Product Life Cycle

9 September 2016

Life Cycle Products play an essential part in our lives. Products are divided by their tangible and intangible attributes which is offered by the wholesaler to end consumers (Business dictionary). Throughout our lives, products play a key role in satisfying not only the needs and but also the desires of consumers. Today, we are living in a world that has a wide variety of products ranging from the basic needs of life such as food, clothes and household appliances to luxury items such as Smartphone and tablets.

The existence of products is not only to satisfy the needs and desires but also to satisfy the demands of consumers or customers. Products have a huge role to play in generating profit for any business-oriented organization. This is because a product greatly contributes to the revenue of the business organization. In addition, a product also helps create long term relationships between an organization and its customers because once the customers are genuinely satisfied with the product, they may be loyal to that particular brand of the product and continue to patronize it again in the future.

Product Life Cycle Essay Example

Just like a human being, every product on the market has to go through a life cycle and the length of each product’s life cycle is different from one another (Kerin, Hartley & Rudelius, 2009) . For instance, consumer products such as facial cleansers have shorter life cycles compared to business products like fax and copy machines. The period of time a product remains competitive in the market illustrates the product life cycle.

The product life cycle (PLC) is one of the most familiar concepts in marketing and is defined as a concept that provides a way to trace the stages of a product’s acceptance in the market from the introduction of the product to the declination of the product. A product progresses through four major stages which are introduction, growth, maturity and decline (Lamb, Hair, McDaniel, Summers & Gardiner, 2009). The first stage of the product life cycle is the introduction stage where a new product is first launched and enters the market (Kotler & Armstrong, 2012).

Having said that, not all products launched during this stage enters the market because some of them are still going through the product planning process in the introduction stage (Bengu & Kara, 2010). According to Bengu and Kara (2010), during this stage, the marketing efforts is focused on identifying the customers needs and specific product characteristics before the product enters the manufacturing stage. In this stage, the company needs to commit to spending a lot of money on the distribution and promotion in order to inform the customers of the new product and get them to try it.

Aggressive promotion and distribution is needed in this stage because some of the customers may not know about the new product. In return, the company probably does not gain any profit because of the low sales but high expenses. Other than that, as product and manufacturing flaws are identified in this stage, the company puts in a lot of effort to correct and develop in mass-production economies that leads to high production cost. In the introduction stage, sales normally increase slowly as the consumers start to know about the product and try it.

Once the product moves from the introduction stage and sales begin to grow, it enters the growth stage. For example, the introduction stage for the iPhone begun when it was first announced in January 2007 then released in the following June 29. During this stage, only a few customers know about the iPhone and Apple needs to do an aggressive promotion in order to tell the customer about their product. When the new product satisfies the market, it enters the second stage of product life cycle.

The second stage is the growth stage in which sales start climbing quickly. This is because, once the customers begin to recognize all the products in the market due to effective promotion and advertisement, the existing and new buyers start to change from their old pattern of buying to the new way of purchasing. The early adopters may continue to buy and later buyers start following their lead, especially if they hear favourable reviews and comments. Attracted by the opportunities for profits, many new competitors enter the market (Kotler & Armstrong, 2012).

They may introduce new products features and the market can expand. Thus, this leads to high competition since many business organizations starts to be more aware about the competitiveness of their prices and thus, increase their promotion and advertising in order to influence and prove to customers that their products are superior compared to the products of their competitors. On top of that, many business organizations tend to constantly be in a price war because the business not only serves the early adopters but also to serves early majority. The early majority are customers that are somewhat price sensitive and come from the lower half of the economic spectrum compared to the early adopters. This hindrance restricts the early majority purchases. As a result, this group of customers are rather risk adverse and to a certain extent are more hesitant to accept the product. Increase in the number of competitor’s leads to an increase in the number of distribution outlets.

The price for the product remains the same or decrease only slightly because business organizations cannot afford to cut the price too drastically due to the high cost of production, distribution and advertising (Lamb et al. , 2009). The profits increase during the growth stage as the promotion costs are spread over a large volume and the manufacturing cost decrease. During this stage, every business organization that competes in the same marketplace has its own goal which is to gain preference from the customers and to increase sales in order to maximise profit.

After the success of the iPhone, Apple decided to come out with the new iPhone which is the iPhone 3GS. This new iPhone included two major features that have been definitely absent from the original iPhone (Sanford, 2012). The release of the iPhone 3GS represents the growth stage of the iPhone. In this stage, competitors have entered the market and it is becoming the threat to the company because of the similarity features between their products (Kurtzleben, 2012). After going through the growth stages, the Product Life Cycle (PLC) then moves on to the maturity stage.

During this stage, the sales become more unpredictable and market competition become more aggressive. This is caused by the competitors entering the market to gain commercial profits (Mohan & Krishnaswamy, 2006). According to Hofer (1975) along with the introduction and decline stage, the maturity stage of the Product Life Cycle is where a major change in strategy is required. The persuasive promotion and differentiation product from competitors are the best strategies to be adopted during this maturity stage (McCarthy, Perreault, & Quester, 1998).

All the competitors try to outdo each other and create products and services that are different in terms of feature, benefit and functions with other rivals in order to conquer the market place during maturity stage. McCarthy et al. (1998) stated that profit declines throughout the market maturity stage because promotion cost rises and some competitors cut prices in order to attract more customers. As a result, the company with weaker and less efficient funds to compete with the other competitors may drop out of the market (Harrell & L. Frazier, 1999).

Besides that, product line size becomes more important during the maturity stage. Companies need to drop products with low volume sales, high production costs or little competitive viability. This situation may lead organizations to purchase certain items from other companies and made it by their own structures (Harrell & Frazier, 1999). As asserted by Pessemier (1997) promotional campaign only focuses more on reminder advertising than on new theme, since most buyers a loyal on particular brand or company. Some author state that product standardization take place.

This leads to no possibility for differentiation of the product between competitors. Hence, marketing should avoid extraordinary expenses and go for premium pricing and cost reduction strategy (Hambrick, Macmillan & Diana, 1982). For example, when the iPhone enters the maturity stage, Apple made an innovation on the iPhone. Apple have included both specification and features enhancements in the iPhone 3GS. The last stage in product life cycle is the decline stage. Keen (2012) reported that the final stage in the product life cycles (PLC) involve low demand for the particular product during that period.

This is because the product has been replaced with a newer product with better features and functions. Supply chain partners should be informed to keep away from needless remaining waste and preventable disposal costs (Keen, 2012). While the sales and profits were dropping, some firms take further action to withdraw from the market. On the other hand, firms that stay may go down to smaller market segments and reduce their expenses in terms of promotion. Promoting a weak profit-oriented product can be very costly to the firm not just in terms of revenue (Kotler & Armstrong, 2012).

Meanwhile, Marcu and Gherman (2010) found that in the declination stage, “the sales promotion continues to be intense, the commercial and non-commercial advertising are reduced and the sales representatives give only minimal attention to the product” (p. 170). Marcu and Gherman (2010) pointed out that, the declination stage in PLC is when the sales are starting to drop and the development is showing negative results. This is happening because the end-user has abandoned the product in the current market. There are many requirements that the marketing management needs to.

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