Product Life Cycle
Product Life Cycle
Product Life Cycle
It is a generally said that 90% of the products we use today did not exist
in their current form five years ago. Similarly, 90% of the products we will be
using five years from now do not exist currently. Generally we can all identify
products that have changed from their original form and/or content. And, with
today's rapid changes in technology, almost every product will undergo some
sort of modification during its lifetime.
A Product in its life cycle under goes a lot of stages, sales and profit of a
product shows a lot of variation in each stage so it becomes important for a
marketer to know the marketing situation and where his product is placed in
Product Life Cycle (PLC),thus impacting the marketing strategy and the
marketing mix.
Knowledge of the product‘s life cycle can provide valuable insights into
ways the product can be managed to enhance sales and profitability. Marketing
activities are heavily dependent on the stage in the product life cycle.
1. Sales
2. Profits
3. Customers
4. Competitors
5. Cost
Introduction
This is the stage when a product is launched so a marketer knows that his
product is in in introduction stage.
Growth
This is the second stage of the PLC it is marked by high sales. In this stage
marketer realizes that the product is valuable to the customer and targets a
huge uncaptured market. Parameters of this stage are as follow:
In the recent years sales of iPods have been slowing. Over the years iPod sales
have mirrored the S-curve, depicts the product life cycle.
As is apparent from the sales graph, iPod is in the Growth stage of the PLC.
1. Non – users: Apple can‘t depend on new users to increase the sales as in
previous years as with 140 million iPods sold and likely more than 200
million total sold, it‘s increasingly difficult to keep expanding the market
to new users. Yet the market will continue to expand, albeit at a much
slower rate.
2. Competitor‘s customers: The competing devices are cheaper and target
more price sensitive consumers. Apple recently cut iPod Shuffle prices
from $79 to $49 making iPods more competitive among lower-priced
devices. This may slightly increase its market share, but not to an extent
large enough to boost sales growth significantly.
3. Current users:They are the largest source of potential sales. Apple is
providing some additional features to boost the sales. It has extended its
iPod line to include iPod Minis - smaller, cheaper versions of the iPod
with less memory - and the iPod Shuffle, a stripped- down player that
Apple promotes for its ability to play songs randomly. Apple has also
encouraged the development of accessories, including a flashlight that
snaps on to iPods. And despite resisting at first, Apple has introduced
the iPhoto, which lets users download digital photos from their
computers.
Maturity
The marketing mix used by the marketer in the previous stage pushes the
product in the next stage of PLC i.e. Maturity. This stage influences the
parameters in the following way:
1. Sales- In this stage the sales are initially at peak but the rate of growth
of sales starts decreasing. So at a later stage of maturity the sales
become constant. Decline in sales show that maturity stage is coming to
an end
2. Profits- Profits are high initially but on a later stage they start
decreasing. This is due to promotion costs and price cuts by competitors
to attract more business. Thus less efficient firms drop out of the market
due to increasing pressure on prices.
3. Customers- Majority of target customer is using the product.
4. Competitors- Numbers of the competitors become constant. Competition
is tougher due to the presence of aggressive competitors.
5. Costs- Costs reduces per customers as in this stage a marketer should
sale in high volumes and lower margins to maximize the profit thus
reducing the cost.
This stage is most challenging stage for the marketer. It becomes very
necessary to come up with a strategy to overcome this problem and avoid the
entry of its product in decline stage. At this stage marketer tries to sell more to
the existing customer this can be done by following marketing mix:
Products, when they reach the maturity stage begin to look old and tired. A
brand Manager needs to refresh the product‘s image using ‘Repositioning
strategy’. The various repositioning strategies are:
Image Repositioning: The product and target market stay the same
but the product image changes. Eg: Cadbury Snack
Product Repositioning: Changing the product to make it more
attractive to the current market. Eg: Most new models of cars
Intangible Repositioning: Using the same product to target a
different target segment. Eg: Lucozade change from targeting the
sick to targeting the athletes.
Tangible Repositioning: The most radical strategy as both product
and target market are changed. Eg: Volkswagen‘s revitalizing of
the Skoda Brand.
Decline
The decline stage is the last stage of the PLC. This stage can be identified
by the following changes in the parameters:
1. Product- At this stage the best strategy is to phase out the weaker
product and concentrate on strong product. Maintain the
product- possibly rejuvenating it by adding new features & finding
new uses.
2. Price- Price of the product should be reduced to increase the sales.
3. Promotion- It should be just sufficient to retain the remaining
users as one cannot capture new customers at this stage.
4. Place- Concentrate only on those distribution channels which are
still showing sales. All other channels should be phased out.