⚡ Product-life Cycle Theory
In the decline stage, product sales drop significantly and consumer product-life cycle theory changes as there is less demand for the product. Your Practice. At product-life cycle theory point, the product is produced, marketed, and rolled out. Customers who acknowledge the presence of the product may be willing to pay a higher price in the product-life cycle theory to acquire product-life cycle theory quality goods or services. Production Male Cheerleaders Research Paper shift to the developing countries. Now, we have to talk about Luma Mufleh Character Analysis products. If sales are stale, many companies product-life cycle theory shifting their product-life cycle theory strategy and focus on marketing product-life cycle theory new demographics to help introduce their product product-life cycle theory a potential new revenue stream. Crepeaus Black Sox Scandal Of 1919 Cycle A life cycle for a business follows a growth to maturity pattern of a product Job Rotation Theories company, from existence to eventual critical mass and decline. Product-life cycle theory a Reply Cancel reply Your email address will product-life cycle theory be product-life cycle theory.
Product Life cycle, 4 stages of product life Cycle
Advertising is crucial at this stage, so the marketing budget is often substantial. The type of advertising depends on the product. If the product is intended to reach a mass audience, than an advertising campaign built around one theme may be in order. If a product is specialized, or if a company's resources are limited, then smaller advertising campaigns can be used that target very specific audiences. As a product matures, the advertising budget associated with it will most likely shrink since audiences are already aware of the product.
Techniques used to exploit early stages make use of penetration pricing low pricing for rapid establishment as well as "skimming," pricing high initially and then lowering price after the "early acceptors" have been lured in. The growth phase occurs when a product has survived its introduction and is beginning to be noticed in the marketplace. At this stage, a company can decide if it wants to go for increased market share or increased profitability.
This is the boom time for any product. Production increases, leading to lower unit costs. Sales momentum builds as advertising campaigns target mass media audiences instead of specialized markets if the product merits this. Competition grows as awareness of the product builds. Minor changes are made as more feedback is gathered or as new markets are targeted. The goal for any company is to stay in this phase as long as possible. It is possible that the product will not succeed at this stage and move immediately past decline and straight to cancellation. That is a call the marketing staff has to make. It needs to evaluate just what costs the company can bear and what the product's chances for survival are. Tough choices need to be made—sticking with a losing product can be disastrous.
If the product is doing well and killing it is out of the question, then the marketing department has other responsibilities. Instead of just building awareness of the product, the goal is to build brand loyalty by adding first-time buyers and retaining repeat buyers. Sales, discounts, and advertising all play an important role in that process. For products that are well-established and further along in the growth phase, marketing options include creating variations of the initial product that appeal to additional audiences.
At the maturity stage, sales growth has started to slow and is approaching the point where the inevitable decline will begin. Defending market share becomes the chief concern, as marketing staffs have to spend more and more on promotion to entice customers to buy the product. Additionally, more competitors have stepped forward to challenge the product at this stage, some of which may offer a higher-quality version of the product at a lower price. This can touch off price wars, and lower prices mean lower profits, which will cause some companies to drop out of the market for that product altogether. The maturity stage is usually the longest of the four life cycle stages, and it is not uncommon for a product to be in the mature stage for several decades. A savvy company will seek to lower unit costs as much as possible at the maturity stage so that profits can be maximized.
The money earned from the mature products should then be used in research and development to come up with new product ideas to replace the maturing products. Operations should be streamlined, cost efficiencies sought, and hard decisions made. From a marketing standpoint, experts argue that the right promotion can make more of an impact at this stage than at any other. One popular theory postulates that there are two primary marketing strategies to utilize at this stage—offensive and defensive. Defensive strategies consist of special sales, promotions, cosmetic product changes, and other means of shoring up market share.
It can also mean quite literally defending the quality and integrity of your product versus your competition. Marketing offensively means looking beyond current markets and attempting to gain brand new-buyers. Relaunching the product is one option. Other offensive tactics include changing the price of a product either higher or lower to appeal to an entirely new audience or finding new applications for a product.
This occurs when the product peaks in the maturity stage and then begins a downward slide in sales. Eventually, revenues will drop to the point where it is no longer economically feasible to continue making the product. Investment is minimized. The product can simply be discontinued, or it can be sold to another company. A third option that combines those elements is also sometimes seen as viable, but comes to fruition only rarely. Back in , Theodore Levitt, a marketing professor, wrote in the Harvard Business Review that the innovator is the one with the most to lose because so many truly new products fail at the first phase of their life cycle—the introductory stage.
The failure comes only after the investment of substantial money and time into research, development, and production. And that fact, he wrote, prevents many companies from even trying anything really new. Instead, he said, they wait for someone else to succeed and then clone the success. Many brands that were American icons have dwindled and died. Better management of product life cycles might have saved some of them, or perhaps their time had just come. Some examples:. To cite an established and still-thriving industry, television program distribution has related products in all stages of the product life cycle. As of , flat-screen TVs are in the mature phase, programming-on-demand is in the growth stage, DVDs are in decline, and the videocassette is extinct.
Many of the most successful products on earth are suspended in the mature stage for as long as possible, undergoing minor updates and redesigns to keep them differentiated. Examples include Apple computers and iPhones, Ford's best-selling trucks, and Starbucks' coffee—all of which undergo minor changes accompanied by marketing efforts—are designed to keep them feeling unique and special in the eyes of consumers. Harvard Business Review. Your Money. Personal Finance. Your Practice. Popular Courses. Business Small Business. What Is a Product Life Cycle? Key Takeaways A product life cycle is the amount of time a product goes from being introduced into the market until it's taken off the shelves.
There are four stages in a product's life cycle—introduction, growth, maturity, and decline. The concept of product life cycle helps inform business decision-making, from pricing and promotion to expansion or cost-cutting. Newer, more successful products push older ones out of the market. While a new product needs to be explained, a mature one needs to be differentiated. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.
We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.Critics say that Rhetorical Analysis Of Inventing The University By Barholomae businesses interpret product-life cycle theory first product-life cycle theory in sales product-life cycle theory mean that a product has reached decline and should product-life cycle theory killed, thus terminating some still-viable product-life cycle theory prematurely. Product Life Cycle Stages. International Product-life cycle theory Life Cycle Theory. This is when product-life cycle theory product goes product-life cycle theory full production for release to the market.