The product life cycle is a series of stages progressing from the product’s initial entry to its ultimate withdrawal from the market. Contemporary marketers try to plan for the life of the product before it is ever introduced. They try to maximize profits over the entire period. It is on the market, not just in the initial stage.
It is interesting to note that not all products, of course, have the same life cycles. Some of them will live longer than others, and some will reach their maturity sooner than others. It is also to note that many products will never complete their normal life cycles; they will abruptly die well before they never mature. The life cycle approach is an effective tool for management to plan for each stage of a product’s life.
Product Life- Cycle Meaning
The concept of a product moving through various life stages has been of interest to marketers for the last few decades. The basic life-cycle analysis is that a new product starts in the introductory stage, moves next to a growth stage, then to maturity, and eventually to decline and possibly death.
Before looking at the stages, let us have an idea of how the knowledge of a product life-cycle can help you to be successful as a strategic marketing planner. The knowledge of product life-cycle can help you in the following ways:
- Depending upon the life-cycle stage, product-market attractiveness will decline as the product advances through the stages to say that a product has a limited life.
- Recognition of life-cycle stresses the importance of new product planning since older products are not likely to grow and contribute to profits as much as new products.
- The emphasis upon corporate and marketing functions will vary depending upon the life-cycle stage.
- The management requirements at different stages also vary. An entrepreneur, for example, maybe critical to getting a new product properly launched, whereas a person who will exercise tight control on finances is often needed during the maturity stage.
Nature of Product Life Cycle – Why Understanding the Product Life Cycle in Important
Of course, each product has its unique life-cycle. In some cases, the pattern of growth-maturity-decline may be quite rapid, while in others, the product can sell at a saturation level for a very long period. It is also important to recognize that brands are subject to similar life cycle stages, although generally of a shorter duration.
The marketing manager must be aware of what stage in the life cycle the brand, as well as the product, has reached. As competition increases, brand life-cycles tend to shorten, requiring the introduction of new marketing strategies designed either to increase sales or to kill off one brand to make way for a new one.
Forecasting product life-cycles, and when a product is about to move into a new stage, is no easy matter.
However, the danger signals heralding a decline are clear enough – declining sales or market share, especially with one particular brand or product in the product line.
An understanding of the relationship between a product and its life cycle enables marketing managers to plan their campaigns more effectively and to be in a better position to judge product sales and profit potential. The value in understanding the nature of the product life-cycle is in its relationship with marketing strategy.
It will alert the company to the need for positive action at the so-called ‘threshold point,’ where some change to strategy will be essential if the product is to continue. But beyond this, the marketing mix will be different for every stage of the life-cycle.
Four Stages of Product Life Cycle and Marketing Strategies of Each PLC Stage
Every product launched in the market will have a life, the span of which can not be known earlier. However, companies want their products to enjoy long lives and expect lucrative profits out of their sales.
Companies recognize that each product will have a life cycle, although its exact shape and length can not be anticipated. A product life cycle (PLC) is the course that a product’s sales and profits take over its lifetime.
A product life cycle normally looks like a bell-shaped curve showing four stages at different points of the curve. The four stages of the product life cycle are;
However, before the ‘introduction’ stage of the product life cycle. The product must be defined and developed.
Many consider ‘product development’ as the first step of the product life cycle. Still, it is a different world altogether, so ‘product development’ is not considered part of PLC. During product development, there are no sales, and the company’s investment costs rise.
The introduction stage shows low sales numbers as the product is being introduced in the market. Profit is zero or negative in this stage because of the heavy expenses of product introduction.
With proper marketing, a product can go into the growth stage. During the growth stage, sales rise rapidly as consumers begin to accept the product. The production runs become longer, and economies of scale are achieved, reducing per-unit cost, and also helping profits to increase rapidly.
During the maturity stage of the product life cycle, the sharp growth in sales begins to slow, and profits at the beginning of this stage decline.
The most notable characteristic of this stage is the peaking of the product’s sales and profit curves. At the beginning of the maturity stage, sales continue to grow but at a much slower rate.
Towards the end of this stage, sales and profits will start to fall fairly rapidly. This stage is characterized by severe competition as many brands enter the market. To combat competition, marketing costs increase substantially results in a reduction in profits.
For any product, it’s PLC will go to the decline stage, where the product’s sales and profits fall very quickly, and most competitors leave the market.
Some products face quick death, and some remain in the mature stage for a long time; some products reverted to the growth stage through aggressive promotion or repositioning.
New technology or a new social trend may cause the product to turn downward in sales sharply. When this happens, marketers consider removing items from the product line to eliminate those not yielding a profit.
|Product Life Cycle Stages and Marketing Strategies|
|Sales||Low sales||Rapidly rising sales||Peak sales||Declining sales|
|Costs||High cost per customer||The average cost per customer||Low cost per customer||Low cost per customer|
|Profits||Negative||Rising profits||High profits||Declining profits|
|Customers||Innovators||Early adopters||Middle majority||Laggards|
|Competitors||Few||Growing number||Stable number beginning to decline||Declining number|
|Product||Offer a basic product||Offer product extensions, service, warranty||Diversify brand and models||Phase-out weak items|
|Price||Use cost-plus||Price to penetrate the market||Price to match or beat competitors||Cut-price|
|Distribution||Build selective distribution||Build intensive distribution||Build more intensive distribution||Go selective: phase out unprofitable outlets|
|Advertising||Build product awareness among early adopters and innovators||Build awareness and interest in the mass market||Stress brand differences and benefits||Reduce to the level needed to retain the most loyal customers|
|Sales Promotion||Use heavy sales promotion to entice trial||Reduce to take advantage of heavy consumer demand||Increase to encourage brand switching||Reduce to a minimal level|
Let’s try to understand better each of the stages and the corresponding marketing strategies of the product life cycle.
Stage 1: Introduction
When a product is commercialized, the product will enter the introduction stage of its life-cycle. Sales growth of a product is likely to be low at the introductory stage due to several reasons.
- First, it may take time to make the product available in different markets.
- Second, it may take time for a company to expand its production capacity.
- Third, the company may experience technical difficulties at the initial stage.
- Fourth, establishing adequate distribution may consume a fairly long time.
- Fifth, the company may also face difficulties changing consumers’ established behavioral patterns to buy its product.
New products usually do not earn a profit in the introductory stage. Investments in research, manufacturing, and marketing often exceed revenues until sales have grown to sizable figures.
The company needs to spend a significant amount of money on obtaining an adequate distribution of the product.
During this stage, potential buyers must be aware of the product’s features, uses, and advantages, which cost a substantial amount of money to the firm.
Companies focus on the high-income group at the introductory stage to buy their products because products are priced higher at this stage.
High prices are diseconomies of scale of production at this stage and higher expenditures in areas mentioned above. The high price results in low sales during this stage. As a result, the profit curve is typically negative.
Because of this unprofitability, the new product’s development and production must often be subsidized by the cash and profits generated by older products.
Marketing Strategies in the Introduction Stage
Marketing managers need to formulate strategies regarding marketing mix elements for the introductory stage of the product. You know that the basic marketing mix elements are: product, price, promotion, and distribution.
Regarding the marketing mix elements, a company may decide to pursue a skimming or penetration strategy. It may either go for rapid skimming or slow skimming strategy. Similarly, the company may decide to pursue rapid penetration or slow penetration strategy.
Rapid Skimming Strategy
In case the company decides to follow the rapid skimming strategy, it sets the price arbitrarily high to capture the early purchaser of the product. This strategy is used to maximize short-term profit.
Companies under this strategy may also go for producing higher quality products, promoting them aggressively, and distributing them through selective distribution channels.
This strategy may work well;
- if a substantial percentage of potential buyers are unaware of the product;
- they will be willing to buy it once they are informed of the product’s existence;
- they will be ready to pay a premium price since the product is of higher quality; and,
- the distribution matches their requirements.
Slow Skimming Strategy
Under the slow skimming strategy, a product is offered to the market at a high price, but the promotion is not as aggressive as the rapid skimming strategy. The company can gain a substantial amount of profit following such a strategy. Since the promotion costs are lower but the price is high, it enables the firm to make a sizeable profit.
A company may be successful in using the slow skimming strategy;
- if most potential buyers are informed of the product,
- ready to pay a premium price, and
- competition is either nonexistent or slim.
Rapid Penetration Strategy
In contrast, in the rapid penetration strategy, the firm sets the price at a low level but aggressively promotes it. The intention is to discourage competition and appeal to a greater portion of the segment on the onset.
A company may effectively use this strategy if the market size is significantly large, the majority of the market is unaware of the product and very much price-sensitive, and there is a small potential competition.
By lowering the price and earning a smaller gross margin, fewer competitors will be attracted to the marketplace than if a skim strategy were used. The executive has extra time to solidify its position in the market and capture a greater market share.
Slow Penetration Strategy
Under the slow penetration strategy, a product is introduced in the marketplace at a low price. The promotion under this policy is not aggressive as well.
If the company senses that the size of the market is substantially large, buyers are mostly aware of the product and price-sensitive, and competition is existent, it may decide to pursue the slow-penetration strategy. It will help the company capture a significant portion of the market, taking advantage of its high price and low promotion costs.
Penetration strategy is normally used when the executive intends to keep the product on the market through all or most of the life cycle. Instead of quickly recouping costs and generating profits as would occur with a skim strategy, the marketing executive hopes for even greater long-term profits.
Although firms have used both strategies successfully, penetration is the most common. It is used for nearly all types of products, while skim is typically reserved for fashion, fad, and novelty items with fairly short life spans.
Stage 2: Growth
During the growth stage, sales rise rapidly; profits reach a peak and then start to decline. The growth stage of the product life-cycle is characterized by several new factors.
- First, sales and profits grow rapidly.
- Second, competitors have attracted to the growing market often more competitors enter than will survive.
- Third, cash flow may still be negative because of the firm’s efforts to establish a strong market share ahead of competitors.
In this stage, the product enjoys a high degree of prosperity.
As it gains market acceptance, the channels of distribution become more open as wholesalers and retailers increase their willingness to carry the product. This prosperity may also attract other companies, and the greatest number of competitors enter the market.
Faced with a growing choice of products, the consumer may become confused and uncertain about selecting. The market is turbulent during the growth stage as competitors enter and fight for share.
Even measuring the exact market share is difficult since the new users are growing. This does not mean that there are no profits at this stage.
Any resulting profits are used up in reinvestment to further the product’s growth. It is likely that a company earns more profit during this stage as sales go up, and promotion expenditures are spread over larger sales volume.
Moreover, as the company gains experience, the cost of production per unit comes down, resulting in higher profit.
Marketing Strategies in the Growth Stage
Since the competition is increasing and the market is expanding during the growth stage, the marketing executive moves away from a strategy of cultivating demand to one of market entrenchment – the struggle for brand acceptance and market share.
In a related sense, the increased competition and the desire to build a larger market share tend to reduce some slight price reduction. However, the price still stays relatively high, and the company reaps substantial profits.
The marketer’s role during the growth stage becomes one of persuading consumers and constantly reminding them about the product’s benefits, ensuring convenience of purchase by maximizing distributive outlets, manipulating price to keep the product competitive, and reinforcing the brand image associated with the product.
The growth stage is critical to a product’s survival because competitive reactions to the product’s success during this period will affect its life expectancy.
In the growth stage;
- A firm implements a marketing strategy to encourage strong brand loyalty and competes with aggressive emulators of the product.
- An enterprise tries to strengthen its market share by identifying the product’s benefits and by emphasizing these benefits.
- A company at this stage may also go for aggressive price cuts. It may also expand product lines and offer greater variety to combat competition.
- Another possibility is to follow a strategy of market segmentation and sell the product under a variety of brands owned by distributors or other producers.
- A company may also engage in a creative promotional campaign to attract potential buyers.
- Marketers may also modify warranty and service conditions to make them more attractive than before.
- The other option could be to make the product widely available to reach the mass market.
Following one or more of these strategies can place the company in competitive standing.
Stage 3: Maturity
In almost all of the products, there will be a time when sales growth will slow down. This is the stage that we term as the maturity stage of a product’s life-cycle.
At this stage, products have leveling demand, and competition will minimize the profit potential. At this stage, a company requires a highly efficient organization, such as a functional pyramid type, to maximize profits from steady sales.
The most notable characteristic of the maturity stage is the peaking of the product’s sales and profit curves. We can divide this stage into three parts.
- Growth maturity is the first phase of this stage when the sales growth rate starts declining. Though sales continue to grow at this phase, the rate is much slower. All of the distribution channels are covered as the product reaches this stage. A product reaches most of the potential customers except a few laggards who may start buying during this phase.
- The second phase is of the stage is stable maturity, where the market already becomes saturated and, as a result, sales flatten. Since the market is already saturated, the number of future sales will depend on the replacement purchase and population growth.
- The last phase of this stage is decaying maturity, when sales will start falling fairly rapidly. This stage is characterized by extreme competition, as many competing brands are available in the marketplace.
Competitors emphasize improvements and differences in their versions of the product. Consequently, weaker competitors at this stage are squeezed out or lose interest in the product.
Companies that did not establish a healthy market share during the growth stage drop out. Sales growth slows as most potential customers have been reached.
Profits are high but begin to decline as market leaders cut prices to gain market share. Profits remain large and mature products become the cash cows of the company, providing funds for the development of new products.
The price of a product will also drop sharply at this stage because of the widespread availability of a substitute.
As the sales growth slows down, it creates overcapacity problems for the firms, making competition severe. To survive in the face of extreme competition, firms increase their advertising, promotion, and research and development expenditures significantly.
These increased expenditures further reduce the profits of the firms. This situation compels weaker firms to withdraw themselves from the market, and as a result, only the competent ones survive.
Among the survivors, there are two types of firms – those who are giants, including the quality leader, service leader, and cost leader, and those who are serving and satisfying their small target markets – that operate in the marketplace.
Marketing Strategies in the Maturity Stage
To compete in this type of market environment effectively, the marketing executive will expand the product line by making a variety of models and styles to broaden the product’s appeal, producing something for everybody in hopes of sustaining sales.
By doing this, however, the product’s costs increase as shorter manufacturing runs are needed for each model, and style and inventories are built up, all of which create diseconomies of scale. The combined effect of lower prices and higher costs results in a declining profit curve.
In fact, during the latter part of the maturity stage, some competitors will withdraw their products because insufficient or no profits remain.
Those who remain in the market make fresh promotional, and distribution efforts; advertising and dealer oriented promotion are common during this stage.
There is no reason to think that mature product is static; improvements can be made on the basic product, and variations can be offered.
Although market leaders generally have the resources to expand their offerings, gaining market share is difficult and expensive.
The best-managed companies, therefore, try to hold and improve their share slightly while diverting profits from successful mature products into the development and introduction of new ones.
A company at this point has to look at the merits for revitalizing the product or allowing it to decline slowly, or killing it off and planning a replacement.
There are many ways a company can rejuvenate its products, and the method it will choose will depend on the reason or reasons for the product’s initial decline.
If this occurred through the introduction of a new competitive product with additional benefits, the company might choose to add similar benefits to its product, to add new but different services, or to reduce the present price and emphasize its value for money, perhaps trying to reach a new, more price-sensitive market in doing so.
If, on the other hand, in the company’s view, the competitive product is not superior to its own, the decision may be taken merely to increase advertising spending or introduce a sales promotion to regain market share.
Marketing is about selecting strategies that are either designed to counteract threats or to take advantage of opportunities in the marketplace.
If you remember the ‘four Ps’ of marketing, you will realize that the action a firm can take is limited to one of four areas: it can alter the product, the price, the promotional campaign, or the place – where and how the product can be bought.
The purpose of any one of the above strategies is to expand the market size.
A company can do this by converting nonusers into users, by entering into the new market segment(s), by winning competitors’ customers, by ensuring repeat sales, by increasing the volume of usage peruse by the customers, and by broadening the product’s uses.
Stage 4: Decline
At some point in time, the sale of a product is bound to decline. This point is termed as the decline or the final stage of the product’s life cycle.
Most products eventually pass from maturity to a fourth stage of the life-cycle: decline and eventual elimination. This stage is characterized by a further dropout of competitors until only a few remain.
At this stage, profits begin to fall sharply, often because of the excess capacity of the firm.
The promotion of the product is reduced or discontinued. Any remaining profit will not be reinvested in the product; no attempt will be made to rebuild demand.
However, careful management can extend a declining product’s life for some time to come. There are several reasons why a product declines.
- One of the important reasons is the availability of new innovative products as a result of technological development.
- The other could be the change in social trends or customers’ habits, which may cause the product to take a sharp turn downward in terms of sales.
Because of the declining profits, firms change their approach;
- Some of the firms are found to withdraw themselves from the marketplace. The remaining firms may reduce the variety they offer to make their operations more economical.
- Others may withdraw themselves from unprofitable segments. Yet some others may reduce their promotion budgets significantly to reduce the prices of their offers further.
- Some of the companies may also decide to increase their product’s price because consumers buying the product are frequently buying it as a replacement or a specialty need.
Only when firms begin to clear out inventories to withdraw the product will they decrease price.
Perhaps a very limited number of firms will find this stage profitable. The production costs will be fairly low, and the marketing efforts will all but cease, making it possible to earn a respectable profit margin.
Thus, a company may continue to sell the product for a relatively long time.
At some point in the decline stage, however, the marketing executive will have to withdraw the product. An acceptable level of profitability may no longer exist, or the product’s and the company’s image begins to suffer as the remaining customers shift to newer items.
As a product’s sales decline, so does its image of respectability and quality, and the company cannot afford to be closely associated with it.
Marketing Strategies in the Decline Stage
Although there is little that can be done about basic shifts in consumer preferences and the entry of competitive items, the firm has a wide range of alternatives that can be exercised for products with falling sales.
Before one decides on alternatives, it is imperative to identify the marginal products. After they are identified, managers need to arrive at decisions regarding their fate.
It is one of the most serious tasks of marketers to identify weak or marginal products. In smaller companies, managers know of the declining products, and hence a formal review procedure need not be followed.
Where product lines are broad, a committee should work to identify the weak items. This responsibility should not entirely be the rest of the marketing department because of the danger of bias.
The committee of product review should consist of executives from marketing, production, purchasing, control, personnel, and research and development departments. The review process should include a two-stage procedure.
Products should first be screened based on sales trends, market share trends, gross margin trends, and overhead trends. A particular product fails to pass minimum standards on the above factors; it should undergo further analyses based on some other factors.
In the second stage, products should be scaled based on market potential, contribution, relationship to sales of other products, and so on.
This analysis will help the company decide on the strategies regarding the products. These strategies could be;
- Perhaps the easiest solution to declining sales is to move the product into new foreign or domestic markets.
- This may require the addition of new distributors or the enlargement of the existing sales force.
- Companies may try to find new uses of the product among the current users.
- Companies may try to revive aging products by redesigning packages and increasing convenience for the customers.
- Companies may also spend heavily on different consumer deals, displays, and so on.
- Companies may also try to revive by declining product by changing the ad firm with the hope of a more creative advertisement campaign to be developed and launched by the new firm.
A company, based on the analysis made by the product review committee, may decide to drop an existing item from its product line (s). The first strategy that a company may pursue regarding this is to do nothing and wait until there are no longer any orders for the item.
Here the company can drop all promotional activities and rely solely on repeat purchases from current customers. Another strategy could be to continue selling a declining product but having a contract with another company to manufacture it.
Yet, another option could be to produce the item but selling through other under licensing arrangements. The other strategy is to sell the product to another firm and let them worry about manufacturing and marketing the item.
When none of the above strategies is found suitable, the firm should dispose of the product with a minimum inconvenience to the parties concerned.
Some other Product-Related Life Cycles
What is the duration of each of the stages of a product life-cycle?
It is very difficult to get an answer to such a question. It is also difficult to ascertain when a particular stage starts and when it comes to an end, marketers usually identify stages based on the sales growth or decline rate.
There should have periodical reviews by the marketers on different stages to decide on courses of action to combat competition. In the following few paragraphs, we shall focus on product-category, product form, product, and brand life cycles.
Using the product life-cycle concept, you may analyze a product category (home entertainment or electronic items), a product form (audio-visual equipment), a product (television), or a brand (Sony). Let us now have some idea on the life cycle of each of the above :
Product Category Life Cycle
The life cycle of a product category is found to be longer. Electronic items, for example, will stay in the growth or mature stage for an indefinite period. We also find that some of the product categories have entered into the decline stage, such as VCP, while others are clearly in the growth stage, such as computers.
Product Form Life Cycle
The product form the life cycle follows more or less the same pattern as the standard product life cycle. For example, the VCPs (video cassette player) passed through the four stages of the life cycle. It is expected that VCD (video compact disc) players will also pass through these stages (introduction, growth, maturity, and decline).
Brand Life Cycle
The life cycles of brands vary. Some brands are withdrawn from the market shortly after their introduction because customers do not favor them. They have a very short life cycle. Again, there are other brands found to be inexistent in the marketplace for decades, such as Lux. These brands have long life cycles.
Other Shapes of Product Life Cycle
A particular product may either follow the shape of the standard product life cycle takes bell shape, or it may follow some other shapes discussed later this lesson.
But some products exhibit life cycles other than a bell-shaped one. It is found from different studies that life cycle patterns may vary from six to seventeen types, of which three are common. They are growth-slump-maturity pattern, cycle-recycle pattern, and scalloped pattern (see figure below).
Products that follow the growth slump maturity life cycle pattern experience rapid sales growth when they are first introduced in the market and gradually fall, settling at a solid level.
Under the cycle-recycle pattern, a product initially experiences rapid growth, reaching the peak and then declines, which ends the first cycle.
The company, during the end of the first cycle, gives aggressive promotional drive as in the introductory stage, which further pushes sales and reaching to another peak (lower than the first one) and again starts declining (second cycle). Pharmaceutical products could be examples following a cycle recycle pattern.
Some products may be used by different people and different purposes.
As the new uses or users are identified or discovered, sales experience a leap. The number of leaps depends on the number of new types of uses or users are discovered or the discovery of new product characteristics. Sales of plastic, for example, may follow a scalloped pattern as its new uses and users are discovered.
Style Life Cycle
Though the words’ style’ and ‘fashion’ mean the same thing to most people, in reality, they carry a different meaning. A style is “a characteristic or distinctive mode or method of expression, presentation, or conception in the field of art.”
Style may be observed in our clothing, automobile, home furnishing, hairdressing, and in so many other areas. A particular style, after its invention, may also experience a life cycle. The pattern of the style life cycle is much like a cycle-recycle pattern.
Fashion Life Cycle
A fashion is a style that has achieved some degree of current acceptance. Importantly, not all styles become fashions – only those that achieve a degree of acceptance by the public.
For example, automobiles (sedans, station wagons, pick-ups). But only a relatively few styles ever become popular and well known. A fashion can originate in basically two different ways. Consumer created fashions are made popular by the public.
For example, the increased interest in physical fitness can create a fashion of jogging, which eventually increases the use of running shoes.
A fashion can also be producer-created. This is particularly apparent in the apparel industry, where prominent clothing designers develop new styles and promote them heavily.
A particular fashion passes through four stages: the distinctiveness stage, emulation stage, mass-fashion stage, and decline stage. In the distinctiveness stage, few people take an interest in something nontraditional to give others that they are different.
When these nontraditional ways are followed by others to emulate the fashion leaders, the emulation stage begins. When fashion becomes increasingly popular with the general public, the mass-fashion stage begins.
At this stage, manufacturers go for mass production to cope up with the mass demand. When fashion loses its appeal and people are attracted to something new, the decline stage starts.
Fashions usually develop slowly but remain popular for a shorter time.
The decline of fashion is also slow as its growth. Fashions are distinct from other products. Although a fashion can last for several years, its popularity usually appeals quickly and fades rapidly. The higher socioeconomic classes usually adopt fashions in the beginning.
How far down the social ladder, a fashion goes depends on how quickly the upper classes adopt a new fashion to replace the existing one. Not all fashions, however, are adopted in this manner.
Some are popularized by lower socioeconomic groups and then move up the social ladder. This is called the “trickle-up” theory of fashion adoption. But has now been adopted as something normal and casual in the fashion world.
The T-shirt was initially popular among the lower classes, worn by laborers as a practical undergarment. Now it is fashionable apparel in society.
Many opportunities exist for companies catering to fashion products, which have the principal advantage of speed with new opportunities coming and going.
The difficulty, however, is that the executive must be knowledgeable about fashion if the company is to have much chance for success, investing considerable sums of money in research and development., and in the marketing effort.
Fad Life Cycle
A fad is a fashion with a high degree of popularity among a particular group in the current period. Kotler defines a fad as a fashion that comes quickly into the public eye, is adopted with great zeal, peak early, and decline very fast.
A fad can have an extremely short life span, much shorter than fashion. Perhaps the most spectacular fad of the early 1980s, however, was Rubik’s Cube. Fads quickly capture the fancy of a particular group of buyers.
Because of the speed with which they enter and leave the marketplace, the executive must create the fad – the little opportunity exists in following another company into the market.
To effectively market fad items, then, the executive must engage in extensive research and development, and the company must be capable of absorbing a considerable amount of risk.
Demand/Technology Life-Cycle Concept
A particular human need may be satisfied in many ways. A particular product, for example, is one of the ways of meeting a particular need. The same need may also be satisfied by other products.
People, for example, need traveling means, which grows and changes as time passes. The demand life-cycle curve can describe the changing need level. Each need passes through five stages (see figure on top a).
The stages are termed as emergence, accelerating growth, decelerating growth, maturity, and decline, designated by ‘E,’ ‘G1’, ‘G2’, ‘M,’ and ‘D’, respectively. In case of particular need such as the need for traveling means, the maturity and decline stages have not set in yet, because such a need is increasing day by day.
When marketers can find out a particular need, they use certain technology to satisfy such needs.
The traveling need was first satisfied using animals as horses; later by carts pulled by animals, by boats, steamers, buses, trains, and airplanes. As technology develops, it satisfies a particular need in a way better than the previous technology.
These demand/technology life cycles are shown by curves T1 and T2 under the demand life-cycle curve (see figure on top a). Looking at the figure, you can see that each demand/technology life cycle follows the trend of emergence, accelerating growth, decelerating growth, maturity, and decline in that order.
A succession of product forms to satisfy a specific need appears within a given demand/technology life cycle. Each new product satisfies the need in a better way than the earlier product because the later product uses superior technology.
Looking at the figure, you can see a succession of product-form life cycles. P1, P2, P3, and P4 are the four products form life cycles where each of the products can satisfy a particular need better than its previous form.
Again, in a particular product form, there could be many alternative brands available that may differ in their need for satisfying abilities.
Criticism of the Product Life-Cycle Concept
Although the concept of a product life-cycle has gained widespread acceptance, some experts question this approach. One study of several products found no evidence of the sales patterns normally associated with product life-cycles.
Other critics suggest that there are no normal patterns for a product since each is so unique. Despite these criticisms, however, the life-cycle concept is an invaluable planning tool used by the marketing managers.
When used properly as a guide, the product life-cycle helps the marketing executive understand buyers of the product over time and create appropriate, effective marketing programs.
Final Words: Product Life Cycle How Products and Markets Operate
The product life cycle concept can be used to describe how products and markets operate.
The PLC concept can be applied to a product class, a product form, or a brand. Product classes have the longest life cycles – they stay in the mature stage for a long time.
On the contrary, product forms tend to have the typical product life cycle shape. A specific brand’s life cycle can change quickly due to changes in competition. The product life cycle concept is also relevant to styles, fashions, and fads.
Still, there are some limitations in using the PLC concept for forecasting product performance and developing marketing strategies.
For example, marketers may have trouble identifying which stage of the PLC the product is in, pinpointing when the product moves into the next stage, and determining the factors that affect the product’s movement through the stages. It is also difficult to forecast the sales level at each PLC stage, the length of each stage, and the shape of the PLC curve.
Developing marketing strategies based on the PLC concept can also be difficult because the strategy is both a cause and a result of the product’s life cycle. The product’s current PLC position suggests the most appropriate marketing strategies, and these strategies may influence product performance in later life-cycle stages.
Nevertheless, the PLC concept, if applied carefully, can help in developing good marketing strategies for different stages of the product life cycle.