Product Life Cycle

Product Life-Cycle
MICHAEL ALONZO
New-Product Development in Turbulent
Times
 In fact, tough times might call for even greater new-
product development, as the company struggles to better
align its market offerings with changing consumer needs
and tastes.
 In difficult times, innovation more often helps than hurts
in making the company more competitive and positioning
it better for the future.
Product Life-Cycle Strategies
 The product life cycle (PLC) has five distinct stages:
Introduction Growth Maturity DeclineProduct
development
Product
Develop-
ment
Introduction Growth Maturity Decline
 It begins when the company finds and develops
a new-product idea.
 During product development, sales are zero,
and the company’s investment costs mount.
 It is 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.
 It is a period of rapid market
acceptance and increasing
profits.
 It is a period of slowdown in sales
growth because the product has
achieved acceptance by most potential
buyers.
 Profits level off or decline because of
increased marketing out lays to defend
the product against competition.
 It is the period when
sales fall off and
profits drop.
Product Life-Cycle Strategies
 The PLC concept can describe a product class
(gasoline-powered automobiles), a product form
(SUVs), or a brand (the Ford Escape).
 The PLC concept also can be applied to what are
known as styles, fashions, and fads.
Style
• It is a basic and distinctive mode of
expression
Fashion
• It is a currently accepted or popular style
in a given field.
Fad
• It is a temporary period of unusually high
sales driven by consumer enthusiasm and
immediate product or brand popularity.
Introduction Stage
 The introduction stage starts when a new product is first
launched.
 In this stage, as compared to other stages, profits are
negative or low because of the low sales and high
distribution and promotion expenses.
 A company, especially the market pioneer, must choose a
launch strategy that is consistent with the intended
product positioning.
Growth Stage
• If the new product satisfies the market, it will enter a growth stage, in
which sales will start climbing quickly.
• Attracted by the opportunities for profit, new competitors will enter
the market.
• They will introduce new-product features, and the market will
expand.
• The increase in competitors leads to an increase in the number of
distribution outlets, and sales jump just to build reseller inventories.
• Profits increase during the growth stage as promotion costs are
spread over a large volume and as unit manufacturing costs decrease.
• The firm uses several strategies to sustain rapid market growth as
long as possible.
• It improves product quality and adds new product features and
models.
Maturity Stage
At some point, a product’s sales
growth will slow down, and it will
enter the maturity stage.
The slowdown in sales growth
results in many producers with many
products to sell.
In turn, this overcapacity leads to
greater competition.
Competitors begin marking down
prices, increasing their advertising
and sales promotions, and upping
their product development budgets
to find better versions of the product.
This step lead to a drop in Profit.
The company might also try
modifying the product ─ changing
characteristics such as quality,
features, style, packaging, or
technology platforms to retain
current users or attract new ones.
Decline Stage
 Sales may plunge to zero, or they may drop to a low level
where they continue for many years. This is the decline
stage.
 Sales decline for many reasons, including technological
advances, shifts in consumer tastes, and increased
competition.
 A product’s failing reputation can cause customer
concerns about the company and its other products.
The End
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Product Life Cycle

  • 2. New-Product Development in Turbulent Times  In fact, tough times might call for even greater new- product development, as the company struggles to better align its market offerings with changing consumer needs and tastes.  In difficult times, innovation more often helps than hurts in making the company more competitive and positioning it better for the future.
  • 3. Product Life-Cycle Strategies  The product life cycle (PLC) has five distinct stages: Introduction Growth Maturity DeclineProduct development Product Develop- ment Introduction Growth Maturity Decline  It begins when the company finds and develops a new-product idea.  During product development, sales are zero, and the company’s investment costs mount.  It is 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.  It is a period of rapid market acceptance and increasing profits.  It is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers.  Profits level off or decline because of increased marketing out lays to defend the product against competition.  It is the period when sales fall off and profits drop.
  • 4. Product Life-Cycle Strategies  The PLC concept can describe a product class (gasoline-powered automobiles), a product form (SUVs), or a brand (the Ford Escape).  The PLC concept also can be applied to what are known as styles, fashions, and fads. Style • It is a basic and distinctive mode of expression Fashion • It is a currently accepted or popular style in a given field. Fad • It is a temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity.
  • 5. Introduction Stage  The introduction stage starts when a new product is first launched.  In this stage, as compared to other stages, profits are negative or low because of the low sales and high distribution and promotion expenses.  A company, especially the market pioneer, must choose a launch strategy that is consistent with the intended product positioning.
  • 6. Growth Stage • If the new product satisfies the market, it will enter a growth stage, in which sales will start climbing quickly. • Attracted by the opportunities for profit, new competitors will enter the market. • They will introduce new-product features, and the market will expand. • The increase in competitors leads to an increase in the number of distribution outlets, and sales jump just to build reseller inventories. • Profits increase during the growth stage as promotion costs are spread over a large volume and as unit manufacturing costs decrease. • The firm uses several strategies to sustain rapid market growth as long as possible. • It improves product quality and adds new product features and models.
  • 7. Maturity Stage At some point, a product’s sales growth will slow down, and it will enter the maturity stage. The slowdown in sales growth results in many producers with many products to sell. In turn, this overcapacity leads to greater competition. Competitors begin marking down prices, increasing their advertising and sales promotions, and upping their product development budgets to find better versions of the product. This step lead to a drop in Profit. The company might also try modifying the product ─ changing characteristics such as quality, features, style, packaging, or technology platforms to retain current users or attract new ones.
  • 8. Decline Stage  Sales may plunge to zero, or they may drop to a low level where they continue for many years. This is the decline stage.  Sales decline for many reasons, including technological advances, shifts in consumer tastes, and increased competition.  A product’s failing reputation can cause customer concerns about the company and its other products.