Automobile manufacturers make subtle changes to their products every model year. From the business perspective, as a good business, the product needs to be sold before it finishes its life. Common characteristics of the decline stage include a decrease in sales, an increasing difficulty to make a profit, and a decrease in advertising. Soft drinks manufacturers have begun selling their products in 7. The length of each stage varies enormously. The competitors have by then entered the market with substitutes and imitations and the product distinctiveness starts diminishing. This stage requires greater investment as the product branding, and quality levels are established, and the property rights such as patents and trademarks are obtained.
A product like Coca-Cola and Pepsi experiences growth, but also a constant level of sales over decades. At this stage price becomes the primary weapon of competition, and we have to reduce considerably expenditure on advertising and sales promotion. Some go from introduction to decline. Some may even go out of business. Once the product is designed and put into the market, the offering should be managed efficiently for the buyers to get value from it.
Especially if the product is new on the market, users may not be aware of its true potential, necessitating widespread information and advertising campaigns through various media. However, this stage also offers its share of opportunities. . A company is usually trying to build both advertising and brand awareness of the product in the introduction stage. The company may also cut back on advertising during the decline stage. The Product Life Cycle contains. The length of the life cycle, the duration of each phase and the shape of the curve vary widely for different products.
Moreover, a new product has to face the existing products. The primary objective at this point is to defend market share while maximizing profit. Be on the lookout for broken fingernail clippers. It did this with the future in mind, allowing them to ultimately retain the market. However, most products fail in the introduction phase. For example, black and white televisions are still in existence but are not promoted.
Article shared by : This article provides an overview on Product Life Cycle. Incentives to get competitors' customers to switch. Product passes through stages in chronological order, that is, one, two, three and likewise. There are three stages contained within the theory. Competitors have started to overflow the market with more appealing and attractive inventions.
Examples Facebook Facebook is in the mature phase of the product life cycle. As such, the slope of the aggregate expenditure line is largely based on the slope of the consumption line which is the marginal propensity to consume , with adjustments coming from the marginal propensity to invest, the marginal propensity for government purchases, and the marginal propensity to import. Here, the firm tries to develop the brand preference and increase the market share. The life of product can be determined by its capacity to meet market expectations. Decline Stage: Once the peak or saturation point is reached, product inevitably enters the decline stage.
Growth Competitors are attracted into the market with very similar offerings. As sales increase, corporations may start to export the product out to other developed nations to increase sales and revenue. The decline stage may be precipitated by new technology that replaces the outmoded product. Until the consumers show the acceptance for the product, the firm distributes its product through a selective distribution channel. Provided by: Global Text Project.
By viewing the product life cycle in the same way, marketers pursue similar positioning strategies for products and services during each stage of the life cycle. In the process, they miss out on opportunities to differentiate themselves. During this stage, the product or the innovation becomes accepted in the market, and as a result sales and revenues start to increase. The firm could also launch a better advertising campaigns or rely on aggressive sales promotion. Problems with Product Life Cycle. Such diagram — stages, sales curve, and profit curve- is possible only if following assumptions are fulfilled: 1. Introduction Stage After a company develops a product and tests its viability among consumers, the product is usually introduced to the market.
For example, the computer eventually replaced the typewriter. Most products follow a predictable pattern from conception through obsolescence. Characteristics of introduction stage include: i Huge selling and promotional costs are required to increase awareness of customers. To be more precise, since the market is normally not ready for product improvements or refinements at this stage, the company produces basic versions of the product. But in every instance, obsolescence or decay eventually occurs when the need disappears or a better, cheaper and more convenient product may suit the same need or a competitive product due to superior marketing strategy suddenly gains a decisive advantage. Furthermore, profits in the introduction stage are negative or low due to the low sales on the one hand and high-distribution and promotion expenses on the other hand.
Buyer preferences also change with the advancements of new technologies which in the end may make products obsolete. We may require heavy advertising and sales promotion. European Journal of Information Systems. If the product has developed brand loyalty, the profitability may be maintained longer. Introduction The introduction phase is the period where a new product is first introduced into the market. Cost control becomes the key to generate profits.