MANAGING PRODUCTS THROUGH

PRODUCT LIFE CYCLE

Product Life Cycle

The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.

The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.

Time

Profits

Sales

IntroductoryIntroductoryStageStage

GrowthGrowthStageStage

MaturityMaturityStageStage

DeclineDeclineStageStage

0

Product Life Cycle

Dollars

Introductory Stage

• High failure rates• Little competition• Frequent product

modification• Limited distribution• High marketing and

production costs• Negative profits• Promotion focuses on

awareness and information• Intensive personal selling

to channels

Full-Scale Launch of New Products

Full-Scale Launch of New Products

• Increasing rate of sales• Entrance of competitors• Market consolidation• Initial healthy profits• Promotion emphasizes brand ads• Goal is wider distribution• Prices normally fall• Development costs are recovered

Offered in more sizes,

flavors, options

Offered in more sizes,

flavors, options

Growth stage

• Declining sales growth• Saturated markets• Extending product line• Stylistic product changes• Heavy promotions to dealers and

consumers• Marginal competitors drop out • Prices and profits fall• Niche marketers emerge

Many consumer products are in Maturity Stage

Many consumer products are in Maturity Stage

Maturity Stage

• Long-run drop in sales

• Large inventories of unsold items

• Elimination of all nonessential marketing expenses

Rate of decline depends on change in tastes or

adoption of substitute products

Rate of decline depends on change in tastes or

adoption of substitute products

Decline Stage

Obsolescence Stage

• Companies withdraw from product manufacturing.• Stragglers eventually switch to an alternative

product.

• Companies withdraw from product manufacturing.• Stragglers eventually switch to an alternative

product.

How stages of the product life cycle relate to firm’s marketing objectives & marketing mix actions

INTRODUCTION GROWTH MATURITY DECLINE

ProductStrategy

DistributionStrategy

PromotionStrategy

PricingStrategy

Limited modelsFrequent changes

More modelsFrequent changes.

Large number of models.

Eliminate unprofitable

models

LimitedWholesale/

retail distributors

Expanded dealers. Long-term relations

Extensive.Margins drop.Shelf space

Phase out unprofitable

outlets

Awareness. Stimulate

demand.Sampling

Aggressive ads.Stimulatedemand

Advertise. Promote heavily

Phase outpromotion

Higher/recoupdevelopment

costs

Fall as result ofcompetition &

efficient produc-tion.

Prices fall (usually).

Prices stabilize at low level.

MANAGING THE PRODUCT LIFE CYCLE

Alter product quality

Enhance performance

Change appearance

• Modifying the Product

• Modifying the Market

Finding New Users

Increase use

Create new use situations

EXTENDING THE PRODUCT LIFE CYCLE- Repositioning

• Trading Up-add bells & whistles to raise price

• Trading Down- remove bells & whistles to lower price

• Downsizing-reduce contents but maintain price

Reacting to a Competitor’s Position-never compete head on

Catching a Rising Trend-baby aspirin is now low dose aspirin to reduce heart attacks

Changing the Value Offered