THE PRODUCT LIFE CYCLE

THE PRODUCT LIFE CYCLE Products and services pass through various stages over time. These stages are known as the “Product Life Cycle” The rates of change, and the length and intensity of each stage may vary, but most life cycles follow roughly the same pattern.

PRODUCT INTRODUCTION A product is developed and the company attempts to build a market for the product Sales are low: customers unaware of product Lots of money spent on advertising Price is either low to attract attention or high to recover development cost High failure rate

GROWTH Sales increase, rapid growth Due to increased sales, competition is attracted Wide advertising is carried out Trying to gain customer preference

MATURITY Growth starts to flatten out Sales remain flat Product in this stage of development is called a “Cash cow” You have paid off all the development expenses so all the money you make is profit Price maybe lowered New features added to product to help fight competition Offered at more locations

DECLINE Sales are decreasing…customers move onto new products Can be delayed/averted by advertising Often times you will see “brand extensions” during this time i.e.

                                                                           

                                                                           

                                                                           

                                                                           

                                                                                                                                                                  

HOW MARKETERS USE THIS We all have all seen advertising done with the use of product placement i.e. we are watching a movie and all of sudden the lead character takes a Coke out of the fridge…well Coke paid a lot of money to have their product there (and not Pepsi)