Meaning of Product Life Cycle
According to Prof. Kotler, “Product life cycle is an attempt to recognize distinct stages in the sales history of the product.”
According to T. D. Kollat, R. D. Blackwell and J. F. Robinson, “Product life cycle is generalized more of sales and profit trends for a product class or category over a period of time.”
According to Harry L. Hansen, “The cycle has generally been described as an ‘S’ shaped curve consisting of four phases introduction, rapid growth, maturity and decline.”
Stages of Product Life Cycle
|Stages of Product Life Cycle|
1. Introduction Stage
- Much expenses should be made on the sale promotional activities of the products at the introductory stage,
- Sales rate growth becomes very low at this stage,
- As the much expense is needed for sales promotional activities, profit becomes nominal or sometimes even loss at this stage,
- Price of the new products at this stage becomes high,
- At this stage, advertising customers are needed, because consumers do not show interest to buy new products.
- The new products need not face competitions at this stage, as considerable competitors do not appear in the market.
- Product: Efforts should be made to convince the customers that the new product is better than the others found in the market and has more utility.
- Price: Two important things should be given more attention while adopting price strategy. If it is to earn satisfactory benefit from a certain market, more prices should be fixed. This is called market skimming strategy. If it is to cover wider market, price should be fixed low. This strategy can also be successful at the introductory stage.
- Promotion: Information about quality, feature and utility of the product should be provided to the customers. For this, wide/ heavy advertisement, personal sale, and other promotional programs should be conducted effectively.
- Place: At first a proper channel should be selected to supply new product. After selecting the channel, proper strategy should be adopted to enter suitable market.
2. Growth Stage
- Because of large production in development stage, production cost becomes low and profit gradually increases.
- Sale growth rate intensely increases at this stage,
- As good opportunities for sufficient profit appear at this stage, new competitors enter the market and competition also increases,
- Per unit price of product becomes low due to low production cost,
- At this stage, business firm or Production Company brings changes in quality and feature of the product and adopts policy to enter new market segments.
- Product: At first quality of products should be changed. Besides this, new features also should be added to the products. Warranty and after-sale services should be compulsorily given to the customers.
- Price: Taking special consideration for sensitive customers in price, price decreasing strategy should be adopted in right time.
- Promotion: The customers should be provided full information about the products or services. Personal sale, advertisement and promotional activities should be increased.
- Place: Production firm or company should give more importance to market expansion strategy. For this an easy environment should be prepared for entering into new market segment.
3. Maturity Stage
- Although profit becomes stable in the beginning of the maturity stage, it gradually goes on decreasing later on,
- Although the sale quantity increases in the beginning of maturity stage, it goes on decreasing later on,
- Comparatively, competition increases at this stage and begins price war. Weak firms or competitors try to retreat from market.
- As price war becomes intense at this stage, there arises compulsion to decrease price repeatedly.
- Product: At first quality of the product should be improved. It is also equally necessary to give peculiarity to the products. Change in product mix also is necessary at this stage. Sometimes it becomes necessary to retreat from market competition and stop production immediately. In fact, improved products should be long lasting, attractive and reliable with new taste. For the same, product improvement strategy is adopted.
- Price: At this matured stage healthy competition takes place. So, price should be fixed on the basis of competition. As far as possible the price should be fixed minimum.
- Promotion: At this stage brand/ trade mark loyalty should be given special attention. Sale promotional equipment should be properly conducted and promoted. After-sale service should be made effective. Dependable warranty to fulfill other conditions and services also should be provided.
- Place: At this stage, a business firm should also use new distribution/ supply channels. This helps, to some extent, to make product sale stable.
4. Decline Stage
- As the competitors, at this stage, begin to search new opportunities, competition slows down.
- At this stage, sale quantity may decrease due to change in the interest of customers and new technology,
- Profit decreases to zero point, if necessary strategy could not be adopted in time, business firms may suffer direct loss,
- Even at this, some certain customers do not change and like to use old brand products,
- Product: The goods produced by any firm may be of different varieties. Among them weak products should be identified. After the weak products have been identified, decision should be taken to abandon them.
- Price: Price of the products which maintains the market demand should be increased.
- Promotion: Investment is not made on advertisement, personal sale and promotional activities without research and development. However, some special market segments can be promoted for the target customers.
- Place: Declined stage of products is very weak stage. So, only the distribution channels having special capacity should be given permission for product distribution.
FEATURES OF THE PRODUCT LIFE CYCLE
|1||Sales||Low levels||Rapid growth||Peak level||Declining|
|5||Customers||Innovators||Mass market||Mass market||Loyal|