Definition Of A Product Life Cycle Marketing Essay

Definition Of A Product Life Cycle Marketing Essay A product is anything which is capable of satisfying customers needs. Product includes both physical or tangible products (mobile,car, type writer, computer, bike) and intangible products or services (health care, banking, insurance). Definition of a Product Life Cycle define what a product life cycle is: It is the period of time over which an item is developed, brought to market and eventually removed from the market. OR The stages through which a product develops over time is called Product Life Cycle (PLC). OR The product life cycle is MARKETING CONCEPT that describes the way the revenues from the sale of a product behave over time. Stages of a Product Life Cycle The product life cycle is broken down into four phases: Introduction Growth Maturity Decline The Product Life Cycle (PLC) Curve plc, product life cycle curve For all products, the life cycle is drawn is the form of a mount shaped curve. The starting of the curve marks the introduction stage; the slope indicates growth stage; top of the curve signifies maturity; and the graph ends in the decline stage. Theory of PLC: Biological Life Cycle Versus Product Life Cycle The concept of Product Life Cycle is based on biological life cycle. For instance, when a seed is planted (introduction); it begins to pullulate (growth); it shoot out flowers and leaves (maturity); and after a defined period of time, it starts to shrink and eventually die out (decline). Human beings also pass through the same phases of introduction, growth, maturity and decline in their lives. The same theory applies to a product. When a new product is launched in the market, it starts gaining customers; then it stabilizes and becomes mature; then after some time, it is taken over by the introduction of better and superior competitors therefore, it is withdrawn or harvested from the market. Benefits of Using a Product Life Cycle for Revenue MARKETING managers consider product life cycle as an important measure of sales revenues. As you can see it from the figure, the slope of the curve denotes the sales of a particular product. The more the slope then more the sales. When a product is introduced in the market, the sales are negligible. Due to marketing promotion efforts, the demand of product starts to rise and as a result some revenue is generated. When more and more customers begin to buy the product, the revenues of the product reaches to maximum; this stage is called maturity. A product can stay in maturity for several weeks, months or years depending on the external and internal market conditions and resources. Finally, when a product better in features and functions is launched by a competitor into the market, the sales starts to decline; in some cases, companies have to disengage their products or services. Product Life Cycle Management (Marketing)/ PLCM Product life cycle management (or PLCM) is the succession of strategies used by business management as a product goes through its developmental life cycle. The conditions involving the promotion and sales of a product, involving market saturation and advertising vary over time and must be managed as it moves through the different stages of succession. What is Marketing Mix? A marketing mix is a pre-planned assortment of all those controllable elements which are involved in the planning of a products marketing. they include the following 4Ps Product (often substituted by Presentation) Price Place Promotion These four elements are adjusted until the correct combination is reached befitting the requirements of a products customers, while generating optimum income. How to Create a Product Life Cycle First Stage Introducing the Product : Brand Building For the product life cycle to begin, the product must be launched in the market. This is done after target market is identified and ensured that the need for your product or service exists. At this stage, sales will be very low because customers are not really aware about the product and its benefits. Generating Demand: Promotion, Advertising, Marketing The cost of advertising and initial distribution is very high as companies intend to create awareness of the product and target early adopters. The goal is to build market and generate demand. Stage 1 Marketing Mix Implications You need to have a fair idea of marketing mix implications for each stage. Product Products are very less in number Price Some companies keep the price to high so as to cover their costs whereas others tend to keep it low so as to attract more and more early adopters. Distribution Initially, the distribution is done selectively Promotion Creation of awareness is the only goal of the promotion Growth Watch how the product is establishing market and making profit in comparison to the competitors. Maintain the focus on the promotion efforts. Notice how slowly or rapidly the product is gaining customers and generating profits. More and more retailers will be interested in carrying your product. Remember the goal of growth phase is to increase sales and gain customer preference. Second Stage Stage 2 Marketing Mix Implications Product Improvement of the product quality. Price If the demand of the product is high, price is maintained at high level whereas; if you want to target additional customer segments, reduce the price. Distribution To intensify distribution, discounts are offered to the retailers. Promotion Improved the promotional efforts. Maturity You will observe that your product has met market saturation. Eventually, there will be a marked increase in sales and it will become a challenge for the marketing and sales team to maintain the market share as new competitors would be penetrating into the market. Increase promotional efforts and offer more discount to the retailers in order that they give your more shelf space than competitors. The goal of maturity stage is to extend product life cycle while maintaining market share. Third Stage Stage 3 Marketing Mix Implications Product Product is differentiated from those of competitors Price Maximum possible reduction in prices to be made Distribution Retain existing distributors by offering discounts as well as searching for more channels of distribution Promotion Intensive promotion efforts in order to establish brand loyality Decline Carry out amarketing analysis or a survey to find out how customers perceive the product currently. If the interest and demand is low, think of ways to take the product back to profit making position. Possible ways could be the creation of new target segment and making modifications in the product. The goal of decline stage is either to maintain the product or discontinue it. Fourth Stage Stage 4 Marketing Mix Implications Product Fewer products left in the product line. Price If the product is to be maintained, the prices are retained. In case of termination, prices are reduced to liquidate inventory. Distribution Channels are phased out gradually. Promotion Advertising expenditure reaches a minimum level Examples of Product Life Cycle (PLC) Set out below are some suggested examples of products that are currently at different stages of the product life-cycle: INTRODUCTION GROWTH MATURITY DECLINE Third generation mobile phones Portable DVD Players Personal Computers Typewriters E-conferencing Email Faxes Handwritten letters All-in-one racing skin-suits Breathable synthetic fabrics Cotton t-shirts Shell Suits iris-based personal identity cards Smart cards Credit cards Cheque books Popular Cases of Product Life Cycles Pepsi Product Life Cycle Development Coca Cola Product Life Cycle Development Kellogs Product Life Cycle Development Apple Product Life Cycle Development Nokia Product Life Cycle Development