PRODUCT LIFE CYCLE STAGE

8/7/2019 PRODUCT LIFE CYCLE STAGE

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It is a complex process.

Absorbs significant recourses.

May not be successful.

May involve a long lead time before

sales are achieved.


6/21

Inadequate demand.

Action of competitor.

Change in external environment.

Production problem.

High cost

Does not fit in firms product range.

Life cycle expected to be too short.


7/21

The rate of change in technology is

rapid.

There is high degree of innovation.

Customer taste are changing rapidly.

The product is a fashion item.

The product is badly marketed


8/21

Research and engineering skills will lead

to product development.

Product is put the market.

Promotion cost will be high.

Sales would be low

Profits would be almost negative.


9/21

Product penetrates into the market

Sales will increase due to the earlier

promotion activity. Customer satisfaction has to be ensured

in this stage.

This stage may last for 1 year for

consumer products and longer forindustrial product.

Profit margin to its peak, as promotioncost is spread over large volume.


10/21

This is usually the longest stage in the

market.

No further distribution channel to fill in.

Sales growth continue but at adiminishing rate.

Profit decline in this stage. Those who do not sustain competition

will withdraw from the market.


11/21

Eventually most products and brands

enter a period of declining sales.

This may be caused due to followingreason.

1. Technical advances leading to product

substitutes.2. Fashion and changing tastes.

3. Profit will not exsist as the product life iscommercially complete.


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13/21

Product have finite lives and pass

through the cycle of development.

Product cost, revenue and profitspattern tend to follow predictable

pattern. profit are more in growth stage,after stabilizing in maturity and further

declining.

Profit per unit varies as product movesthrough life-cycles.


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Each stage of the cycle poses different

threats and opportunity to give rise to

different strategic actions.

Product requires different functional

emphasis in each phase such asR&

D indevelopment stage and cost control in

decline.


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In reality very few products follow such a

prescriptive cycle. The length of each

stage varies enormously.

Not all products go through each stage.

Some go from introduction to decline. Itis not easy to tell which stage the

product is in.


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Firms will often try to use extension strategiesto try to delay the decline stage of theproduct life cycle. The maturity stage is agood stage for the company in terms ofgenerating cash.

The costs of developing the product andestablishing it in the market are paid and ittends to then be at a profitable stage. Thelonger the company can extend this stagethe better it will be for them


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But ultimately this only delays a product

or service's decline. Ideally, you should

always have new products or services tointroduce as others decline so that at

least one part of your range is showing a

sales peak.


18/21

INTRODUCTION

Third generation mobile phones

E-conferencing

All-in-one racing skin-suits

iris-based personal identity cards


19/21

GROWTH

Portable DVD Players

Email

Breathable synthetic fabrics

Smart cards


20/21

MATURITY

Personal Computers

Faxes

Cotton t-shirts

Credit cards


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DECLINE

Typewriters

Handwritten letters

Shell Suits

Cheque books

PRODUCT LIFE CYCLE STAGE

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