The product life cycle is a set of
stages a product goes through between the first time it is manufactured and
when it is no longer sold. The product life cycle is a set of stages a product goes through between the first time it is manufactured and when it is no longer sold. Because of differences in type among both goods and services, each has its own kind of product life cycle. However, most products pass through four common phases.
Understanding the characteristics of each part of the life cycle places a manager in a position to make preparations and responses that increase the chances of better product performance.
Stage 1: The
introduction period. The introduction chapter is the period a good or service is brought
to the market as a never-before offered production. The marketing effort,
naturally, leans heavily toward making potential consumers aware of the product
and its merits. There is great expenditure on activities like advertising,
sales promotion and distribution as the marketer entices the audience to try
the product.
In the introductory phase, sales are
low and no profit is to be realistically expected. It is a spending period.
Pricing is likely to lie somewhere between recovery of some product development
and marketing costs and allowing many to buy.
Stage 2: The
growth period. The marketing strategies of the introductory stage begin to pay off with
grown product knowledge and acceptance, and a steep rise in sales. Experience,
economies of scale and the advantage of being the pioneering producer result in
lower costs and good profits. Production has to cope with the increasing demand
not only to avoid disappointing consumers but also to not give signals that there is room for more players. However, sensing
healthy fortunes, competition does start creeping in at this stage, making it
necessary to from-time-to-time revise strategy, including slightly lowering
price.
In the growth segment of the life
cycle, a big portion of the market still exists that is yet to buy the product
for the first time ever, but it keeps shrinking.
Stage 3: The
maturity period. The market is now saturated and each of the many competitors now in the
market tries to grow mainly by grabbing customers from the others. There are basically
no first-time consumers and the market is buying as much as its purchasing
power can. Price wars and product differentiation become more common.
Overall profits markedly fall as
prices now have even thinner margins. Some producers simply seek a stable
market and a decent return.
Stage 4: The
decline period. As radically better or cheaper competing products emerge, less and less
of the existing is bought. If the current product can also be made more competitive,
say, by significantly lowering production costs so that it has a more
attractive price, this stage could be held at bay for some time or made more
gradual. Whatever the case, eventually, further decreases in both profits and
sales make operations uneconomic and the product has to be discontinued.
Conclusion
There is no standard length for any
of the four stages of the product life cycle. How long any of the segments is
depends on such dynamics as the type of product, amount of competition and marketing
strategies employed.
Rupert Chimfwembe 5
January 2017