INTRODUCTION TO PRODUCT LIFE CYCLE

The product life cycle is an important concept in marketing that provides

insight into a product’s competitive dynamics. Once a new good or service

is introduced to the market, it enters the product life cycle. The product life

cycle is nothing more than the pattern of sales for a product over time. To

maximize efficiency, a product is managed through its life cycle. This

usually means altering marketing strategies and tactics as the product

matures. It is the recent introduction to the marketing inventory which acts

as the key to successful product management right from its introduction to

the obsolescence.

According to Prof. Philip Kotler “An attempt to

recognize distinct stages in the sales history of the product.” The product

life cycle is a conceptual representation. It is a product aging process. Just as

human beings have a typical life cycle going from childhood, adolescence,

youth and old age, so also products follow a similar route. Product life cycle

is simply graphic portrayal of the sales history of a product from the time it

is introduced to the when it is withdrawn. To fully understand product life

cycle, we will first describe its parent concept, the demand technology life

cycle.

DEMAND/ TECHNOLOGY LIFE CYCLE

Marketing thinking should not begin with the product, or even a product

class, but rather with a need. The product exists as one solution among many

to meet a need. For e.g. the human race has a need for “calculating power,”

and this need has grown over the centuries. The changing need level is

described by a demand-life-cycle curve. There is a stage of emergence (E)

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followed by stages of accelerating growth(G1),decelerating

growth(G2),maturity(M),and decline(D).In the case of “calculating power,

“the maturity and decline stages might not have set in yet.

Now a need is satisfied by some technology. The need

for “calculating power” was first satisfied by finger counting, then by

abacus, still later by slide rules, adding machines, hand calculators and

computers. Each new technology normally satisfies the need in a superior

way. Each demand/technology life cycle shows an emergence, rapid growth,

slower growth, maturity and the decline

FEATURES OF PRODUCT LIFE CYCLE

Products move through the cycle of introduction-growth-maturity-

decline at different speed.

Both sales volume and unit profits rise correspondingly till the growth

stage. During this period of maturity, the promotional expenses reach

a normal ratio to sales. Most of the competitors spend very normal

amount on promotion. Efforts are made to rationalize the existing

budget. Though, total expenditure does not expand, major share of the

expenditure goes to distribution and brand promotion to keep the

dealer’s loyalty intact. Advertising emphasizes the difference between

one brand and those of competitors. As a result, weaker competitors

leave the market only to the larger and stronger manufacturers.

However, in the period of maturity stage, sales volume rises but

profits fall.

The successful product management needs dynamic functional

approach to meet the unique situations of sales and profitability.

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IMPORTANCE TO MANAGEMENT

The product life cycle is an excellent tool for planning and developing

marketing strategy. Effective management of a product is enhanced when

the manager understands the process by which the product is adopted and

the concepts of brand loyalty and switching. The section on “managing the

product line” is very important for any manager marketing two or more

related products. Considerations are presented, for e.g. on product

modification and how to determine if a product should be dropped from a

line. The last section explains how to manage service businesses and

discusses the marketing concept in service organizations.

INTRODUCTION TO PRODUCT LIFE CYCLE

MANAGEMENT

Product life cycle management is the process of managing the entire life

cycle of a product from its conception, through design and manufacture, to

service and disposal. It integrates people, data, processes and business

systems and provides a product information backbone for companies and

their extended enterprise product life cycle management (PLM) is more to

do with managing descriptions and properties of a product through its

development and useful life, mainly from a business/engineering point of

view. Whereas product life cycle management is to do with the life of a

product in the market with respect to business/commercial costs and sales

measure.

All companies need to manage communications and

information with their customers (CRM-Customer Relation Management),

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their suppliers (SCM-Supply Chain Management), their resources with the

enterprises (ERP-Enterprise Resource Planning) and their planning (SDLC-

System Development life cycle). A form of product life cycle management

is called people-centric product life cycle. While traditional PLM tools have

been deployed only on release or during the release phase, people centric

PLM targets the design phase.

STAGES OF PRODUCT LIFE CYCLE

A basic product life cycle consists of four stages.

1. Introduction

2. Growth

3. Maturity

4. Decline

Before we examine these stages, several points need to be made.

First, not every product goes through every stage. In fact, many goods

never get past the introduction stage.

Second, the length of time a product spends in any one stage may vary

dramatically. Some products, such as food items, move through the

entire cycle in weeks. Others, such a scotch whiskey and filter

cigarettes, have been in maturity stage for years and changes in a

product can change its life cycle.

Repositioning a product can lead to a new growth cycle.

Repositioning is basically changing the perceived image on uses of

product.

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SC

SALES VALUE/

PROFIT (Rs.)

PC

INTRODUCTION GROWTH MATURITY DECLINE

1. THE INTRODUCTION STAGE

Whenever a new product is introduced, it has only a proved demand and not

the effective demand. That is why, sales are low and creeping very slowly. It

may be the case with a product like instant coffee, frozen orange juice or a

powdered coffee cream.

CHARACTERISTICS

1. LOW AND SLOW SALES: The product sales are the lowest and move

up very slowly at snail’s pace. The basic reasons for this are:

Delays in expansion of production capacity.

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Delays in making available the product to consumers due to lack of

retail outlets which are acceptable and adequate.

Consumer resistance to change over from the established

consumption behavioral patterns.

2. HIGHEST PROMOTIONAL EXPENSES: During this period of

introduction or the development, the promotional expenses bear the highest

proportion of sales. It is so, because, the sales are of smaller volume on one

side and high level promotion efforts to create demand on the other.

Demand creation is not an easy task as it is a matter of breaking the barriers,

which is done by:

Informing potential and present consumers of the new and unknown

product.

Inducing a trial of the product.

Screening distribution network.

3. HIGHEST PRODUCT PRICES: The prices charged at the beginning are

the highest possible because of:

Lower output and sales absorbing fixed costs.

Technological problems might not have been mastered fully.

Higher margin to support higher doses of promotional expenses-a

must for growth.

Very few competitors or no competitors.

Sales to higher income groups in a limited area for cultivating the

effective demand.

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2. THE GROWTH STAGE

Once the market has accepted the product, sales begin to rise. The prices

may remain high to recover some of the development costs. With high sales

and prices, profits rise sharply. This encourages competition leading to

possible product improvement. Although, the contribution to sales is

sizeable from the high income group buyers, middle income group buyers

do not contributes towards sales.

CHARACTERISTICS

1. SALES RISE FASTER: The sales start climbing up at faster rate because

of:

Killing the consumer resistance to the product.

The distribution network-retail outlet is built to the needs.

Production facilities are streamlined to meet the fast moving sales.

Thus, sales increases at an increasing rate over the period of time.

2. HIGHEST PROMOTIONAL EXPENSES: During the period of growth,

the promotional strategy changes. The problem is no longer one of

persuading the market to buy the product, but rather to make it to buy a

particular brand. The question is one of creating and maintaining and

extending selective demand. The advertising moves towards brand

identification, awareness to have the effects of a brand image. Special

offers, concessions, allowances to stockists and dealers are given to push a

particular brand or brand group.

3. PRODUCT IMPROVEMENTS: With the high sales and prices, profits

rise sharply and because of this, there is greater incentive for the

companies to enter the market. Competitions have the advantage of

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entering the market because; research and development have already been

completed by innovating firm at its costs. Once the originator has proved

the pattern of market, competitors can become stronger by coming out with

modified products. Along with product modification, they may reduce

prices too. This makes the originators to further improve the product and

bring down the price to nab competition.

3. THE MATURITY STAGE

Eventually, market becomes saturated because, the household demand is

satisfied and distribution channels are full. Sales level off and over capacity

in production becomes apparent. Competition intensifies as each

manufacturer wants to ensure that he can maintain production at a level

which gives him low unit cost. The greater the cost of production and the

initial investment, the more important it is to maintain high output so as to

cover fixed costs at lower rates of revenue. Lower prices are essential to

save off the competition. Though production costs are reduced, the margin

of distributors may not taper off. The efforts are made to extend the maturity

stage. So, this period is much longer than the growth stage.

CHARACTERISTICS

1. SALES INCREASE AT DECREASING RATE: As most of the

customers are knowing the uses of the product, the sales grow at falling rates

giving an overall picture of “off level”strategies.It shows that there is

apparent gap in production level and sales level. This identifies competition.

There is little growth in market as there is declaration in sales growth

leading to market saturation. Therefore, demand mostly consists of repeat

sales. Consequently competition intensifies, price tends to fall and selling

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efforts become aggressive. Profits, then, are squeezed. That is why, firms

employ extension strategies to retain their market share.

2. NORMAL PROMOTIONAL EXPENSES: During this period of

maturity, the promotional expenses reach a normal ratio to sales. Most of the

competitors spend very normal amount on promotion. Efforts are made to

rationalize the existing budget. Though, total expenditure does not expand,

major share of the expenditure goes to distribution and brand promotion to

keep the dealer’s loyalty intact. Advertising emphasizes the difference

between one brand and those of competitors. As a result, weaker competitors

leave the market only to the larger and stronger manufacturers.

3. UNIFORM AND LOWER PRICES: The prices charged by the producer

are quite lower and uniform with a very narrow difference except for the real

product differentiation. The strength and vitality of higher prices fade. That

is why, extension strategies are followed. The price charged just to cover

special costs in addition to the usual manufacturing expenses plus a low

margin for the investment. It has an advantage of low margins over broad

based turnover.

4. THE DECLINE STAGE

In this stage, sooner or later actual sales begin to fall under the impact of

new product competition and changing consumer’s tastes and preferences.

Prices and profits decline. It is a stage where the market for the product has

been superseded by a technological or style change which replaces the

existing demand altogether. That is, the old products are rendered obsolete.

For instance, the development of tough water based “oil-bong” has made

significant inroads into the traditional market for oil-based varnish enamel

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paints. That is, alternatively, interest in the product may fade, leading to a

rapid reduction in sales.

CHARACTERISTICS

1. RAPID FALL IN SALES: As the product is pretty old, new one available,

there is a change in the trend. People are interested in buy something new.

The sales fall sharply. Over production appears to be the major problem.

This induces firms to close down as competitors have to leave or left to

them. The total numbers of firms in the arena comes down. For instance, the

numbers of companies manufacturing calculators is much less than what it

was in 1960s and 1970s.

2. FURTHER FALL IN PRICES: Rapid reduction in sales creates a fear and

there will be intense competition to liquidate the stock at the earliest. There

would be a new kind of competition to have enlarged share in such a decline

stage to have maximum benefit at least profit margin.

3. NO PROMOTIONAL EXPENSES: Expenditure in support of product

falls sharply as prices become keener for fast stock liquidation. Distribution

network is reduced to the minimum with thorough rationalization. This is an

advantage as product is known for good many years. It may enable the

manufacturer to milk the product with profit through sales are scanty.

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STAGES OF THE PRODUCT LIFE CYCLE

EFFECCTS

AND

RESPONSES

INTRODUCTION GROWTH MATURITY DECLINE

Competition None of

importance

Some

emulators

Many rivals

competing

for a small

piece of pie.

Few in no.

with a

rapid

shake –out

of weak

performan

ce.

Overall

strategy

Market

establishment;

persuade early

adopters to try the

product.

Market

penetratio

n;

persuade

mass

market to

prefer the

product.

Defuse of

brand

position;

check the

inroads of

competition.

Prepare

for

removal;

milk the

brand dry

of all

possible

benefits.

Profits Negligible because

of high production

and marketing

costs.

Reach

peak

levels as a

result of

high

prices and

Increasing

competition

cuts into

profits

margins and

ultimately

Declining

volume

pushes

costs up to

levels that

eliminate

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growing

demand.

into total

profits.

profits

entirely.

Retail prices High, to recover

some of the

excessive costs of

launching.

High, to

take

advantage

of heavy

consumer

demand.

What the

traffic will

bear, need to

avoid price

war.

Low

enough to

permit

quick

liquidation

of

inventory.

Distribution Selective, as

distribution is

slowly built up.

Intensive,

employ

small

trade

discounts

since

dealers are

eager to

store.

Intensive,

heavy trade

allowances to

retain shelf

space.

Selective,

unprofitab

le outlets

slowly

phased

out.

Advertising

strategy

Aims at the needs

of early adopters.

Make the

mass

market

aware of

brand

benefits.

Use

advertising as

a vehicle for

differentiatio

n among

otherwise

similar

Emphasiz

e low

price to

reduce

stock.

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brands.

Advertising

emphasis

High, to generate

awareness and

interest among

early adopters and

persuade dealers to

stock the brand.

Moderate,

to let sales

rise on the

sheer

momentu

m of

word- of

mouth

recommen

dations.

Moderate,

since most

buyers are

aware of

brand

characteristic

s.

Minimum

expenditur

es

required to

phase out

the

product.

Consumer

sales and

promotion

expenditures

Heavy, to entice

target groups with

samples, coupons,

and other

inducements to try

the brands.

Moderate,

to create

brand

preference

.

Heavy, to

encourage

brand

switching,

hoping to

convert some

buyers into

loyal users.

Minimal,

to let the

brand

coast by

itself.

MARKETING STRATEGIES IN PRODUCT LIFE

CYCLE

1. INTRODUCTION STAGE: In launching a new product, marketing

management can set a high or a low level for each marketing variables, such

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as price, promotion, distribution and product quality. Considering only price

and promotion, management can pursue one of the four strategies as shown:

1. High promotion high price – Rapid skimming strategy

2. High promotion low price – Rapid penetration strategy

3. Low promotion high price – Slow skimming strategy

4. Low promotion low price – Slow penetration strategy

1. A RAPID – SKIMMING STRATEGY: It consists of launching the new

product at a high price and a high promotion level. The firm charges a high

price in order to recover as much gross profit per unit as possible. It spends

heavily on promotion to convince the market of the product’s merits even at

the high price. The high promotion acts to accelerate the rate of market

penetration. The strategy makes sense under the following assumptions: a

large part of the potential market is unaware of the product, those who

become aware are eager to have the product and can pay the asking price,

and the firm faces potential competition and wants to build up brand

preference.

2. A SLOW – SKIMMING STRATEGY: It consists of launching the new

product at a high price and low promotion. The high price helps recover as

much gross profit per unit as possible, and the low level of promotion keeps

marketing expenses down. This combination is expected to skim a lot of

profit from the market. This strategy makes sense when the market is limited

in size, most of the market is aware of the product, buyers are willing to pay

a high price and potential competition is not imminent.

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3. A RAPID – PENETRATION STRATEGY: It consists of launching the

product at a high price and spending heavily on promotion. This strategy

promises to bring about the fastest market penetration and largest market

share. This strategy makes sense. When the market is large, the market is

unaware of the product, most buyers are price sensitive, there is strong

potential competition, and the company’s unit manufacturing costs fall with

the scale of production and accumulated manufacturing experience.

4. A SLOW – PENETRATION STRATEGY: It consists of launching the new

product at a low price and low level of promotion. The low price will

encourage rapid product acceptance, and the company keeps its promotion

costs down in order to realise more net profit. The company believes that

market demand is highly price elastic but minimally promotion elastic. This

strategy makes sense when the market is large, the market is highly aware of

the product, the market is price sensitive, and there is some potential

competition.

2. GROWTH STAGE: During this stage, the firm uses several strategies to

sustain rapid market growth as long as possible.

The firm improves product quality and adds new product features and

improves styling.

The firm adds new models and flanker products.

It enters new product segments.

It increases its distribution coverage and enters new distribution

channels.

It shifts from product – awareness advertising to product – preference

advertising.

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It lowers price to attract the next layer of price sensitive buyers.

The firm that pursues these markets– expansion strategies

will strengthen its competitive position. But this improvement comes at

additional cost. The firm in the growth stage faces a tradeoff between high

market share and high current profits. By spending money on product

improvement, promotion and distribution, it can capture a dominant

position. It foregoes maximum current profit in the hope of making even

greater profits in the next stage.

3. MATURITY STAGE: In mature stage, some companions abandon their

weaker products. They prefer to concentrate their resources on their more

profitable products and on new products. Marketers should systematically

consider strategy of market, product and marketing – mix modification.

A. MARKET MODIFICATION: The company might try to expand the

market for its mature brand by working with the two factors that make up

sales volume.

Volume = No. of brand users * Usage rate per user

The company can try to expand the no. of brand users in three ways:

a. Convert non- users: The company can try to attract non-users to the

product. For e.g., the key to the growth of air freight service is the constant

search for new users to whom air carriers can demonstrate the benefit of

using air freight over ground transportation.

b.Enter new market segments: The company can try to enter the new market

segments – geographic, demographic and so on – that use the product but

not the brand. For e.g., Johnson & Johnson successfully promoted its baby

shampoo to adult users.

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c. Win competitor’s customers: The company can attract competitor’s

customers to try or adopt the brand. For e.g., Pepsi – cola is constantly

tempting coca-cola users to switch to Pepsi-cola, throwing out one challenge

after another.

Volume can also be increased by convincing current

brand users to increase annual usage of the brand. Here are three strategies:

a. More frequent use: The company can try to get customers to use the

product more frequently. For e.g., orange juice marketers try to get people to

drink orange juice on occasions other than breakfast time.

b. More usage per occasion : The company can try to interest users in

using more of the product on each occasion. Thus, a shampoo manufacturer

might indicate that the shampoo is more effective with two risings than one.

c. New and more varied users : The company can try to discover new

product uses and convince people to use the product in more varied ways.

Food manufacturers, for e.g., list several recipes on their package to broaden

the consumer’s uses of the product.

B. PRODUCT MODIFICATION: Managers also try to stimulate sales by

modifying the product’s characteristics. This can take several forms.

a. Quality improvement: This strategy aims at increasing the functional

performance of the product – its durability, reliability, speed and taste. A

manufacturer can often overtake its competitors by launching the “new and

improved” machine tool, automobile, television set, or detergent.

b. Feature improvement: Feature improvement aims at adding new feature

(like size, weight, material, additives and accessories) that expand the

product’s versatility, safety and convenience.

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c. Style improvement: It aims at increasing the aesthetic appeal of the

product. The periodic introduction of new car models amounts to style

competition rather than quality or feature competition.

C.MARKET-MIX MODIFICATION: Product managers might also try to

stimulate sales by modifying one or more marketing-mix elements. They

should ask the following questions about the non product elements of the

marketing-mix in searching for ways to stimulate a mature product’s sales.

a. Prices: Would a price cut attract new triers and users? If so, should the list

price be lowered, or should prices be lowered through price specials, volume

or early-purchase discounts, freight absorption, or easier credit terms? Or

would it be better to raise the price to signal higher quality?

b.Distribution: Can the company obtain more product support and display in

the existing outlets? Can more outlets be penetrated? Can the company

introduce the product into new types of distribution channel?

c.Advertising: Should advertising expenditure be increased? Should the

advertising message or copy be changed? Should the media-vehicle mix be

changed? Should the timing, frequency, or size of ads be changed?

d.Sales promotion: Should the company step up sales promotion-trade deals,

cents-off, rebates, warranties, gifts and contests?

e.Personal selling: Should the number or quality of sales people be

increased? Should the basis for sales force specialization be changed?

Should sales force incentives be revised? Should sales territory be revised?

Can sales-call planning be improved?

f.Services: Can the company speed up delivery? Can it extend more

technical assistance to customers? Can it extend more credit?

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4. DECLINE STAGE: The Company faces a number of tasks and

decisions to handle its aging products.

A. IDENTIFYING THE WEAK PRODUCTS: The first task is to establish a

system for identifying weak products. The company appoints a product-

review committee with representatives from marketing, R&D,

manufacturing and finance. This committee develops a system for

identifying weak products. The controller’s office supply data for each

product showing trends in market size, market share, price, costs and profit.

This criterion includes the number of years of sales decline, market share

trends, gross profit margin and return on investment. The managers

responsible for dubious products fill out rating forms showing where they

think sales and profits will go, with or without any changes in marketing

strategy. The product review committee examines this information and

makes a recommendation for each dubious product-leave it alone, modify its

marketing strategy or drop it.

B.DETERMINING MARKETING STRATEGIES: Some firms will

abandon declining markets earlier than others. Much depends on the level of

the exit barriers. The lower the exit barriers, the easier it is for firms to leave

the industry and the more tempting it is for the remaining firms to remain

and attract the customers of the withdrawing firms. The remaining firms will

enjoy increased sales and profits. In the study of company strategies in

declining industries, there are five decline strategies available to firm.

Increasing the firm’s investment (to dominate or strengthen its

competitive position).

Maintaining the firm’s investment level until the uncertainties about

the industry are resolved.

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Decreasing the firm’s investment level selectively, by sloughing off

unprofitable customer groups, while simultaneously strengthening the

firm’s investment in lucrative niches.

Harvesting (or milking) the firm’s investment to recover cash quickly.

Divesting the business quickly by disposing of its assets as

advantageously as possible.

Harvesting calls for gradually reducing a product or

business’s costs while trying to maintain its sales. The first costs to cut are

R&D costs and plant and equipment investment. Divesting would have tried

to increase the attractiveness of the business, not run it down.

C. THE DROP DECISION: When a company decides to drop a product, it

faces further decisions. If the product has strong distribution and residual

goodwill, the company can probably sell it to a smaller firm. If the company

can’t find any buyers, it must decide whether to liquidate the brand quickly

or slowly. It must also decide on how much parts inventory and service to

maintain for past customers. Example, Johnson & Johnson

DEATH IS NOT INEVITABLE:

Not all products face an inevitable death as they move

through the life cycle. Sometimes they can be given new life through

repositioning or product modification that allows them to enter a new growth

phase. Johnson & Johnson’s success with baby shampoo repositioning gave

management the confidence to try the same tactic again. A series of ads

touted Johnson’s baby lotion as being not only for the baby, but also for the

adults. Check protection, leg shaving, face washing, all over body

massaging, and after sun moisturizing. The use of creative marketing

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strategies to prolong the life of a product is called innovative maturity.

Tactics to achieve innovative maturity includes these:

Promoting more frequent use of the product by current consumers.

Developing more varied use of the product by current consumers.

Creating new consumers for the product by expanding the market.

Finding new uses for the product.

PROSPECTS AND PROBLEMS OF PRODUCT LIFE

CYCLE CONCEPT

This concept of product life cycle is so significant that it

can be used as a major tool by marketing manager in market forecasting,

planning and control. Though it helps us in having highly competitive

marketing strategies, its specific uses can be seen in its application in the

following areas.

PROSPECTS:

1.IN SALES FORECASTING: One of the most dramatic uses of product

life cycle in sales forecasting is its application to explain the violent rise and

fall of sales in case of a given product. A sales forecaster, having perfect

knowledge about the product life cycle, will be able to establish cause and

effect relations and helps to arrive at concrete conclusions. Under changing

business conditions with changing life cycle, some definite solutions can be

suggested, as sales forecasting essentially a problem solving area of

management process.

2. IN PRODUCT PLANNING: A product is the outcome of the research

and development. At what stage it is to be improved, remodeled or discarded

is dependent on product life cycle. It is very clear that during the infancy

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period - original issue works, during growth – defects are rectified, during

maturity – sophistication comes in and at last the product is discarded.

3. IN PRODUCT PRICING: Through the manufacturer is to decide at a

very outset, whether he is to go in for ‘high price’ and skim the market with

the risk of attaching too much competition or to go in for ‘low price’ and to

aim at greater and more rapid market penetration, he is to do it in

consonance with the changes in product life cycle stages. If he follows lower

prices, he has the advantage of keeping away the competitors; however, the

profit may not allow him to go in for the extension strategies during the

period of maturity. That is why; he is to start with high prices so that he can

reduce in course of time to take advantage of price competition such as

branding.

4. IN PRODUCT CONTROL: Product life cycle concept is an effective

control tool in case of those firms which have multi-product base. Such a

firm when it offers simultaneously number of products in a market, it is but

natural that all products so offered may have some degree of success. Some

might be doing exceedingly well, others so, and still others below

expectation. It is product life cycle that can be used to monitor the product

position so that the nature and extent of change required in marketing

strategy can be sought to exploit the product potentially in enjoying

maximum possible market share.

5. IN ADVERTISING: The process of persuasion is known as advertising if

done in impersonal way. The major aim of advertising is to create, maintain

and extend demand for a product or a service or an idea. The same policy

followed in the different stages of product life cycle may not fetch rich

dividends. The role of advertising must change phase wise to get the best

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rewards for the efforts put in terms of talent, time and treasure in advertising.

Thus, the role of advertising is to kill the consumer resistance in the

introduction stage, extending the demand for the product in growth stage,

maintaining the demand in the period of maturity. The role of advertising is

dormant in the last stage of decline. In other words, in the first stage it

speaks of product availability, in the second product differentiation, in the

third stage product improvement and in the last stage grand clearance sale.

While assessing the strengths of product life cycle as a

marketing tool, one should not turn deaf ears to the problems because; some

very serious doubts and problems are raised about the relevance and the use

of this concept.

PROBLEMS

1. ABSENCE OF ABSOLUTE CONFORMITY: Though we are informed,

in general, that every product conforms to the traditional life cycle pattern, it

is so always that all products have this conformity. Thus, products like steel,

coal, cement, gold, silver, aluminium, patent medicines, bicycles and the like

have economic fluctuations rather than pattern fluctuations.

2. STAGE SPAN FLUCTUATES: Length and pattern of product life cycles

can vary significantly from product to product. There is no reason to believe

that all products inevitably pass through all the four stages, some might

proceed, for e.g., straight from growth into decline because of the

introduction of some superior new product. Other products may have a

prolonged introduction stage before coming into wide acceptance. That is,

real product histories do not get hand in hand with the statement that

products pass from one to the successive stages as a matter of course.

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NEW PRODUCT DEVELOPMENTS

An identifying and developing new product idea – and effective strategies to

go with them – is often the key to a firm’s success and survival. But this is

not easy. New product development demands effort, time and talent – still

the risks and costs of failure are high. A new product may fail for many

reasons. Not offering a unique benefit or understanding the competition is

common mistake. Some companions rush to get a product on the market -

perhaps without developing a complete marketing plan. Sometimes the idea

is good, but there are design problems – or the product costs much more to

produce than was expected. To avoid such mistakes, it is useful to follow an

organized new product development process.

NEW PRODUCT DEVELOPMENT PROCESS

1. IDEA GENERATION: New ideas can come from a company’s own

sales or production staff, middleman, competitors, consumer surveys,

or other sources – such as trade associations, advertising agencies or

government agencies. Analysing new and different views of the

company’s markets helps spot opportunities that have not yet occurred

to competitors – or even to potential customers. Basic studies of

present consumer behavior point up opportunities, too. When looking

for ideas, the consumer’s view point is all important. It may be helpful

to consider the image that have of the firm.

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IDEA DEVELOPMENT

SCREENIN

G

IDEA EVALUATION

DEVELOPME

NT

COMMERCIALIZATION

2. SCREENING: It involves evaluating the new ideas with the product

– market screening criterion. The criterion includes the nature of the

product – market the company would like to be in as well as those it

wants to avoid. The qualitative criterion includes the statement that

helps the company select ideas that will allow it to lead from its

strengths and avoid its weakness. Ideally, the company matches its

resources to the size of its opportunities. A “good” new idea should

eventually lead to a product that will give the firm a competitive

advantage – hopefully one that will last.

ROI IS A CRUCIAL SCREENING CRITERION.

Getting by the initial screening criterion does not guarantee success

for the new idea. But it does show that at least the new idea is “in the

right ballpark” for this firm. If any ideas pass the screening criterion,

then a firm must set priorities for which ones go on the next step in

the process. This can be done by comparing the ROI (return on

investment) for each idea – assuming the firm is ROI oriented. The

most attractive alternatives are pursued first.

3. IDEA EVALUATION: When an idea moves past the screening step,

it is evaluated more carefully. Note that no tangible product has yet

been developed – and this can handicap the firm in getting feedback

from customers. For help in idea evaluation, firms use concept testing

– getting reactions from customers about how well a new product idea

fits their needs. Concept testing uses market research – ranging from

informal focus groups to formal surveys of potential customers. Idea

evaluation is more precise in industrial markets, potential customers

are more informed about their need – and their buying is more

economical and less emotional. Further, given the derived nature of

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demand in industrial markets, most needs are already being satisfied

in some way. So new products are ‘substitutes’ for existing ways of

doing things.

4. DEVELOPMENT: Product ideas that survive the screening and idea

evaluation step must now be analysed further. Usually, this involves

some research and development and engineering – to design and

develop the physical part of product. Input from the earlier efforts

helps guide this technical work. But it is still desirable to test models

and early versions of the product in the market. This process may

have several cycles – building a model, testing it, revising product

specification based on the tests and so on.

5. COMMERCIALIZATION: A product idea that survives this far can

finally be placed on the market. First, the new product people decide

exactly which product form or line to sell. Then, they complete the

marketing mix – really a whole strategic plan. And top management

has to approve an ROI estimate for the plan before it is implemented.

Finally, the product idea emerges from the new product development

process – but success requires the co-operation of the company.

Putting a product on the market is expensive. Manufacturing facilities

have to be set up and enough products have to be produced to fill the

channels of distribution. Further, introductory promotion is costly –

especially if the company has to develop new channels of distribution.

CONCLUSION

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The product life cycle concept is especially important to marketing strategies

planning and describes that each product spend different length of time in

each stage (i.e. introduction, growth, maturity and decline stage). It shows

that different market mixes and even strategies are needed as a product

moves through its cycle. This is an important point because profit change

during the life cycle with most of the profits going to the innovators or fast

copiers. However, the better your financial control, the more you will be

able to track individual product.

BIBLIOGRAPHY

Kotler, Philip, “Marketing Management” Tata Mc Grew Hills

Publications, 2008.

McCarthy, E.J., “Basic Marketing – a managerial approach”, Tata Mc

Grew Hills Publications,1990.

McDaniel , Carl.Jr , “Marketing”1987.

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Sontakki ,C.N., “Marketing Management”Kalyani Publications,2008.

Websites:

www.google.com

www.wikipedia.com

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