Product Life Cycle
Switch on the television set and you are likely to find more ads for Tata Sky, Airtel DTH, Sun TV DTH and Dish TV than say Amul Butter or CTVs. DTH service is rather new and hence marketeers spend money on advertising it aggressively whereas CTVs are already on their way out; any extra money spent on them would be counter productive. This means that every product has a life cycle- It is launched, it grows and at some point may die. So a semi automatic washing machine may die, but washing machines in general might not; or having a BSNL landline connection may go out of demand, but having a phone connection will not.
The product lifecycle serves as a good model for managers that help them decide different marketing, financial, manufacturing, purchasing, and human resource strategies in each life cycle stage. for various products.
The product lifecycle has 4 phases: Introduction, Growth, Maturity and Decline. The product lifecycle is often likened to that of a tree; a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).
Introduction: The need for immediate profit is not a pressure. The product is promoted to create awareness. In the DTH service for example, as the service is new, all service providers are providing it with attractive offers to customers because they have to create a demand for this product. A skimming pricing strategy where providers charge differential prices at different stages in the introduction of the product. Limited numbers of product are available in few channels of distribution.
Growth: Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilise. The mobile market in India can be classified in the growth stage, with many players and similar offerings.
Maturity: Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media. The colour television market in India has reached the maturity stage.
Decline:At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting. The colour television has been replaced by LCD and Plasma TVs that are now eyeing the consumer's wallet.
However, the length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Thus, the life cycle may be useful as a description, but not as a predictor.
Switch on the television set and you are likely to find more ads for Tata Sky, Airtel DTH, Sun TV DTH and Dish TV than say Amul Butter or CTVs. DTH service is rather new and hence marketeers spend money on advertising it aggressively whereas CTVs are already on their way out; any extra money spent on them would be counter productive. This means that every product has a life cycle- It is launched, it grows and at some point may die. So a semi automatic washing machine may die, but washing machines in general might not; or having a BSNL landline connection may go out of demand, but having a phone connection will not.
The product lifecycle serves as a good model for managers that help them decide different marketing, financial, manufacturing, purchasing, and human resource strategies in each life cycle stage. for various products.
The product lifecycle has 4 phases: Introduction, Growth, Maturity and Decline. The product lifecycle is often likened to that of a tree; a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).
Introduction: The need for immediate profit is not a pressure. The product is promoted to create awareness. In the DTH service for example, as the service is new, all service providers are providing it with attractive offers to customers because they have to create a demand for this product. A skimming pricing strategy where providers charge differential prices at different stages in the introduction of the product. Limited numbers of product are available in few channels of distribution.
Growth: Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilise. The mobile market in India can be classified in the growth stage, with many players and similar offerings.
Maturity: Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media. The colour television market in India has reached the maturity stage.
Decline:At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting. The colour television has been replaced by LCD and Plasma TVs that are now eyeing the consumer's wallet.
However, the length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Thus, the life cycle may be useful as a description, but not as a predictor.