Mba Product Life Cycle Notes
Product Life Cycle A new product progresses through a sequence of stages from introduction to growth, maturity and dedine.This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix.
Product life cycle is an attempt to recognise distinct stages in the sales history of the product -Philip kotler
Product life cycle refers to progress or course of product’s sales and profit over its life time! -ER Bleech
Stages in Product Life Cycle
The product revenue and profits can be plotted as a function of the life cycle stages as shown.
1. Introduction Stage: In this stage, the firm seeks to build product awareness and develop a market for the product. This stage has the following features:
(a) Product branding and quality level is established and intellectual property protection such as patents and trademarks are obtained.
(b) Pricing may be low penetration pricing to build market share rapidly or high skim pricing to recover development costs.
(c) Distribution is selective until consumers show acceptance of the product.
(d) Promotion is aimed at innovators and early adopters. Marketing communications seek to build product awareness and to educate potential consumers about the product.
2.Growth Stage: In this stage, the firm seeks to build brand preference and increase market share.
This stage has following features:
(a) Product quality is maintained and additional features and support services may be added.
(b) Pricing is maintained as the firm enjoys increasing demand with little competition.
(c) Distribution channels are added as demand increases and customers accept the product.
(d) Promotion is aimed at a broader audience.
3.Maturity Stage: At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to defend market share while maximising profit. The stage has the following features:
(a) Product features may be enhanced to differentiate the product from that of competitors.
(b) Pricing may be lower because of the new competition.
(c) Distribution becomes more intensive and incentives may be offered to encourage preference competing products.
(d) Promotion emphasises product differentiation.
4.Decline Stage: As sales decline, the firm has several options. The stage has following features:
(a) Maintain the product possibly rejuvenating it by adding new features and finding new uses.
(b) Harvest the product, reduce costs and continue to offer it possibly to a loyal niche segment.
(c) Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing continue the product.
The marketing mix decisions in the decline phase will depend on the selected strategy. For example, the product may be changed if it is being rejuvenated or left unchanged if it is being harvested or liquidated.
The price may be maintained if the products is harvested or reduced drastically if liquidated.