4.4 Product Life Cycle

Product life cycle is just like a biological life cycle of a person. It has beginning and end. In between there is peak level of experience and perhaps benefits and rewards before it starts declining. Generally there are four stages of product life cycle. These are presented in the below graph and discussed.

4.4 Product Life Cycle

INTRODUCTION STAGE
This is the most critical period for a new product. The period determines whether the product will survive in the market. It is the situation when the new product is lunched, sales is low and there is absent of profits.

Market consideration
There are advantages and disadvantages of introducing a new product. The company that takes risk of the pioneering work (becoming the first) to lunch new product will enjoy the benefit of non-existence of competitors. Little knowledge exists by all the stakeholders such as buyers and competitors. In this situation, the company can adopt a strategy to benefit maximally in the market. However, in case the product is lunch and did not get acceptance from the customers, the company risks the chance of losing part of its capital by lowering price. Therefore, proper market research is very important before any product is lunched.

Strategy
Basically there are four strategies for successful lunching of a product.

Product
A new product may lack the important features or may be poorly designed. Thus, it is vital to design carefully and insert good features that make the product to sell itself if possible.

4.4 Product Life Cycle

Price
As mentioned earlier, pricing is very important at this period and companies can choose between two pricing strategies vis-a-vi market penetration and market skimming. For a company that wants to control the market share, will offers lower and attractive price which will make customers to buy and discourage competitors to come into the market. Alternatively, for the company that wants to make a quick turnover can adopt market skimming strategy whereby, the initial price will be high and as the product approaches growth and maturity the price declines.

Marketing Communications
The marketing communications has an important role to play in terms of creating awareness about the features and the benefits of the product and also motivating customers to purchase the product.

Distribution
The distribution process of a new product can determine the number of purchase of the product. Companies can make the product as available as possible or distribute the product widely and limit its availability.

4.4 Product Life Cycle

GROWTH STAGE
Growth stage is characterized by very high sales revenue, since customers are aware and understand the benefit of the product, market expands due to coming of competitors.

Market Conditions
Because of the market growth competitors join the market to reap the profit which is matured already. The product becomes part of the items customers are used to and competition increases among the competitors.

Strategy
Company that lunch the product has learned from the experiences in the introductory stage, the product now, is better designed, modified to suit customers`` expectations and needs.

Price
In pricing the products at this period, competitors and pioneers reduced the price points of old versions and increase the price points of new versions.

4.4 Product Life Cycle

Marketing Communications
Unlike in the introduction period, the marketing strategy here focuses on differentiating the competitors’ product with the pioneer`s product by highlighting specific features of the product.

Distribution
Companies tend to segment markets more because of the growth in the market and increasing expectations of the customers.

MATURITY STAGE
From the growth period, products become more established and move to the maturity stage before decline stage. Researches show that products tend to have more stability in this stage compared to the previous stages or decline stage. The specific market condition is that companies are trying hard to maintain market share and the profits, by targeting new customers.

Product
The product has reaches maturity; companies are adopting various strategies to maintain the sales. Some of the strategies are to add new features to the product, alter prices, and increase customer`s satisfaction through after sales service.

4.4 Product Life Cycle

Price
In a situation of intensive competition, market price of the product plays an important role in determining sales and revenues. The high level of competition in the market, the more likely market price will be affected.

Marketing communication
At his stage, marketers take charge by striving to make customers continue to buy the product. A considerable amount of money is spent for re-energizing the customers’ satisfaction by the company.

Distribution
At this stage of maturity, distribution reaches its peak with many outlets. The strategy now is for the channels to drop poor performance product (Marshall and Johnston, 2010) and carries along with the competitive product.

4.4 Product Life Cycle

DECLINE STAGE
At this stage, the product sales start to decline, companies put in a lot of effort to rescue the product from inevitable death. The market condition in the stage is that companies prescribe medication to their products; sometimes it extends the life span of the products and sometimes fails to do that.

Strategy
The main strategy in this stage with regard to the product is cutting future investment and preparation to eliminate the product.

Price
The price strategy in this stage is price reduction to ensure smooth elimination of the product. Customers concern about the price, so it is only by lowering the product’s price they can be able to continue buying the product as there are no new customers in the market.

Marketing Communication
The strategy here is to reduce the budgeting on marketing communication, since there is chance of adding new customers, the current customers are just there because of their loyalty to the company.

Distribution
Distribution channels will inevitably reduced because of the reduction in inventories and marketing communication.