Different Types Of Product Life Cycle – A product’s life cycle is the sequence of stages from its initial arrival to its final exit from the market. Today’s marketers try to plan the life of a product even before it is introduced. They try to maximize profits throughout the period. It’s in the market, not just in the early stages.
It is interesting to note that of course not all products have the same life cycle. Some live longer than others and some mature earlier than others.
Different Types Of Product Life Cycle
It should also be noted that many products never complete their normal life cycle; they die suddenly before they ever mature. A life cycle approach is an effective management tool for planning each stage of a product’s life.
What Is Product Lifecycle Management (plm) And How To Use It
The concept of a product passing through different life stages has been of interest to marketers for the past few decades. A basic life cycle analysis is that a new product begins in an introductory stage, moves to a growth stage, then maturity, and finally declines and possibly dies.
Before we look at the stages, let’s consider how knowing the product life cycle can help you succeed as a strategic marketing planner. Knowing the product life cycle can help you in the following cases.
Of course, each product has its own unique life cycle. In some cases, the growth-maturity-decline pattern can be quite rapid, while in other cases, the product can sell at saturation levels for a very long time. It is also important to understand that brands go through similar life cycle stages, although they are usually shorter.
The marketing manager must know what stage the brand and product have reached in the life cycle. As competition increases, the brand life cycle shortens, requiring the adoption of new marketing strategies aimed at either increasing sales or killing one brand to make way for a new one.
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Predicting product life cycles and when a product will reach a new stage is not easy.
But the danger signals of a downturn are pretty obvious – a decline in sales or market share, especially for one particular brand or product in a product line.
Understanding the relationship between a product and its life cycle allows marketing managers to plan their campaigns more effectively and better assess the product’s sales and profit potential. The importance of understanding the nature of the product life cycle lies in its relationship to marketing strategy.
This alerts the company to the need for positive action at the so-called “threshold point” where a change in strategy is necessary to continue the product. But beyond that, the marketing mix is different for each stage of the life cycle.
Electronic Product Development Lifecycle
Every product launched on the market has a lifetime, the duration of which cannot be predicted in advance. However, companies want their products to last a long time and expect lucrative profits from sales.
Companies understand that every product has a life cycle, although its exact shape and length cannot be predicted. Product Life Cycle (PLC) is the progression of sales and profits of a product over its lifetime.
A product’s life cycle usually looks like a bell-shaped curve, showing four stages at different points on the curve. The four stages of the product life cycle:
Many consider “product development” to be the first step in the product life cycle. This means that it is a completely different world, so “product development is not considered part of PLC”. During product development, sales do not take place and the company’s investment costs increase.
The Product Life Cycle And New Products
The implementation stage shows low sales figures as the product is introduced to the market. At this stage, the profit is zero or negative because of the significant costs involved in introducing the product.
With the right marketing, the product can enter the growth phase. During the growth phase, sales increase rapidly as consumers begin to accept the product. Production cycles become longer and economies of scale are achieved, reducing costs per unit of output while contributing to faster profit growth.
In the maturity stage of the product life cycle, rapid sales growth begins to slow down and profits decline at the beginning of this stage.
The most striking feature of this stage is the peak of the product’s sales and profit curves. At the beginning of the maturity phase, sales continue to grow, but at a much slower rate.
Software Development Life Cycle (sdlc)
Towards the end of this stage, sales and profits begin to decline quite rapidly. This stage is characterized by intense competition as many brands enter the market. To fight the competition, marketing costs are significantly increased, which leads to a decrease in profits.
For any product, its PLC enters a decline phase where product sales and profits decline very rapidly and most competitors leave the market.
Some products are threatened with quick death, and some are preserved for a long time; some return to the growth phase through aggressive promotion or relocation.
A new technology or a new social trend can cause a product’s sales to plummet. When this happens, marketers consider removing items from the product line to eliminate those that are not profitable.
Are You Working In The Right Part Of The Product Life Cycle?
We try to better understand each stage of the product life cycle and the corresponding marketing strategies.
Once a product is commercialized, it enters the implementation phase of its life cycle. Product sales growth is likely to be low in the introductory phase for a number of reasons.
New products are usually not profitable during the implementation phase. Investments in research, production, and marketing often exceed revenues until sales grow to significant numbers.
The company has to spend a lot of money to adequately distribute the product.
Figure3. The Product Life Cycle Curve For Different Types Of Drugs.
At this stage, potential buyers need to know the features, uses and benefits of the product, which are worth a lot of money to the company.
Companies focus on the high income group in the initial stage of purchasing their products as the prices of the products are higher at this stage.
High prices are the reason for the loss of economies of scale of production and higher costs in the above mentioned areas at this stage. High price leads to low sales at this stage. As a result, the yield curve is usually negative.
Because of this unprofitability, new product development and production often have to be financed with cash and profits from old products.
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Marketing managers must strategize the elements of the marketing mix for the entry stage of the product. You know that the main elements of the marketing mix are: product, price, promotion and distribution.
In terms of elements of the marketing mix, a company may choose to use a cue or penetration strategy. This can be a fast or slow withdrawal strategy. Similarly, a company may decide to use a fast or slow diffusion strategy.
When a company chooses to follow a quick reset strategy, it sets an arbitrarily high price to catch an early buyer of the product. This strategy is used to maximize short-term profits.
Firms following this strategy may also seek to produce higher quality products, aggressively promote and distribute them through selective distribution channels.
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In a slow withdrawal strategy, the product is offered to the market at a high price, but the promotion is not as aggressive as in a fast withdrawal strategy. With such a strategy, the company can make significant profits.
Since the cost of advertising is lower, but the price is high, it allows the company to make a significant profit. A company can successfully use a slow retreat strategy;
In contrast, in a rapid penetration strategy, the company sets the price at a low level but promotes it aggressively. The goal is to thwart the competition and draw attention to a larger portion of the segment early.
A company can use this strategy effectively if the market size is quite large, most of the market is unaware of the product and highly price sensitive, and there is little potential competition.
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Lowering the price and earning a lower gross margin will attract fewer competitors to the market than using a cutback strategy. The manager has additional time to strengthen his position in the market and capture a larger market share.
According to the slow diffusion strategy, the product is introduced to the market at a low price. The promotion of this policy is also not aggressive.
If the company feels that the market is significantly large, buyers are largely product-aware and price-sensitive, and there is competition, it may choose a slow-to-market strategy. This helps the company capture a significant share of the market by taking advantage of its high price and low advertising costs.
A lean strategy is usually used when the manager intends to keep the product on the market throughout its life cycle. Instead of quickly covering costs and turning a profit, as would happen with a lean strategy, the marketing manager hopes for even greater long-term profits.
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Although companies have used both strategies successfully, the spread is the most common. It is used for almost all types of products,