MEANING OF PRODUCT LIFE CYCLE:
A product passes through certain different stages during its life. This is called the product life cycle. In other words, the product life cycle concept to analyze a product category, a product form, a product or a brand. Every product moves through the four stages such as:
- Introduction
- Growth
- Maturity
- Decline
A product moves through different stages of its life cycle, sale volume, and profitability changes from stage to stage.
STAGES OF PRODUCT LIFE CYCLE:
INTRODUCTION STAGE:
At this first stage whenever a new product is introduced, it has no effective demands. Sales seem very low and creeping very slowly. Under this stage, competition is almost non-existent. The growth in sales volume is at a lower rate because of the lack of knowledge. As well as the part of customers and difficulties in making the product available to the customers.
Prices are mostly high during the introduction stage, because of the small scale of production, technology problems, and heavy promotional expenditure.
FOLLOWING STRATEGIES ARE FOLLOWED IN THAT STAGE:
- Advertisement and publicity of the product money back guarantee may be offered to stimulate the people to try the product.
- Attractive gift to customers as an introductory office.
- Selective distribution and attractive discounts to dealer.
- Also ironing out of product deficiencies.
FEATURES OF INTRODUCTION STAGE:
- Cost is high for the promotion and developing the product.
- Everyone does not know about the product so the sales volume is very low.
- In this stage, the product has no or very little competition.
- Spending more on the product so profits are negative.
- To aware the customers for the product, the demand is made.
- Promotional expenses are high.
GROWTH STAGE:
As the product grows in popularity, it moves into the second phase of its life cycle. In this stage, the demand expands rapidly, prices fall, competition increases. Marketers are forced to follow competition oriented pricing because the total market is shared among many firms. The promotional expenses remain high.
A FIRM USES FOLLOWING STRATEGIES FOR GROWTH STAGE:
- Add new product features and improvement in quality and styling.
- Also adds new models as well as add different flavors.
- It enters new market segments.
- Increases all distribution coverage and enter new distribution channels.
- Lower prices to attract buyers.
FEATURES OF GROWTH STAGE:
- The market is expanding at that stage because the new customers come to purchase the product.
- More sale, more production, the cost of the product is decreasing.
- The product is on the growth and the highest profits on the product.
- Customers are aware of the product in the growth stage.
- The competition begins to increase within a few new players in the market.
MATURITY STAGE:
In the maturity stage, demand tends to reach a saturation point. There is enough supply from several competing sources. Profits come down because of hard competition and marketing expenditure rise. The price decreases because of competition and innovation in technology.
A FIRM USES THESE STRATEGIES TO STAY IN MARKET IN THAT STAGE:
- Market modification: A company might try to expand the market for its mature brand.
- Product modification: Companies also try to stimulate sales by modifying the products’s characteristics through quality improvement, a feature improvement, or style improvement.
- Marketing mix modification: Companies might also try to stimulate sales by modifying other market elements like prices, distribution, advertisement, sales promotion etc.
FEATURES OF MATURITY STAGE:
- In that stage, the product has very slow growth.
- The product has a high sales volume so customers purchase the product.
- On the product, the profit is also on high volume.
- Competition is increasing.
- Price is decreasing day by day.
DECLINE STAGE:
In this stage, the product success placed by some new product or change in consumer buying behavior. The decline stage total sales and profit diminish. The demand for product shrinks because new products are available in the market.
STRATEGIES IN DECLINE STAGE:
- The firm may decide to maintain its brand without change, with the hope that competitors will leave the industry.
- A firm may decide to reposition its brand.
- The firm may decide to drop the product from the line, totally vanish the product.
FEATURES OF DECLINE STAGE:
- Marketers begin to shrink.
- Sales volume decline.
- Profits become more like a challenge for production efficiency then increased sales.
