Product Life Cycle PRODUCT Management

PLC - Product Life Cycle The purpose of having a diagram is to help you understand the changes, in the revenue that is made, as you go through the different stages of selling a product, from the beginning, to the end.

Stages in the Product Life Cycle Introduction Growth Maturity Decline Digital cameras Mini-disc Electric cars DVD VR* The time at each stage varies greatly *= virtual reality

Stages in the Product Life Cycle Introduction Growth Maturity Decline Introduction The seller tries to stimulate demand Promotion campaigns to get increase public awareness Explain how the product is used, Features Advantages Benefits You will lose money, but you expect to make profits in the future

Stages in the Product Life Cycle Introduction Growth Maturity Decline Introduction Sales are low, and profits are below the line because your costs are greater than the amount of money you make you have “negative” profit Need to spend a lot of money on promotion

Stages in the Product Life Cycle Introduction Growth Maturity Decline Growth A lot is sold - The seller tries to sell as much as possible Other competitor companies watch, and decide about joining in with a competitor product “success breeds imitation” (Text) Growth will continue until too many competitors in the market - and the market is saturated

Stages in the Product Life Cycle Introduction Growth Maturity Decline Growth At the end of the growth stage, profits start to decline when competition means you have to spend more money on promotion to keep sales going. Spending money on promotion cuts into your profit

Stages in the Product Life Cycle Introduction Growth Maturity Decline Maturity Many competitors have joined - the market is saturated The only way to sell is to begin to lower the price - and profits decrease It is difficult to tell the different between products since most have the same F.A.B. - Features, Advantages & Benefits Competition can get “Nasty” and commercials are intense

Stages in the Product Life Cycle Introduction Growth Maturity Decline Maturity “Persuasive Promotion” becomes more important during this stage That is to say, you have commercials almost begging the customer to still buy your product because you still make it just as good.

Stages in the Product Life Cycle Introduction Growth Maturity Decline Decline Newer products are now more attractive - even a low low price does not make consumers want to buy. Profit margin declines - and so the only way to make money is to sell a high volume

Stages in the Product Life Cycle Introduction Growth Maturity Decline Decline To increase volume you try to 1. Increase the number of customers - get new customers 2. Increase the amount each customer uses Extending the Product Life Cycle

2 things you can do Extending the Product Life Cycle 1. Increase frequency of use by present customers 2. Add new users 3. Find new uses 4. Change product quality or packaging Market Modification Product Modification Purpose: to sell more product and cover original investment

Extending the product Cycle to prevent the product going into decline you modify the market MARKET MODIFICATION you look for new consumers by changing the product so it has new users - and then new customers (Baking soda, vinegar, Q-tips, Avon Skin So Soft, vaseline Examples from class

Extending the product Cycle MARKET MODIFICATION examples Windex for cleaning jewelry Javex bleach for toilets Lemons for hair colouring beer for hair Bounce for in the garbage, gym bag etc. Examples from class

Extending the product Cycle to prevent the product going into decline you modify the product PRODUCT MODIFICATION adding new features, variations, model varieties will change the consumer reaction - create more demand therefore you attract more users Examples from class

Extending the product Cycle PRODUCT MODIFICATION examples condoms - colours, features CD players chip flavours - many kinds flavoured tongue depressors couples seats at movie theatre Examples from class

Extending the product Cycle PRODUCT MODIFICATION examples continued digital sound at theatres Examples from class

Overlap of Life Cycle for Products A and B WINDOWS 3.1 WINDOWS 95 1991 1995 1996 1997

Most people have a problems thinking this theory is relevant because they apply it to specific product brands - it should be applied only to a general product category

Length of Cycle Stages Products move through the cycle at different speeds sometimes introduction is very long, or very short, depending on how easy it is for the public to understand the F.A.B. Not all products follow the same pattern

Life Cycle Length Some products move very fast because they are new and have no competition so the intro stage is short, and they go direct to growth stage.

Life Cycle Length Because of technology and globalization the introduction stage is getting very short some cycles more quickly to maturity, then have many product modifications so the decline stage drags on and on

Speed of the PLC Since the Intro Stage is getting shorter, and sometimes the Growth Stage doesn’t last too long (because competitors move in) companies must continually come up with new products You can tell when they are in the growth stage because this is when they introduce new model variations, and some improvements to the product Page 340

Alternative Product Life Cycles Pocket pagers Tamagachi Failures that do not go through the 4 steps

Fashions & Fads Fashions - currently popular products that tend to follow recurring life cycles eg. Wide lapels, 3 button suits, high heels vs. wedge heel “the currently acceptable style” p. 265

Fashions & Fads Fads - Fashions with abbreviated life cycles - only popular with certain groups - music - fast food - children’s toys

Fashions & Fads

Product Life Cycle Considerations in Marketing Strategy Understand that profits have a predictable pattern in the early stages, focus is on product information in the later stages, focus is on brand promotion use market segmentation in maturity stage to maintain strong core customer basis

Stages in the Product Life Cycle Introduction Growth Maturity Decline Digital cameras Mini-disc Electric cars Monopoly Monopolistic Oligopoly Pure Competition The time at each stage varies greatly *= virtual reality