Some marketing experts speak of a fifth state, which is more developmental in nature. This situation is unavoidable, but the company still have many options. Since the promotion costs are lower but the price is high, it enables the firm to make a sizeable profit. The value in understanding the nature of the product life-cycle is in its relationship with marketing strategy. The committee of product review should consist of executives from marketing, production, purchasing, control, personnel, and research and development departments. Of course, there are an infinite amount of parameters that may affect a Product Life Cycle. Any resulting profits are used up in reinvestment to further the product’s growth. The promotion of the product is reduced or discontinued. The market is turbulent during the growth stage as competitors enter and fight for share. Using the product life-cycle concept, you may analyze a product category (home entertainment or electronic items), a product form (audio-visual equipment), a product (television), or a brand (Sony). The company, during the end of the first cycle, gives aggressive promotional drive as in the introductory stage, which further pushes sales and reaching to another peak (lower than the first one) and again starts declining (second cycle). Introduction, growth, maturity, saturation and decline. Before one decides on alternatives, it is imperative to identify the marginal products. The stages that a product goes through is the product life cycle. competition is either nonexistent or slim. This does not mean that there are no profits at this stage. Companies under this strategy may also go for producing higher quality products, promoting them aggressively, and distributing them through selective distribution channels. The product life cycle concept can be used to describe how products and markets operate. It is used for nearly all types of products, while skim is typically reserved for fashion, fad, and novelty items with fairly short life spans. Others may withdraw themselves from unprofitable segments. A particular product fails to pass minimum standards on the above factors; it should undergo further analyses based on some other factors. In some cases, the pattern of growth-maturity-decline may be quite rapid, while in others, the product can sell at a saturation level for a very long period. Its time period vary from product to product. Because of this unprofitability, the new product’s development and production must often be subsidized by the cash and profits generated by older products. Many opportunities exist for companies catering to fashion products, which have the principal advantage of speed with new opportunities coming and going. The growth stage occurs once customer awareness and acceptance of the product has grown, and hence ever increasing numbers of customers begin to buy it, thus revenues grow rapidly. The development stage of the product life cycle is the research phase before a product is introduced to the marketplace. If the company senses that the size of the market is substantially large, buyers are mostly aware of the product and price-sensitive, and competition is existent, it may decide to pursue the slow-penetration strategy. A particular product may either follow the shape of the standard product life cycle takes bell shape, or it may follow some other shapes discussed later this lesson. The promotion under this policy is not aggressive as well. Consequently, weaker competitors at this stage are squeezed out or lose interest in the product. It may either go for rapid skimming or slow skimming strategy. Product classes have the longest life cycles – they stay in the mature stage for a long time. The basic life-cycle analysis is that a new product starts in the introductory stage, moves next to a growth stage, then to maturity, and eventually to decline and possibly death. In the second stage, products should be scaled based on market potential, contribution, relationship to sales of other products, and so on. The product’s current PLC position suggests the most appropriate marketing strategies, and these strategies may influence product performance in later life-cycle stages. The company is developing the product, selecting its target market, and creating a marketing plan and marketing mix. This can lead to companies focusing strongly on differentiating their product from competing offerings, and encouraging customers to switch to their offering. During product development, there are no sales, and the company’s investment costs rise. Looking at the figure, you can see that each demand/technology life cycle follows the trend of emergence, accelerating growth, decelerating growth, maturity, and decline in that order. The growth stage is critical to a product’s survival because competitive reactions to the product’s success during this period will affect its life expectancy. This is called the “trickle-up” theory of fashion adoption. Many consider ‘product development’ as the first step of the product life cycle. This concept is predominantly used by marketing professionals along with the management team because it is seen as the precursor for various … However, a series of processes are to be undertaken by the management even prior to the introduction of a product in the market. Product Life Cycle: 4 PLC Stages and Marketing Strategies of PLC, Types of Products (Consumer Products and Industrial Products), Market Evolution: Definition, Stages of Market Evolution, 5 Stages of Consumer Adoption Process (Buyer Decision Process for New Products), Market Coverage: Definition, Strategies, Examples, New Product Development: Definition, Process, Marketing: Definition, Scope, Importance, Role, Consumer Decision Process (Buyer Decision Process), marketing executive will expand the product line, Offer product extensions, service, warranty, Go selective: phase out unprofitable outlets, Build product awareness among early adopters and innovators, Build awareness and interest in the mass market, Reduce to the level needed to retain the most loyal customers, Use heavy sales promotion to entice trial, Reduce to take advantage of heavy consumer demand. But some products exhibit life cycles other than a bell-shaped one. As a product’s sales decline, so does its image of respectability and quality, and the company cannot afford to be closely associated with it. This is particularly apparent in the apparel industry, where prominent clothing designers develop new styles and promote them heavily. This is the stage when an idea turns into action. There are five stages in Product Life Cycle: A company at this point has to look at the merits for revitalizing the product or allowing it to decline slowly, or killing it off and planning a replacement. Forecasting product life-cycles, and when a product is about to move into a new stage, is no easy matter. The most notable characteristic of the maturity stage is the peaking of the product’s sales and profit curves. The product life cycle is also a useful framework for describing the typical evolution of marketing strategy over the stages of product life cycle. The demand life-cycle curve can describe the changing need level. This stage is characterized by a further dropout of competitors until only a few remain. Indeed, as the market develops so competing products will become increasingly similar as companies better understand customer demands, and being to imitate the most successful products. In the introduction phase, the business firm tries to fabricate product awareness plus create a market for the product. To combat competition, marketing costs increase substantially results in a reduction in profits. When fashion loses its appeal and people are attracted to something new, the decline stage starts. They are growth-slump-maturity pattern, cycle-recycle pattern, and scalloped pattern (see figure below). 1.04 namely, Introduction, Growth, Maturity and Decline. A particular style, after its invention, may also experience a life cycle. As a product reaches each of the stages of a product life cycle, marketers adjust how the product is priced, promoted, and distributed. Some of the companies may also decide to increase their product’s price because consumers buying the product are frequently buying it as a replacement or a specialty need. It is also to note that many products will never complete their normal life cycles; they will abruptly die well before they never mature. The product life cycle is the process a product goes through from when it is first introduced into the market until it declines or is removed from the market. The process by which the distinctiveness gradually disappears as the product merges with other competitive products, has been rightly termed by Joel Dean as “the cycle of competitive degeneration”. Sales are less.Buzz: This stage involves creating a buzz. A particular fashion passes through four stages: the distinctiveness stage, emulation stage, mass-fashion stage, and decline stage. Companies focus on the high-income group at the introductory stage to buy their products because products are priced higher at this stage. A product might not pass through every stage in the cycle. It also helps dictate marketing efforts and how much support is needed to enable the product’s future success. Product life cycle concentrates only the life-cycle of a product beginning with its introduction into the market to the post-marketing phase. A company may also engage in a creative promotional campaign to attract potential buyers. When a product first launches, sales will be low and grow slowly. Products with superior levels of brand loyalty will tend to maintain their profitability for longer, and will be helped as competitors enter the market. The emphasis upon corporate and marketing functions will vary depending upon the life-cycle stage. Managers and business owners must be cognizant of the four stages of the … You have limited time to make a profit on that product. Competitors emphasize improvements and differences in their versions of the product. Still, it is a different world altogether, so ‘product development’ is not considered part of PLC. This means that a product which is distinct when new degenerates over the years into a common commodity. Each need passes through five stages (see figure on top a). Thus, the concept of product life-cycle can be used as a forecasting tool. The other strategy is to sell the product to another firm and let them worry about manufacturing and marketing the item. However, once the sales of a product start to fall or profitability can no further be maintained, the decline stage is reached. A product is introduced to the market during the introduction stage. The decline of fashion is also slow as its growth. Stages include introduction, growth, maturity and decline and are explained in detail here. The firm can prepare an effective product plan by knowing the product life cycle of a product. In order to achieving the desired level of profit, the introd… The other could be the change in social trends or customers’ habits, which may cause the product to take a sharp turn downward in terms of sales. Conceptually, the life cycle consists of four stages—introduction, growth, maturity and decline. When none of the above strategies is found suitable, the firm should dispose of the product with a minimum inconvenience to the parties concerned. This prosperity may also attract other companies, and the greatest number of competitors enter the market. Some products, for instance, might not get past the maturity stage. Sales of plastic, for example, may follow a scalloped pattern as its new uses and users are discovered. The product goes through these stages right from the time of its invention to its demise due to a lack of demand. Product Life Cycle refers to the entire process that a product has to go through from the time it is launched into the market until the time it is taken off from the market and is divided into four stages – introduction, growth, maturity, and decline. Some of them will live longer than others, and some will reach their maturity sooner than others. Pharmaceutical products could be examples following a cycle recycle pattern. In the following few paragraphs, we shall focus on product-category, product form, product, and brand life cycles. A specific brand’s life cycle can change quickly due to changes in competition. Other critics suggest that there are no normal patterns for a product since each is so unique. There are several reasons why the life-cycle of a product tends to be short: (a) continuous research for product development, (b) simultaneous attempts by several companies in the same direction, and (c) tendency of a new idea to attract competitors. Regarding the marketing mix elements, a company may decide to pursue a skimming or penetration strategy. But has now been adopted as something normal and casual in the fashion world. When fashion becomes increasingly popular with the general public, the mass-fashion stage begins. It is on the market, not just in the initial stage. Theory of international product life cycle propounded by Raymond Vernon emphasizes that every product has to pass through different stages. Four stages exist to the product life cycle after a product is introduced to the market. If, on the other hand, in the company’s view, the competitive product is not superior to its own, the decision may be taken merely to increase advertising spending or introduce a sales promotion to regain market share. Examples include Coca-Cola, Gillette, American Express, which st… For example, if your product has a short lifetime, it needs to have a fast response and action from customers to survive. The product life cycle (PLC) is the series of steps through which every product goes. It will alert the company to the need for positive action at the so-called ‘threshold point,’ where some change to strategy will be essential if the product is to continue. However, what you can and should be doing, is focusing a lot of your time on market research. A company may effectively use this strategy if the market size is significantly large, the majority of the market is unaware of the product and very much price-sensitive, and there is a small potential competition. As such, this tactic is often only done when a company has a unique offering, such as a new film, computer game or technologically superior device such as the iPod or iPhone. People, for example, need traveling means, which grows and changes as time passes. Nevertheless, different dynamics occur during each of the four product life cycle stages, which affects a company's advertising, pricing and product strategies. First, it may take time to make the product available in different markets. This is the stage that we term as the maturity stage of a product’s life-cycle. Companies may try to find new uses of the product among the current users. The purpose of any one of the above strategies is to expand the market size. During the growth stage, sales rise rapidly; profits reach a peak and then start to decline. Companies may also try to revive by declining product by changing the ad firm with the hope of a more creative advertisement campaign to be developed and launched by the new firm. When these nontraditional ways are followed by others to emulate the fashion leaders, the emulation stage begins. Stages of Product Life Cycle. Fourth, establishing adequate distribution may consume a fairly long time. This responsibility should not entirely be the rest of the marketing department because of the danger of bias. The company can gain a substantial amount of profit following such a strategy. Some are cycled back into the growth stage after reaching the decline stage through strong promotion or repositioning. For example, marketers 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 that affect the product’s movement through the stages. Product Life Cycle Stages: The table shows the product life cycle stages and the different marketing characteristics that accompany and identify them. It can alert management that its product will inevitably face saturation and decline, and the host of problems these stages pose. During this stage, potential buyers must be aware of the product’s features, uses, and advantages, which cost a substantial amount of money to the firm. There are several reasons why a product declines. The most notable characteristic of this stage is the peaking of the product’s sales and profit curves. Stages of Product life cycle 5. The pattern of the style life cycle is much like a cycle-recycle pattern. These stages in the life of a product are collectively known as product life-cycle. However, this runs the risk of alerting competitors, who can then develop competing products. This is usually followed by a rapid expansion in its sales as the product gains market acceptance. Kotler defines a fad as a fashion that comes quickly into the public eye, is adopted with great zeal, peak early, and decline very fast. An acceptable level of profitability may no longer exist, or the product’s and the company’s image begins to suffer as the remaining customers shift to newer items. Penetration strategy is normally used when the executive intends to keep the product on the market through all or most of the life cycle. A fad can have an extremely short life span, much shorter than fashion. For any product, it’s PLC will go to the decline stage, where the product’s sales and profits fall very quickly, and most competitors leave the market. The production costs will be fairly low, and the marketing efforts will all but cease, making it possible to earn a respectable profit margin. Yet, another option could be to produce the item but selling through other under licensing arrangements. Product Life Cycle 3-parameters Matrix proposed by Consuunt. New technology or a new social trend may cause the product to turn downward in sales sharply. Modern product life cycles are becoming shorter and shorter as products in mature stages are being renewed by market segmentation and product differentiation. Product life cycle applies to both brand and category of products. Developing marketing strategies based on the PLC concept can also be difficult because the strategy is both a cause and a result of the product’s life cycle. The product must be defined and developed. The life cycles of brands vary. Stage 1: Development. We can divide this stage into three parts. A product launch is always risky. However, companies want their products to enjoy long lives and expect lucrative profits out of their sales. Stages of Product Life Cycle (PLC) [with notes]: All products and services have certain life cycles. The concept of product life cycle highlights that sooner or later all products die and that if management wishes to sustain its revenues, it must replace the declining products with the new ones. If the characteristics of the product life cycle stages and their marketing implications are understood properly, the product may have made it to the final stage in the PLC: the decline stage. This stage is where the idea becomes an actual product for sale in the market. if most potential buyers are informed of the product. In a related sense, the increased competition and the desire to build a larger market share tend to reduce some slight price reduction. To achieve the projected sales target, it formulates promotional, pricing and distribution policies. You never know how the market will receive the product. The remaining firms may reduce the variety they offer to make their operations more economical. Next: Growth Stage However, the danger signals heralding a decline are clear enough – declining sales or market share, especially with one particular brand or product in the product line. Product Life Cycle Theory Raymond Vernon explained that, a product goes through four stages: introduction, growth, maturity, and decline. Market rejects these products and compels to die. Profits remain large and mature products become the cash cows of the company, providing funds for the development of new products. For example, the VCPs (video cassette player) passed through the four stages of the life cycle. One day, a product is conceptualized, and then designed and manufactured. However, competitive pressures may still be strong as existing incumbents battle for market share and continue to try to demonstrate the superiority of their product. A style is “a characteristic or distinctive mode or method of expression, presentation, or conception in the field of art.”. Fashions usually develop slowly but remain popular for a shorter time. Instead of quickly recouping costs and generating profits as would occur with a skim strategy, the marketing executive hopes for even greater long-term profits. There should have periodical reviews by the marketers on different stages to decide on courses of action to combat competition. The product life cycle concept is also relevant to styles, fashions, and fads. The effect on the marketing mix is: Product branding as well as the quality level is launched and intellectual property protection like trademarks and patents are received. Companies may also spend heavily on different consumer deals, displays, and so on. Let us now have some idea on the life cycle of each of the above : The life cycle of a product category is found to be longer. Contemporary marketers try to plan for the life of the product before it is ever introduced. A product life cycle normally looks like a bell-shaped curve showing four stages at different points of the curve. Fashions are distinct from other products. The lifecycle of your product is all you should ever care about. These increased expenditures further reduce the profits of the firms. Consumer created fashions are made popular by the public. If you remember the ‘four Ps’ of marketing, you will realize that the action a firm can take is limited to one of four areas: it can alter the product, the price, the promotional campaign, or the place – where and how the product can be bought. A fashion can also be producer-created. It is one of the most serious tasks of marketers to identify weak or marginal products. If this occurred through the introduction of a new competitive product with additional benefits, the company might choose to add similar benefits to its product, to add new but different services, or to reduce the present price and emphasize its value for money, perhaps trying to reach a new, more price-sensitive market in doing so. There’s not any outbound marketing to be done since the product is not complete. Stage One: Introduction. Usually, the firm will have tried to keep the product as long as possible in the maturity stage. A fad is a fashion with a high degree of popularity among a particular group in the current period. The T-shirt was initially popular among the lower classes, worn by laborers as a practical undergarment. It is found from different studies that life cycle patterns may vary from six to seventeen types, of which three are common. Another strategy could be to continue selling a declining product but having a contract with another company to manufacture it. 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stages of product life cycle

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