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Product Life Cycle
Transcript of Product Life Cycle
After the introduction and growth stages the product enters into the Maturity stage. During the third stage the main focus for the most companies is maintaining their market share in all of the possible obstacles they will encounter.
When a product is initially introduced, sales will be low until customers become aware of the product.
There will most likely be heavy promotional and advertising activity designed to raise awareness of the new product. (ad costs usually high)
Low sales + high costs = usually make introduction stage a period of negative profits
Product Life Cycle
Product Life Cycle
The primary goal is to establish a market and build primary demand for the product class.
The final stage in the Product Life Cycle
Demonstrated by the fall of both sales and profits
Has both challenges and opportunities
Challenges of the Maturity Stage
Sales Volume Peak:
The market becomes saturated because there are less customers. Most customers who were going to purchase the product have already done so.
Decreasing Market Share:
Challenge to maintain market share die to high competition.
Profit Share to Decrease:
Less market share equals less profit. Companies start to lower process hoping to attract more customers.
Benefits of Maturity Stage
Continued Reduction in Costs:
Economies of scale and production efficiency.
Increased Market Share Through Differentiation:
Innovative marketing campaigns or diverse product features.
In 1931 is when Otto Kleppe developed a precursor to what we know as PLC now.
In 1957, Jones worked for Booz, Allen and Hamilton is the one that theorized PLC
The first ever PLC recorded was by American Motors
Speeding up the product development process for Jeep Grand Cherokee
Helps reduce the product's time in the market
Maximize profit during the beginning stage
Strengthen the quality and reliability of the product
Maximize the Supply Chain Collaboration
Maximize value and Reduce waste
Reduce stock out
More companies are enticed to enter the developing market by the increased product demand
Product pricing reduction lure consumers from competitors to increase sales
Different Marketing Approach:
Companies generate public awareness through advertising, word of mouth, social media, referral programs
Consumers begin to favor other products:
Consumer typically stop purchasing the product and move on to newer and better items.
The market for the product will start to decline.
Loss of sales and profit:
Sales will start to fall and the overall profit for manufacturers will begin to decrease.
Possible withdrawal of product:
Companies could get to the point where they are no longer making any profit. The only option many companies have is withdrawal before they lose anymore money.
Opportunity for some companies to keep making profit, if they are able to reduce their costs.
Finding cheaper markets for sale.
Benefits of Growth Stage
Increased manufacturing production cut costs through economies of scale
Greater Consumer Awareness:
Increased market size result in increased product demand
Increase in Profits:
Increased sales volume and lowered costs boost higher profit margins
Challenges of Growth Stage
Following the introduction stage, the focus in the growth stage is to establish the product's position in the market and develop continued product demand. Profitability is highest during this stage. Companies may need more marketing and promotional strategies to shun competition.
by Group 9
Kathleen San Andres
It is not till
when the business had a clear better understanding how to price the product and when they can transition them during the different stages.
Fisher, Melissa. "Is Your Marketing Life Cycle Flatlined?".
www.forbes.com. 24 September 2013. Web. http://www.forbes.com/sites/prospernow/2013/09/24/is-your-marketing-life-cycle-flatlined/
"Maturity - Boundless Open Textbook." Boundless. N.p., n.d. Web. 21 July 2015. <https://www.boundless.com/marketing/textbooks/boundless-marketing-textbook/products-9/product-life-cycles-69/maturity-345-7308/>.
"Product Life Cycle." Http://productlifecyclestages.com/product-life-cycle-stages/decline/. N.p., n.d. Web. <http%3A%2F%2Fproductlifecyclestages.com%2Fproduct-life-cycle-stages%2Fdecline%2F>.
www.productlifecyclestages.com. Living Better Media. Web. 23 July 2015
Product Life cycle Visually
Challenges and Benefits
small or no market for the product
More losses than profits
Can charge a high price for the product