PRODUCT PUBLISHING, DELIVERING AND MARKETING

(MARKETING MANAGEMENT)

PRODUCT LIFE CYCLE

SRI LANKA INSTITUTE OF INFORMATION TECHNOLOGY

BSC (IT) SPECIALIZING IN MULTIMEDIA – FINAL YEAR

VIDYAS G. IT 11 6086 46

Product Life Cycle Shows the stages that products go through from development to withdrawal from the market

PRODUCT LIFE CYCLE

A product is the item offered for sale. A product can be a service or an item.

The price that can be charged depends on the market, the quality, the marketing and the segment that is targeted.

PRODUCT

The Product Life Cycle (PLC) is used to map the lifespan of a product.

There are generally four stages in the life of a product.

These four stages are, Introduction stage Growth stage Maturity stage Decline stage

The following graph illustrates the four stages of the PLC

THE DEFINITION

Not all products follow this cycle: Fads Styles Fashions

The product life cycle concept can be applied to a: Product class Product form Brand

THE DEFINITION

New Product Entrants Establishing Preference Competing in a Crowded Market Maintaining Awareness Backing Off and Starting Over

IMPORTANCE

The introduction stage of the product life cycle is where a new product is launched into a market.

Begins when the company develops a new-product idea

Sales are zero Investment costs are high Profits are negative

INTRODUCTION STAGE

Product – Offer a basic product Price – Use cost-plus basis to set Distribution – Build selective

distribution Advertising – Build awareness

among early adopters and dealers/resellers

Sales Promotion – Heavy expenditures to create trial

INTRODUCTION STAGE

In the growth stage of the product life cycle, the market has accepted the product and sales begin to increase.

Low sales High cost per customer acquired Negative profits Innovators are targeted Little competition

GROWTH STAGE

Product – Offer product extensions, service, warranty

Price – Penetration pricing Distribution – Build intensive

distribution Advertising – Build awareness and

interest in the mass market Sales Promotion – Reduce

expenditures to take advantage of consumer demand

GROWTH STAGE

In the maturity stage of the product life cycle, sales will reach their peak.

Sales peak Low cost per customer High profits Middle majority are targeted Competition begins to decline

MATURITY STAGE

Product – Diversify brand and models

Price – Set to match or beat competition

Distribution – Build more intensive distribution

Advertising – Stress brand differences and benefits

Sales Promotion – Increase to encourage brand switching

MATURITY STAGE

In the decline stage of the product life cycle, sales will begin to decline as the product reaches its saturation point.

Declining sales Low cost per customer Declining profits Laggards are targeted Declining competition

DECLINE STAGE

Product – Phase out weak items Price – Cut price Distribution – Use selective

distribution: phase out unprofitable outlets

Advertising – Reduce to level needed to retain hard-core loyalists

Sales Promotion – Reduce to minimal level

DECLINE STAGE

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