Managing Product Life Cycles And Strategies
The product life cycle (PlC) is an important concept in marketing. Most discussions of product life cycle portray - the sales history of a product as following an S-shaped curve.
The curve is typically divided into four stages, know as introduction, growth, maturity, and decline.
- A period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction.
- A period of rapid market acceptance and substantial profit improvement.
- A period of a slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased marketing outlays to defend the product against competition.
- The period when sales shown a downward drift and profits erode.
Some authors distinguished addition stages. For example, Chester Wasson suggested a stage of competitive turbulence between growth and maturity. Maturity describes a stage of sales growth slowdown and saturation, a stage of flat sales have peaked.
Not all products exhibit an S-shaped PLC. Researches have identified from six to seventeen PLC patterns (e.g., "growth-slump-maturity" pattern, "cycle-recycle" pattern, "scalloped" pattern).
PLC theory has been criticized on the grounds that companies cannot predict the shapes in advance. Also, PLCs are the result of chosen marketing strategies rather than of an inevitable sales that is independent of the chosen marketing strategies.
Product life must be broadened by a theory of market evolution. This theory holds that, a market evolves through four stages: emergence, growth, maturity, and decline.
New markets emerge when a product is created to satisfy an unmet need. The innovator usually designs a product for the mass market. Competitors enter the market with similar products leading to market growth. Growth eventually slows down and the market enters maturity.
The market undergoes increasing fragmentation until some firm introduces a powerful new attribute that consolidates the market into fewer segments. Because competitors copy the new attributes, the market demand for the present product will begin to decline.
A company must plan successive strategies appropriate to each stage in the product's life cycle.
Product is the first and most important element of marketing mix. Product may be of the three types: physical object, services, or ideas. "A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need" (Philip Kotler and Ronald E. Turner).
Each product offered to customers can be looked at on three levels: the core product, the tangible product, the augmented product. The core product is the essential service that the buyer is really buying. This is embodied in the features, styling, quality, brand name, and packing that constitute the tangible product. The augmented product is the tangible product plus the various services accompanying it, such as warranty, installation, service maintenance, and free delivery. The core product stands at the center of the total product.
Each product is related to certain other products. Several schemes have been proposed for classifying products.
All products can be classified according to their durability (nondurable goods, durable goods, and services) or stanglibility.
Consumer goods are usually classified according to consumer shopping habits (convenience, shopping specialty, and unsought goods).
Industrial goods are classified according to how they enter the production process (materials and parts, capital items, and supplies and services).
Product strategy calls for making coordinating decisions on product mixes, product lines, individual products, and service products.