Unit #2:

Product Life

Cycles

The Traditional Product

Life Cycle (PLC)

A product life cycle is also called a market

life cycle.

It describes changes in the consumer

demand over time.

The PLC is based on knowledge that no

product can be in demand forever, so it

serves as an alarm system to alert marketers

as to when changes in consumer demand

may occur.

The Traditional Product

Life Cycle (PLC) Five stages:

introduction,

growth,

maturity,

decline, and

decision point.

Will vary for

different

brands,

products, and

companies.

1. Introduction Stage

Product launch: when a new product is introduced

in marketplace.

Launches can be regionally, provincially, nationally,

or internationally.

New product launches are expensive and include

cost of: research, machinery purchase, product

design, employees training, promotional activities,

packaging design, etc.

As a result, the initial price of the product is high.

1. Introduction Stage

Marketers focus efforts on early adopters who are

people who like to be the first to own new products,

called early adopters.

A pull strategy is necessary at this stage because

marketers need to make consumers aware of their

product and establish a favourable value

equation/product positioning in consumers’ minds.

A shelf allowance is money paid by manufacturers

to a retailer in order to get shelf space to stock a

new product.

Controversial: bribery or necessary?

2. Growth Stage

Product is now visible, more people are using it, and

its reputation spreads through word-of-mouth.

Most crucial stage for advertising, so

manufacturers will do so heavily.

This is when a product will catch on or fail.

If the product is removed it is called a bust.

The first company to reach this stage will spend the

most in development costs and advertising, but it

will have the advantage of no competitors for a

time.

2. Growth Stage As more competitors enter the marketplace,

businesses must monitor their market share, which is

the company’s own sales as a percentage of the

total sales for that market.

Competitive products have a shorter introduction

stage because the pioneer work was done by the

first product that broke into the market.

Barriers to entry are factors that might prevent new

competitors from entering the marketplace:

o Small market size

o Cost of research and

development

o Equipment costs

o Government

regulations, etc.

2. Growth Stage Push strategies work well at this stage since having

the product available in a well-known retailer can

lead to sales.

Retailers may introduce a low-end product, which is

the product with the lowest price point in a

category, so as to establish a minimum price for a

specific line.

3. Maturity Stage

Period during which sales of a product increase

more slowly, if at all.

Marketers highlight brand name and market that

the product has been around for a long time.

By this time the manufacturer has paid off

production, development and research costs, and

because of low cost of sales and low cost of

distribution, profits are high.

Companies use this income to generate new

products or fund product launches.

4. Decline Stage

When a company is unable to find new customers

for a given product or service.

Can result in: company removing product

altogether, change in price, new advertising

campaign, product design or repackaging.

5. Decision Point Stage Final stage where brand managers make decisions

regarding the product’s future.

Involves new promotion, new pricing, “new and

improved” updates to product.

E.g.: Arm & Hammer Baking Soda

Saw a decline in sales, which researched

showed was due to a decline in the amount of

baking done in stores.

Repositioned product to focus on its ability to

deodorize freezers, litter boxes, etc.

Non-Traditional Product

Life Cycles

Fads:

A fad is a product, service, or idea that is extremely

popular for a brief period of time and then becomes

unpopular just as quickly, soon vanishing from the

marketplace.

Fads are unpredictable and high-risk.

Marketers can make or lose a great deal of money on

fads and must enter the market at the right time.

When a fad dies too quickly a business may be caught

with a large product inventory no one wants.

Examples: Tamagotchi, Furby, clogs

Non-Traditional Product

Life Cycles Trends:

Unlike a fad, a trend has a lasting effect.

A trend is a mass movement toward a particular

style or value and can result in a number of

products that take on the traditional product life

cycle.

Example: organic food, skinny jeans

Non-Traditional Product

Life Cycles Niche Markets:

Products find a niche, a small section of the

market that they dominate.

They have a very short growth stage that leads to

a solid but not financially spectacular maturity

stage.

Because the market is so small there is little

competition.

Example: Pet hotels

Non-Traditional Product

Life Cycles Seasonal Markets:

Products sold during particular times of the year.

Marketers must anticipate demand and create

opportunities outside of the peak season.

E.g.: Christmas, New Years, Mother’s Day,

Summer

Assignment …

Find a product example of the following and explain

how that product fits into the category

A fad

A trend

Niche market

Seasonal

Explain how the Pumpkin Spice Latte follows the

traditional product life cycle.

Provide three suggestions for reviving a product you

think is currently in decline.