Product Life Cycle Strategies

After launching the new product, management wants the product to enjoy .along and healthy life. Although it does not expect the product to sell for ever, the

Saies and profits

Saies and profits

Figure 14.2

Sales and profits over the product's fife from inception to demise company wants to earn 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.

Figure 14.2 shows a typical product life cycle (PLC), the course that a products sales and profits take over its lifetime. The .product life cycle has five distinct stages:

1. Produce development begins when the company finds and develops a new-product idea. During product development, sales are zero and the company's investment costs mount.

2. Introduction is a period of slow sales growth as the product is being introduced in the market, Profits are non-existent in this stage because of the heavy expenses of product introduction.

3. Growth is a period of rapid market acceptance and increasing profits.

4. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition.

5. Decline is the period when sales fall off and profits drop.

product life cycle (PLC) The course of a product's sales and profits over its lifetime. It involves five distinct stages: product development, introduction, growth, maturity and decline.

Not all products follow this S-shaped product life cycle. Home products are introduced and die quickly; others stay in the mature stage for a long, long time. Some enter the decline stage and are then cycled back into the growth stage through strong promotion or repositioning.

The PLC concept can describe a product class (petrol-engined ears), a product form (coupe) or a brand (the BMW 325is). The PLC concept applies differently in each case. Product classes have the longest life cycles. The sales of many product classes stay in the mature stage for a King time. Product forms, in contrast, tend to have the standard PLC shape. Product forms such as 'cream deodorants', the 'dial telephone' and 'phonograph records' passed through a regular history of introductions, rapid growth, maturity and decline. A specific brand's life cycle can change quickly because of changing competitive attacks and responses. For example, although teeth-cleaning products (product class) and

Figure 14.3

Marketers need to understand and predict style, fashion and fad fashion

A currently accepted or popular style in a given field.

fads

Pasftiona chat enter quickly, are adopted with great %eal, peak early and decline vary fast.

style

A basic and distinctive mode of expression.

toothpaste (product form) have enjoyed fairly long life cycles, the life cycles of specific brands have tended to be much shorter.

The PLC concept can also be applied to what arc known as styles, fashions and fads. Their special life cycles are shown in Figure 14.3. A style is a basic and distinctive mode of expression. For example, styles appear in British homes (Edwardian, Victorian, Georgian); clothing (formal, casual); and art (realistic, surrealistic, abstract). Once a style is invented, it may last for generations, coining in and out of vogue. A style has a cycle showing several periods of renewed interest.

A fashion is a currently accepted or popular style in a given field. For example, the 'preppie look' in the clothing of the late 1970s and 1980s gave way to the loose and layered' look of the 1990s. Fashions pass through many stages. First, a small number of consumers typically take an interest in something new that sets them apart. Then other consumers take an interest out of a desire to copy the fashion leaders. Next, the fashion becomes popular and is adopted by the mass market. Finally, die fashion fades away as consumers start moving towards other fashions that are beginning to catch their eye. Thus fashions tend to grow slowly, remain popular for a while, then decline slowly.

Fads are fashions that enter quickly, are adopted with great zeal, peak early and decline very fast. They last only a short time ynd tend to attract only a limited following. Fads often have a novel or quirky nature, as when people start buying Rubik's cubes, 'pet rocks' or yoyos. Fads appeal to people who are looking for excitement, a way to set themselves apart or something to talk about to others. Fads do not survive for long because they normally do not satisfy a strong or lasting need or satisfy it well.21

The PLC concept can be applied by marketers as a useful framework lor describing how products and markets work. But using the PLG concept tor forecasting product performance or for developing marketing strategies presents some practical problems.2'1 For example, managers may have trouble identifying which stage of the PLC the product is in, pinpointing when the product moves into the next stage and determining the factors (hat affect the product's movement through [lie stages. In practice, it is difficult to forecast the sales level at each PLC stage, the length of each stage and the shape of the PLC curve.

Using the PLC concept to develop marketing strategy can also be difficult because strategy is both a cause and a result of the product's life cycle. The product's current PLC position suggests the best marketing strategies, and the resulting marketing strategies affect product performance in later life-cycle stages. Yet when used carefully, the PLC concept can help in developing good marketing strategics for different stages in the product life cycle.

We looked at the product development stage of the product life cycle in the first part of the chapter. Now let us look at strategies for each of the other life-cycle stages.

Continue reading here: Maturity Stage

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