrid

Modeling, Reverse Engineering, KBE (Knowledge-Based Engineering), NDT

(Nondestructive testing), Assembly construction.

This step covers many engineering disciplines including: Mechanical, Electrical,

Electronic, Software (embedded), and domain-specific, such as Architectural, Aerospace,





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Phase 4: Service

Use, operate, maintain, support, sustain, phase-out, retire, recycle and disposal

The final phase of the lifecycle involves managing of in service information. Providing

customers and service engineers with support information for repair and maintenance, as

well as waste management/recycling information. This involves using such tools as

Maintenance, Repair and Operations Management (MRO) software.

All phases: product lifecycle

Communicate, manage and collaborate

None of the above phases can be seen in isolation. In reality a project does not run

sequentially or in isolation of other product development projects. Information is flowing

between different people and systems. A major part of PLM is the co-ordination of and

management of product definition data. This includes managing engineering changes and

release status of components; configuration product variations; document management;

planning project resources and timescale and risk assessment.

For these tasks graphical, text and metadata such as product bills of materials (BOMs)

needs to be managed. At the engineering departments level this is the domain of PDM ±

(Product Data Management) software, at the corporate level EDM (Enterprise Data

Management) software, these two definitions tend to blur however but it is typical to see

two or more data management systems within an organization. These systems are also

linked to other corporate systems such as SCM, CRM, and ERP. Associated with this

system are Project Systems for Project/Program Planning.



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This central role is covered by numerous Collaborative Product Development tools which

run throughout the whole lifecycle and across organizations. This requires many

technology tools in the areas of Conferencing, Data Sharing and Data Translation. The

field being Product visualization which includes technologies such as DMU (Digital

Mock-Up), Immersive Virtual Digital Prototyping (virtual reality) and Photo realistic

Imaging.



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PRODUCT LIFE CYCLE AS AN EFFECTIVE TOOL IN MANAGING

CUSTOMERS.

Customer¶s experience with the company changes as the product passes through its

product life cycle; as such PLC can be effective tool managing customers. When a product

is moving through the various phases of its life cycle, the customers of the product is also

moving in a certain path in relation to his experience of the product. Though this change is

represented by shifts in the nature of the demand in the PLC stages it is essential for the

marketing man to know what actually happens to the consumers has some implication for

the´ company-consumer relationship´ and consequently, knowledge of this change would

help effective management of customers.

Buyers of various products, especially hi-tech products, evolve from stage of

inexperienced generalist to experienced specialist. As the experience level of customer¶s

changes, the benefits they seek from the company also keep changing. Companies who

can sense and anticipate this customer experience factor can be ready with suitable

strategies to keep the customers with them.

The seller of the product has to understand when and how a transition is taking place in

the experience level of the customer, as his product moves along its life cycle. The

changing expectations and the demands of the customers can be handled through different

strategy routes- strengthening the company- customer relationship, augmenting the

product, improving service support or modifying the pricing approaches.



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PRODUCT LIFE CYCLE OF MAGGI NOODLES:



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INTRODUCTION:

Maggi noodles are a brand of instant noodles manufactured by Nestlé. The brand is

popular in India, South Africa, Brazil, Nepal, New Zealand, Australia, Malaysia,

Singapore, Sri Lanka , Bangladesh, Pakistan and the Philippines; in several countries it is

also known as "maggi mee" (mee is Indonesian/Malaysian for noodles). Maggi noodles

are part of the Maggi family, a Nestlé brand of instant soups, stocks and noodles. In

Malaysia, there are fried noodles made from maggi noodles known as Maggi goreng.

Maggi noodles recently introduced a new variety of its noodles, to cater for the health

conscious like 'No MSG', 'Less Salt' and 'No Tran¶s fat'. Wholewheat flour based noodle

variation marketed by the name "Vegetable Atta Noodles" has been introduced in India

(Atta flour is used in preparing most forms of wheat based breads in India) and caters to

health conscious buyers wary of the refined flour used in the regular Maggi noodles. This

move helps the brand in India as suburban mothers, who feed the noodles to children as an

afterschool snack, are the primary customers of the brand. Recently a line of Rice noodles

and Whole wheat with pulses, carrots, beans and onions has also been introduced in India.

In fact, "Maggi" has become a genericized name for instant noodles in India and Malaysia.



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In mid 2008, New Zealand supermarkets introduced replacement formulations for its Beef,

Oriental and Curry flavours. A new feature is an extra sachet containing dehydrated

vegetables. Maggi claims the new range contains 88% less total fat and 86% less saturated

fat than the average of top-three (unnamed) 2-minute-noodle competitors. The new Maggi

range also has considerably lower fat than its own previous formulation. However, the salt

content has been increased by 31 percent. Consumers have not reacted well to the new

formulations, complaining that they want the original chicken flavour back.



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Preparation

Maggi noodles take around 2 minutes to cook, hence the name "2 minute noodles". The

Maggi noodle cake and seasoning is added into boiling water for two minutes and it is

ready for consumption. Egg, seaweed or lemon can also be added to the noodles for a

better flavour.



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Flavours and Variety

Maggi Noodles are available in a large assortment of different flavours. They are:

y Original Flavour

y Chicken

y Curry (a healthier alternative is also sold in supermarkets)

y Kari Letup (Extremely Spicy Curry) in Malaysia

y Laksa Lemak (discontinued)

y Tom yam

y Chicken & Corn

y Beef

y Oriental

y Masala

y Prawn

y Dal Sambar (whole wheat noodles)

y Asam Laksa

y Cheese

y Pizza (only in Saudi Arabia, was available for a period of time in Australia)

y Sup Tulang (bone soup) (in Malaysia)

y Chatpata

y Tomato

y Vegetable Atta Noodles (whole wheat noodles) mostly in India



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ISSUES

� Different phase¶s product life cycle of maggi.

� Why Atta noodle was a failure?

� Strategies taken to establish new product category

� What measures NIL should take to sustain the image of a popular brand image.

� Stage at which maggi is in the product life cycle.

Introductory Stage

� High failure rates

� No competition

� Frequent product modification

� Limited distribution

� High marketing and production costs

� Promotion focuses on awareness and information

Nestlé India Ltd. (NIL), the Indian subsidiary of the global FMCG major, Nestlé SA,

introduced the Maggi brand in India in 1982, with its launch of Maggi 2 Minute Noodles,

an instant noodles product.With the launch of Maggi noodles, NIL created an entirely new

food category - instant noodles - in the Indian packaged food market.







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Maturity Stage:

Many consumer products are in Maturity Stage

� Declining sales growth

� Saturated markets

� Extending product line

� Stylistic product changes

� Heavy promotions to dealers and consumers

� Prices and profits fall

� In 2003 Hindustan Lever Ltd was all set to take on Nestle's bestselling Maggi 2-minute

noodles by launching a new category of liquid snacks under its food brand, Knorr

Annapurna.

� The new product, called Knorr Annapurna Soupy Snax, was priced aggressively at Rs 5

and had four variants: two chicken options and two vegetarian.

� Like Maggi, Soupy Snax will be an in-between-meals snack and will be targeted at all

age groups, particularly office-goers.



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Decline Stage if no product innovation brought:

Rate of decline depends on change in tastes or adoption of substitute products

� Long-run drop in sales

� Large inventories of unsold items

� Elimination of all nonessential marketing expenses.

Extending the PLC

� Change product

� Change product use

� Change product image

� Change product positioning.

Analysis (why Atta Noodles Failed?)

� In 2005 Nestlé India launched MAGGI Vegetable Atta Noodles.

� Based on consumer needs and evolving trends for more whole grain based products.

� Extensive Research and Development expertise to develop Maggie Vegetable Atta

Noodles.

� Maggi Vegetable Atta Noodles will provide the dietary fiber of whole wheat to

facilitate good.



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FAILURE CAUSES

1. Indian psyche- The basic problem the brand faced is the Indian Psyche. Indian Palate

is not too adventurous in terms of trying new tastes. So a new product with a new taste

that too from a different culture will have difficulty in appealing to Indian market.

2. Price- The price of atta noodle was little more than maggi 2 minutes noodle

3. False claims- In October 2008, Nestle mistakenly aired an advert that noodle "help to

build strong muscles and bone". The British Advertising Standards Authority said that it

was a false claim.

4. Not purely vegetarian- Maggi Noodles also contains the additives E150d and

E627.E627 is partly prepared from fish,and is thus not suitable for vegetarians.

5. Lack of essential nutrients- The new maggi atta noodles as can be seen from the fig.

lacked essential vitamins A, C,also the fat content was more then carbohydrates

6. Targeted health conscious people.



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Suggestive Promotional Strategies

1. They should conduct test marketing before launching new product.

2. Focus on creating distinctive image, based on twin benefits of ³INSTANT´ and

³HEALTHY´.

3. Conduct promotional campaigns at schools in small towns with population more than

10,000.

4. Strengthen the distribution channel of the rural areas within 100 KM of all the metros.

Current Scenario of Maggi

Leading Brand in India as well as World.

Current Sales: Approx.

± 90000 boxes

± Rs. 4, 79, 49,000 in Mumbai

± 10, 00,000 boxes

± 55 cr. in India Reasonable competitive pricing.



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BIBLIOGRAPHY

Book s referred:



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Mark eting Management

Productivity Quality Mgmt.

Inf ormation has been collected f rom the below websites:

www.en.wik ipedia.org

www.maggi.com.my/en/home.htm

www.managementparadise.com

www.google.co.in

www.indianmba.com



PRODUCT LIFE CYCLE

www.ask .com

Documents

Actual Needed Plc