1. PRODUCT LIFE CYCLE
Chapter 30 Notes

2. Product Life Cycle
The stages that a product goes through during its life.

3. Stages The four stages represent sales history over a period of time:
Introduction
Growth
Maturity
Decline
Maturity
Growth
Decline
Introduction

4. Stage One = INTRODUCTION
The first appearance of the product into the market.
All efforts on marketing (promotion) and production
MAJOR GOAL = draw customer’s attention to the new product
Build sales and increase product awareness
Special promotions to get customer to try product
HIGH COSTS = LEAST PROFITABLE STAGE
Usually takes 7 years for a company to break even or fully recover costs of introducing a new product.
Maturity
Growth
Decline
Introduction

5. Stage Two = GROWTH Growth
The period where sales and profits are rising
Product is enjoying success
Target market is aware and buying the product
Advertising focused on customer satisfaction rather than new product benefits
Competition is aware and beginning to compete
Maturity
Growth
Decline
Introduction

6. Stage Three= Maturity Maturity The period where sales level off
Product may have more competition now or most of market already owns the product (saturation)
Company spends marketing dollars to fight off competition
Some products maturity stage may last for decades (ex. Ivory)
When a product matures, management must consider ways to:
Extend the product’s life cycle
Gradually phase it out
Replace it with another product
(ex. IPOD Nano replaces IPOD Shuffle)
Maturity
Growth
Decline
Introduction

7. Stage Four= Decline Decline The period where sales slow down
Obsolescence: Changes in technology or consumer preference – becomes obsolete (VCR’s)
Loss of Appeal: Consumer taste change (Beanie Babies, Cabbage Patch Kids)
Changes in Company Objectives: Product does not match company’s current objectives – sell off
Replacement with New Products
Conflict with other products in the line
Profits may actually be smaller than costs
Maturity
Growth
Decline
Introduction

8. Stage Four= Decline Decline
Management must decide how long to support the product
Sell or license the product: Risk taking companies buy product and try to change the product’s image
Recommit to the product line: A product may have other possible uses that can help improve sales – advertise those new uses.
Discount the product: Some lines can be saved by discounting them to compete with cheaper store or private brands
Regionalize the product: Sell declining product only in geographic areas with strong customer loyalty. (avoid national advertising & distribution)
Modernize or Alter the Product Offering: Some products can be altered to avoid deletion.
Companies spend a large amount of money to develop and promote a product, therefore they are reluctant to delete products without trying one of the above first.