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Product Life Cycle

Marketing Management Text and Cases

Excel Books21-1

Product Life

Cycle

21Chapter

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Product Life Cycle

A product is introduced among consumers, and if consumers perceive it as

meeting their needs and want, it experiences a period of growth.

Subsequently, it reaches the stage of maturity and when it loses its appeal,

its decline starts and eventually is may be taken off the market (demise). The

classical product life cycle curves are depicted as S shaped and generallydivided in four stages: Introduction, growth, maturity, and decline.

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Product Life Cycle

Common Product

Life Curves

Sales Sales Sales

Time Time Time(a) Growth-Decline Plateau (b) Cycle-Recycle Pattern (c) Innovative Maturity or

Scalloped Pattern

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Product Life Cycle

Introduction Growth Maturity Decline

(d) Classical Life Cycle Pattern

Time

Sales

Profits

Loss

Common Product

Life Curves

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Product Life Cycle

Pioneer and

Follower

Advantages

Pioneer Follower

First choice of market

segments.

Can bring in superior technology.

Influence on consumer attitudes

and choice criteria. Can take advantage of pioneers

product mistakes.

Pioneer defines the rules of thegame.

Ability to take advantage ofpioneers positioning mistakes.

Switching costs higher for early

adopters of pioneers product.

Ability to take advantage of

pioneers marketing mistakes.

Gaining distribution advantage. Can take advantage of pioneers

resources limitations.

Economies of scale and moreexperience.

Possibility of pre-empting scarce

resources and suppliers.

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Product Life Cycle

Introduction StageThe introductory stage is viewed as fairly risky and quite expensive because

large amounts of money is spent on advertising and other tools of marketing

communications to create consumer awareness in sufficiently large numbers,

and encourage trial.

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Product Life Cycle

Growth Stage

The growth stage of life cycle is characterised by a sharp rise in sales. Only a

small percentage of new products introduced survive to reach the growth

stage.

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Product Life Cycle

Maturity Stage

Most products after surviving competitive battles, winning customer

confidence and successful through growth phase enter their maturity stage.

The sales plateau, and this flattening of sales usually lasts for some time

because most products in the category have reached their maturity stage, andthere is stability in terms of demand, technology, and competition.

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Product Life Cycle

Product Life

Cycle Stages,

Characteristic

s and

Standard

Responses

Introduction Growth Maturity Decline

Characteristics

Market Growth Rate

(Rs)

Moderate High Insignificant Negative

Technical Change High Moderate Limited Limited

In Product Design

Market Segments Few Few to many Few to many Few

Competitors Few Many Limited Few

Profitability Negative High High for Market-

share leaders

Low

Companys Standard

Responses

Stimulate primary

demand

Gain market

share

Gain market share Harvest

Product Improve quality Continue quality

improvements

Concentrate on

features

No change

Product Line Narrow Broad Hold line length Reduce linelength

Price Skimming or

Penetration

Reduce Hold or reduce Reduce

Promotion High High Hold or reduce Reduce

Distribution Selective Intensive Intensive Selective

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Product Life Cycle

Decline Stage

Decline stage sets in when customer preferences change due to the availability

of technologically superior products and consumers shift in values, beliefs, and

tastes to products offering more value.

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Product Life Cycle

Implications and Limitations of Product Life

Cycle Concept

Product life cycle concept shows a framework to spot the occurrence of

opportunities and threats in a product market and the industry. This can help

firms to reassess their objectives, strategies, and different elements of

marketing programme.