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Idea of ‘Product Life Cycle’
At first, the hypothesis of the ‘Product Life Cycle’ was established in 1950s which had explained the expected life cycle of some products starting from the very beginning to the final time of a product in a market. The entire life which a product passes through in a market is divided into four phases or stages which are ‘product introduction’, ‘product growth’, ‘maturity’ and ‘decline’.
The Model of ‘Product Life cycle’ is becoming popular for last some decades. This is an important view and the principle of business which the manufacturer of goods has to understand and adopt in order to get profits and to stay in the field of business.
The goal to manage a product life cycle is to increase its power to gain profits at each stage. The model of ‘life cycle’ is basically connected with the conjecture of marketing.
INTRODUCTION
Consumers buy millions of goods every year. All of these articles have limited lives. By the passage of time the older and long life products lose their attraction and become less popular and likewise the demand increases for some modern products as soon as some new model is launched or some modifications are introduced(Gan et al., 2015).
The companies producing the goods bitterly understand the different stages of life cycles in different products. They further know that the goods which they sell have a life span in some limits. The majority of the companies intend to make heavy investments for development of new products to grow and continue their business(Stanford-Smith, 2009).
The right way to manufacture successfully is not only to understand the life cycle but it depends upon appropriate management of the product though their entire life by applying the right resources as well as by adopting best marketing and sales strategies, dependent upon the stage of life cycle of the product.
Stages
The ‘life cycle’ of a product has got four clear defined stages; each stage has its own characteristics, which means the different things about business which the companies are trying to get manage for the life cycle of some particular product (Coelho and McLaren, 2012). These stages are as under
1. Introduction stage
In this stage the life cycle of the product may be very expensive for the company introducing some new product(Waghmode, 2014). Sales may be low due to small size of the market and less demand for the newly introduced product, the demand may be increased by passage of time. In a sector of competition of products the cost of newly introducing product may be very high due to research work, development, consumer testing and marketing.
During this introduction phase, there should likely heavy advertising and promotional activities designed to raise up the awareness in respect of new product and to check the sale among early purchasers who are the adventurous consumers liking to own some cutting edge product(Clayton and Heo, 2011).
The market penetration must be, depending upon the nature of goods, should either get a premium price so the developing cost can be recovered rapidly or be priced at a low level to have wide spread adoption. During this stage the number of products sold is little because the business has yet to expand awareness of the product among the potential consumers.
At this stage the advertisement is very crucial so the budget incurred in marketing is often substantial. The process and style of advertisement depends upon the nature of the product. If it is intended that the product should go to mass audience, the campaign of advertisement may be built in order and around one theme.
If the resources of the company are limited or the product is specialized, then a smaller campaign should be used which could used to target a very specific audience. As the product moves towards maturity, the budget incurred on advertisement automatically shrinks because the audiences are already consumer of the product and are well aware about it.
Various techniques are adopted to exploit the early stage use of penetrating prices i.e. low prices for speedy establishments in addition to gliding. Initially lofty prices are kept, which are later lowered, so that the initial purchasers may be attracted in.
2. Growth Stage
In this stage typical strong growth in profits and sale is expected as the company may obtain the benefits of increased economies at a great scale in production, in profit margin and on the overall benefit and profits(Revilla and Fernandez, 2013). It creates a possibility for businesses for investing more money to promote activities for maximizing the potential of the stage of growth.
In this growth phase the professional activities may extend to get focus on expansion of the market for the new segment of the product, either demographic or geographic and giving support to expand the product family.
After survival in the introduction stage, a product enters in the growth stage and get start to be observed in markets. At this moment the company may choose as to whether it will go to increase profitability or to increase the market share.
This time is the golden period or boom time of a product. Production is increased which results in low unit cost, momentum of sale is build strong, the advertising campaign targets the mass audience instead of any specialized market.
Awareness of consumers grows high among the consumers due to competition of the product in the market. Developments and amendments have to be made as per feedback which has been received and fresh market is to be discovered. The aim of the producer becomes to sustain there in the market during the stage of growth, as long as possible.
This will quite possible that the articlemay never sustain at the current phase and gets an immediate slip towards the reduction so much so forthwith disappearance. This may be challenge for entire marketing department of a company for evaluation the entire cost which the company has to bear and the chances of the product for survival and retention in the competition. In this behalf hard choices are needed to be taken thus a trailing product may be unfortunate.
3. Maturity Stage
In this stage the product becomes established, share of owner is built up in the market and aim and goal of the manufacturer is achieved. At this stage a wise strategy is required for investment and marketing as this is the most probable time of competition(Nickell, 2009).
At this stage the manufacturer have to introduce the improvement and modifications in the process of production which may give them theadvantages in competition in the market. In that time when a product reaches in the maturity phase, the producing company becomes entitle to get considerable reward for it capital and time indulged in development of the product.
The features of the product to be continuously refreshed and there should be some advancement to differentiate the product from the competitive goods and for increase in share in the market. However by the passage of time the expenditure and marketing activity becomes at much lower level than the earlier in life cycle.
This maturity stage is the more profit earning time for a product. In this stage the sales are continuously increased(Krishnamoorthi, 2012). Due to very strong awareness the expenditure of advertisement is reduced.
Competition is resulted into decreased market share and price. At this stage the competing products are very similar which create difficulties of differentiating the product. The company has to make efforts to encourage the customers of the competitor …
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