Description
product life cycle presentation
CONTENTS
? INTRODUCTION ? PRODUCT LIFE CYCLE MODEL DESCRIPTION ? PRODUCT DEVELOPMENT PHASE ? INTRODUCTORY PHASE
? ? ? ?
GROWTH PHASE MATURITY PHASE DECLINE/SATURATION PHASE STRATEGIES OF EACH PRODUCT LIFE CYCLE PHASE
INTRODUCTION:All products and services have certain life cycles. The life cycle refers to the period from the product’s first launch into the market until its final withdrawal and it is split up in phases. During this period significant changes are made in the way that the product is behaving into the market i.e. its reflection in respect of sales to the company that introduced it into the market. Since an increase in profits is the major goal of a company that introduces a product into a market, the product’s life cycle management is very important. Some companies use strategic planning and others follow the basic rules of the different life cycle phase that are analyzed later.
The understanding of a product’s life cycle, can help a company to understand and realize when it is time to introduce and withdraw a product from a market, its position in the market compared to competitors, and the product’s success or failure.
For a company to fully understand the above and successfully manage a product’s life cycle, needs to develop strategies and methodologies, some of which are discussed later on.
PRODUCT LIFE CYCLE MODEL DESCRIPTION:The product’s life cycle - period usually consists of five major steps or phases: Product development, Product introduction, Product growth, Product maturity and finally Product decline. These phases exist and are applicable to all products or services from a certain make of automobile to a multimillion-dollar lithography tool to a one-cent capacitor. These phases can be split up into smaller ones depending on the product and must be considered when a new product is to be introduced into a market since they dictate the product’s sales performance.
PRODUCT LIFE CYCLE GRAPH
PROFITS & SALES
PRODUCT DEVELOPMENT INTRO GROWTH MATURITY DECLINE PHASE
SALES
+ 0 -
PROFITS
TIME
PRODUCT LIFE CYCLE PHASES
1.PRODUCT DEVELOPMENT PHASE
roduct development phase begins when a company finds and develops a new product idea. This involves translating various pieces of information and incorporating them into a new product. A product is usually undergoing several changes involving a lot of money and time during development, before it is exposed to target customers via test markets. Those products that survive the test market are then introduced into a real marketplace and the introduction phase of the product begins.
2.Introduction Stage:At the Introduction stage market size and growth is slight. It is possible that substantial research and development costs have been incurred in getting the product to this stage. In addition, marketing costs may be high in order to test the market, undergo launch promotion and set up distribution channels. It is highly unlikely that companies will make profits on products at the Introduction Stage. Products at this stage have to be carefully monitored to ensure that they start to grow. Otherwise, the best option may be to withdraw or end the product.
3. Growth Stage:The Growth Stage is characterized by rapid growth in sales and profits. Profits arise due to an increase in output (economies of scale)and possibly better prices. At this stage, it is cheaper for businesses to invest in increasing their market share as well as enjoying the overall growth of the market. Accordingly, significant promotional resources are traditionally invested in products that are firmly in the Growth Stage.
4. Maturity Stage:The Maturity Stage is, perhaps, the most common stage for all markets. It is in this stage that competition is most intense as companies fight to maintain their market share. Here, both marketing and finance become key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. The Maturity Stage is the time when most profit is earned by the market as a whole. Any expenditure on research and development is likely to be restricted to product modification and improvement and perhaps to improve production efficiency and quality.
5. Decline Stage:In the Decline Stage, the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors. At this stage, great care has to be taken to manage the product carefully. It may be possible to take out some production cost, to transfer production to a cheaper facility, sell the product into other, cheaper markets. Care should be taken to control the amount of stocks of the product. Ultimately, depending on whether the product remains profitable, a company may decide to end the product.
Strategies of each product life cycle phase
Development Introduction Growth
Phase
Strategic Goal Make your product known and establish a test period Almost not there
Phase
Acquire a strong market position
Phase
Maintain your market position and build on it
Maturity Phase Defend market position from competitors and improve your product Establishme nt of competitive environment
Decline Phase “Milk” all remaining profits from product
Competitio n
Early entry of aggressive competitors into the market
Price and distribution channel pressure
Some competitors are already With drawing
Development Phase Product Limited number of variations
Introductory Phase
Growth Phase Maturity Phase Price decrease
Decline Phase Variations and models that are not profitable are withdrawn
Introduction Improvement of product – upgrade of variations and product models
Price Goal
High sales to middle men
Aggressive price policy (decrease) for sales increase
Re-estimation Defensive of price policy price policy
Maintain price level for small profit
Promotion Goal
Creation of public – market product awareness Exclusive distribution channels and Creation of high profit margins
Reinforcement Reinforcement Reinforcement Gradual of product of middle of middle decrease awareness men men and preference
Distribution Goal
General and reinforced distribution through all distribution channels available
General and reinforced distribution with good supply to middle men with low profit
General and reinforced distribution with good supply to middle men with low profit
Withdrawal from most channels except those used in the development phase
doc_707972225.pptx
product life cycle presentation
CONTENTS
? INTRODUCTION ? PRODUCT LIFE CYCLE MODEL DESCRIPTION ? PRODUCT DEVELOPMENT PHASE ? INTRODUCTORY PHASE
? ? ? ?
GROWTH PHASE MATURITY PHASE DECLINE/SATURATION PHASE STRATEGIES OF EACH PRODUCT LIFE CYCLE PHASE
INTRODUCTION:All products and services have certain life cycles. The life cycle refers to the period from the product’s first launch into the market until its final withdrawal and it is split up in phases. During this period significant changes are made in the way that the product is behaving into the market i.e. its reflection in respect of sales to the company that introduced it into the market. Since an increase in profits is the major goal of a company that introduces a product into a market, the product’s life cycle management is very important. Some companies use strategic planning and others follow the basic rules of the different life cycle phase that are analyzed later.
The understanding of a product’s life cycle, can help a company to understand and realize when it is time to introduce and withdraw a product from a market, its position in the market compared to competitors, and the product’s success or failure.
For a company to fully understand the above and successfully manage a product’s life cycle, needs to develop strategies and methodologies, some of which are discussed later on.
PRODUCT LIFE CYCLE MODEL DESCRIPTION:The product’s life cycle - period usually consists of five major steps or phases: Product development, Product introduction, Product growth, Product maturity and finally Product decline. These phases exist and are applicable to all products or services from a certain make of automobile to a multimillion-dollar lithography tool to a one-cent capacitor. These phases can be split up into smaller ones depending on the product and must be considered when a new product is to be introduced into a market since they dictate the product’s sales performance.
PRODUCT LIFE CYCLE GRAPH
PROFITS & SALES
PRODUCT DEVELOPMENT INTRO GROWTH MATURITY DECLINE PHASE
SALES
+ 0 -
PROFITS
TIME
PRODUCT LIFE CYCLE PHASES
1.PRODUCT DEVELOPMENT PHASE
roduct development phase begins when a company finds and develops a new product idea. This involves translating various pieces of information and incorporating them into a new product. A product is usually undergoing several changes involving a lot of money and time during development, before it is exposed to target customers via test markets. Those products that survive the test market are then introduced into a real marketplace and the introduction phase of the product begins.2.Introduction Stage:At the Introduction stage market size and growth is slight. It is possible that substantial research and development costs have been incurred in getting the product to this stage. In addition, marketing costs may be high in order to test the market, undergo launch promotion and set up distribution channels. It is highly unlikely that companies will make profits on products at the Introduction Stage. Products at this stage have to be carefully monitored to ensure that they start to grow. Otherwise, the best option may be to withdraw or end the product.
3. Growth Stage:The Growth Stage is characterized by rapid growth in sales and profits. Profits arise due to an increase in output (economies of scale)and possibly better prices. At this stage, it is cheaper for businesses to invest in increasing their market share as well as enjoying the overall growth of the market. Accordingly, significant promotional resources are traditionally invested in products that are firmly in the Growth Stage.
4. Maturity Stage:The Maturity Stage is, perhaps, the most common stage for all markets. It is in this stage that competition is most intense as companies fight to maintain their market share. Here, both marketing and finance become key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. The Maturity Stage is the time when most profit is earned by the market as a whole. Any expenditure on research and development is likely to be restricted to product modification and improvement and perhaps to improve production efficiency and quality.
5. Decline Stage:In the Decline Stage, the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors. At this stage, great care has to be taken to manage the product carefully. It may be possible to take out some production cost, to transfer production to a cheaper facility, sell the product into other, cheaper markets. Care should be taken to control the amount of stocks of the product. Ultimately, depending on whether the product remains profitable, a company may decide to end the product.
Strategies of each product life cycle phase
Development Introduction Growth
Phase
Strategic Goal Make your product known and establish a test period Almost not there
Phase
Acquire a strong market position
Phase
Maintain your market position and build on it
Maturity Phase Defend market position from competitors and improve your product Establishme nt of competitive environment
Decline Phase “Milk” all remaining profits from product
Competitio n
Early entry of aggressive competitors into the market
Price and distribution channel pressure
Some competitors are already With drawing
Development Phase Product Limited number of variations
Introductory Phase
Growth Phase Maturity Phase Price decrease
Decline Phase Variations and models that are not profitable are withdrawn
Introduction Improvement of product – upgrade of variations and product models
Price Goal
High sales to middle men
Aggressive price policy (decrease) for sales increase
Re-estimation Defensive of price policy price policy
Maintain price level for small profit
Promotion Goal
Creation of public – market product awareness Exclusive distribution channels and Creation of high profit margins
Reinforcement Reinforcement Reinforcement Gradual of product of middle of middle decrease awareness men men and preference
Distribution Goal
General and reinforced distribution through all distribution channels available
General and reinforced distribution with good supply to middle men with low profit
General and reinforced distribution with good supply to middle men with low profit
Withdrawal from most channels except those used in the development phase
doc_707972225.pptx