“Products, like humans, no matter how successful, are mortals” (adopted from Batory, 2008).
This interesting quote shows the fact that a product does have a lifespan in the marketplace. That’s why managers and marketers should understand the life cycle concept in order to effectively manage their products in each different stage. This essay aims at giving an idea about the Product Life Cycle (PLC) concept. It begins with defining the concept. Then, it gives an idea about the four different stages of the product life cycle (introduction- growth- maturity- decline) with example product in each stage.
First of all, to understand the concept of ‘Product Life Cycle’ (PLC), it is better to start by defining the concept. According to Merriam Webster (2008), a product ‘life cycle’ term is defined as “a series of stages through which a product passes during its lifetime”. These four stages “begin with the introduction of the product to the market and end with the decline of this product or even the withdrawal of this product from the market” (Thompson, 2001).
The life cycle of a product –generally- is divided into four main stages, (1) introduction, (2) growth, (3) maturity, and (4) decline. Obviously, the logic or analysis in this life cycle is based on the change or performance of sales, revenues or profitability of this product in the market. The “duration of products or brands could be few months or even centuries, such as gasoline powered automobile” (NetMBA, 2007).
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Now, to realize the importance of this concept, it is important to know what this concept exactly means for business managers or marketers. According to Kotler and Keller (2006), this life cycle shows that “products have main things in common, (1) a limited lifespan; (2) changes in sales/revenues/profits depending on each stage with different characteristics, challenges, and opportunities; and (3) the need to use different strategies (financial, human resources, manufacturing, marketing, and purchasing) in each stage”. (Cited in Papares4You, 2007)
As a result, these different stages of the product life cycle could be used to effectively manage the product by using the appropriate strategies or even making any required changes in the marketing mix. The first stage is the introduction stage which begins after the product development, when the product is introduced to the market. The most important thing is to create ‘demand’ for this new product by creating ‘customer awareness’ of it. It is natural in this stage to have low growth in the sales (or profitability) of this product.
That’s why promotion in the introduction stage should be intensive to create ‘customer awareness’. Companies should have a long-term marketing strategy for the product in this stage. For example, it is not important during this stage to have high revenues or profits; the company could adjust the pricing policy based on this long-term strategy and introduce the product at a low price to attract customers and make it easy for them take the purchasing decision. There are many examples for products in this stage such as iphones, virtual reality, digital cameras, mini computers, DVD, video phones.
Some of these examples will remain in this stage longer than the others due to high prices such as video phones, and others won’t remain for too long –may be 5 or 10 years- such as digital cameras, mini computers, DVD, iphones due to the increasing awareness of the product along with the increasing demand from consumers. The second stage is the growth stage; when the product becomes available and sales begin to rapidly increase till the market approaches saturation. Competitors start to enter the market in this stage.
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Companies could succeed in this stage by –for example- “adding new product features or improve its quality and managing customer relationship”. (Papares4You, 2007) There are many examples for products in this stage such as CD player, personal or home computing, the internet and mobile or cellular phones. The sales of these products are growing faster and faster. However, a product such as CD player may be replaced by other products. But, the internet and personal computing are about to enter the maturity stage may be five or ten years.
The third stage is the maturity stage; and this is when the market is saturated with this product. However, it is not necessary that the product reaches this stage. Sales in this stage continue to grow till their peaks but with a low growth rate. There are “some product categories which remain in this stage for decades or centuries such as automobiles, cigarettes, and refrigerators; sales for these categories may remain at their peak for decades” (Thompson, 2001).
There are many examples for products in this stage such as automobiles, toothpaste (such as Crest and Colgate), Coca-Cola and Pepsi, batteries (such as Duracell).
Batteries’ technologies are changing that’s why a product like traditional batteries will stay – may be for 20 years for maximum- until new batteries enters the market. There are some strategies such as intelligent branding, entering new markets, and adding significant changes to the product could make the product stay longer in this stage. The fourth stage is the decline stage; when the product withdraws from the market due to deterioration in sales and profits.
The decline in sales could be due to “(1) technological developments, (2) changes in consumer behaviour, or (3) significant increases in competition” (Kotler and Armstrong, 2004 cited in Papares4You, 2007) There are many examples for products in this stage such as vinyl records, black and white T. V. , the yo-yo, the hula-hoop, the pet rock Now, after having an idea about the four stages of product life cycle, it is important to realize that the product could repeat this cycle over as the case in fashion for example.
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And the duration of the product in each stage isn’t fixed because there are products that stays for too long in the introduction stage (such as video phones- microwave ovens- automatic dishwashers) or in the maturity stage (such as refrigerator- T. V. – Coca-Cola).
Also, the product needs different strategies in each stage. For example, to use intensive promotion’ in the ‘introduction stage’ to create ‘customer awareness’ or to introduce products with low prices to increase customers; and to add more features to the product or decrease prices in the ‘growth stage’ to enter new markets and to still competitive.
Finally, any product could be affected by many factors –mentioned previously- in its life cycle such as “(1) technological developments, (2) changes in consumer behavior, or (3) significant increases in competition” (Kotler and Armstrong, 2004 cited in Papares4You, 2007).
That’s why business managers and marketers should continuously study the external environment along with the product life cycle to be able to effectively manage their products and in the marketplace.