Explain the product life cycle theory. Product Life Cycle Analysis & Price Strategies 2019-02-04

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Product Life Cycle Analysis & Price Strategies

explain the product life cycle theory

At this time, successful companies will invest profits into marketing and sales efforts to help a product reach the next stage. It is neither healthy nor helpful to know the present too well, for our perception of the present is too often too heavily distorted by the urgent pressures of day-to-day events. For instance, advertising campaigns that look successful from a short-term view may hurt in the next stage of the life cycle. Others make functional and design improvements. Conclusion For companies interested in continued growth and profits, successful new product strategy should be viewed as a planned totality that looks ahead over some years. In the light of those findings, one approach to propping up the flattening sales curves might have been to reiterate the social necessity of wearing stockings at all times. Coca-Cola has been at the mature stage of its life cycle for a century or so, and it continues to lead in its market segment.

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the economist

explain the product life cycle theory

However, they still have to deal with the challenges from other technologies that are characteristic of the Maturity Stage. Note that a particular firm or industry in a country stays in a market by adapting what they make and sell, i. Growth Maturity: Sales-growth rate starts to decline. That's called the maturity stage. Shapiro, editors, Theory in Marketing Homewood, Illinois, Richard D. What has happened in nylon may not have been purposely planned that way at the outset, but the results are quite as if they had been planned. As a result of this, the organizations shift their manufacturing facilities to the countries where the cost of labor is low to reduce cost of production.

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Exploit the Product Life Cycle

explain the product life cycle theory

Characteristics of the product and the production process are in a state of change during this stage as firms familiarize themselves with the product and the market. Hence during the Metrecal boom Jell-O employed an advertising theme that successfully affixed to the product a fashion-oriented weight control appeal. The actual slope, or rate of the growth stage, depends on some of the same things as does success or failure in Stage I. This stage is marked by a rapid climb in sales. Notify me of new posts by email. Typically, the market maturity stage forces the producer to concentrate on holding his distribution outlets, retaining his shelf space, and, in the end, trying to secure even more intensive distribution. This occurs when the product peaks in the maturity stage and then begins a downward slide in sales.

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Product Life Cycle

explain the product life cycle theory

Applications: The Product Life Cycle idea helps advertising managers to arrange alternate marketing schemes to deal with the challenges that the products are liable to confront. In fact, every product strategy and every business decision inescapably involves making a prediction about the future, about the market, and about competitors. Yet a recent survey I took of such executives found none who used the concept in any strategic way whatever, and pitifully few who used it in any kind of tactical way. Few companies are able to weather the competitive storm. The introduction stage When an organization has developed a product successfully, it will be introduced into the national and international outlet. Many activities designed to raise the sales and profits of existing products or materials are often undertaken without regard to their relationship to each other or to timing—the optimum point of consumer readiness for such activities or the point of optimum competitive effectiveness. Sponsored Meaning: A product, when it is new, advances through an arrangement of stages from incubation to development, maturity, as well as decline.

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The Three Stages of the International Product Life Cycle Theory

explain the product life cycle theory

But, again, in time the sales and profit curves began to flatten out. Efforts are made to cut production and distribution costs which become the main concerns as sales and profit margins decline even further. End of third year: find new uses Ideas—make identical product for use as a pepper shaker, as decorative garlic salt shaker, shaker for household scouring powder, shaker to sprinkle silicon dust on parts being machined in machine shops, and so forth. It has remained—as have so many fascinating theories in economics, physics, and sex—a remarkably durable but almost totally unemployed and seemingly unemployable piece of professional baggage whose presence in the rhetoric of professional discussions adds a much coveted but apparently unattainable legitimacy to the idea that marketing management is somehow a profession. Introduction: The product is introduced in the market. Maturity Stage: This stage is marked with slow down of sales growth. For nylon, this tactic has had many triumphs—from varied types of hosiery, such as stretch stockings and stretch socks, to new uses, such as rugs, tires, bearings, and so forth.

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The 4 Stages of the Product Life Cycle with Examples

explain the product life cycle theory

This is where sales, marketing, and customer service really have to be on their A-game. As competition increases still further price becomes more critical and it starts to decrease; to a small degree or large, a price war is present as competing products fight for their market share. The growth stage is a period of rapid market acceptance and increasing profits. Characteristics of introduction stage include: i Huge selling and promotional costs are required to increase awareness of customers. In all cases of maturity and decline the industry is transformed.

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Product Life Cycle

explain the product life cycle theory

The main benefits of penetration pricing are as follows: 2. Other Examples Few companies seem to employ in any systematic or planned way the four product lifestretching steps described above. Competitors have entered the market and existing products face severe competition. Giving up on it too soon, and reducing your manufacturing or marketing efforts, can become a self-fulfilling cycle. From here, companies can take full advantage of economies of scale and improved distribution channels, meaning the overall costs will decrease while profits increase. Over time, new products or new technologies come along, and sales of your product will begin to ebb.

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Stages of a Product Life Cycle

explain the product life cycle theory

Prices and margins get depressed. Production gets concentrated into fewer hands. In other words, advance planning should be directed at extending, or stretching out, the life of the product. The continuity of the brand name helps to disguise the fact that the product itself has been through several life cycles. It passes through all four stages of its life. Next comes Maturity until eventually the product will enter the Decline stage. In the standardized product stage, production moves to developing countries, which then export the product to developed countries.

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Exploit the Product Life Cycle

explain the product life cycle theory

While some products are introduced and die quickly afterwards, others stay in the mature stage for a very long time. At various stages it would have exhausted its existing markets or been forced into decline by competing materials. In response to this, rather than continuing to add new features to the product, the corporation focuses on driving down the cost of the process to manufacture the product. Eventually, revenues drop to the point where it is no longer economically feasible to continue making the product. Market Growth Demand begins to accelerate and the size of the total market expands rapidly. Maturity phase At maturity, the steady increase in sales reduces. The only cases where there is any relief from this boredom and gradual euthanasia are where styling and fashion play some constantly revivifying role.

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Product Life Cycle Examples

explain the product life cycle theory

The product becomes widely known and competitors enter the market with their own version of the product. . But the extent to which patent exclusiveness can play a critical role is sometimes inexplicably forgotten. As demand declines, the overcapacity that was already apparent during the period of maturity now becomes endemic. A fad may be part of an otherwise normal product life cycle, passing through the product life cycle stages. Creating new users for nylon hosiery might conceivably have taken the form of attempting to legitimize the necessity of wearing hosiery among early teenagers and subteenagers.

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