Product Life Cycle

Product Life Cycle



Product Life Cycle

The Product Life Cycle

Product Life Cycle - the stages a new product goes through in the marketplace

The introduction Stage of the product life cycle occurs when a product is first introduced to its intended target market.

            * Sales grow slowly
*  Profit is minimal due to large investment costs in product development
* The marketing objective for the company is to create customer awareness and
Stimulate trial.

Companies often spend heavily on advertising and other promotion tools to build product awareness.

  • Primary demand - the desire for the product class rather than for a specific


  • As more competitors introduce their products a firm focuses on creating selective demand, the preference for a specific brand.

Other marketing mix variables are important at this stage.

  • Gaining distribution can be a challenge because channel intermediaries

May be hesitant to carry a new product.

  • During introduction pricing can be either high or low. A high price or

Skimming strategy is used to help the company recover the costs of develop-
Ment as well as capitalize on the price insensitivity of early buyers.

  • Since high prices tend to attract competitors because they see the opportunity

For profit, a company can price low, referred to penetration pricing, to build unit volume.


The growth stage of the product life cycle is characterized by rapid increases in sales and when competitors appear.

  • Profit usually peaks during growth stage because of more competitors and more aggressive pricing.
  • Advertising shifts to stimulating selective demand, in which product benefits

Are compared  with those of competitors’ offerings to gain market share.

Product sales grow at an increasing rate because new people try or use the product and a growing proportion become repeat purchasers - people who tried the product, were satisfied and bought again.

*Failure to achieve substantial repeat purchasers usually means an early death for a product

  • It is important to gain as much distribution for the product as possible.


The maturity stage is characterized by a slowing of total industry sales for the product class.

  • Weaker competitors begin to leave the market
  • Most consumers who would buy the product are either repeat purchasers

Of the item or have tried and abandoned it.

  • Sales increase at a decreasing rate as fewer buyers enter the market
  • Profits decline because there is fierce competition
  • Marketing attention is directed toward holding market share through

Further product differentiation and finding new buyers.

The decline stage occurs when sales and profits begin to drop due to changes in the marketing environment.
*Technological innovation often precedes the decline stage as newer technologies
Replace older ones.

  • Product deletion - dropping a product from the company’s product line
  • Harvesting - when a company continues to offer the product but reduces

Marketing costs.


Marketers rely on three ways to manage a product through successive stages of its life cycle.

Modifying the Product

  • Product modification involves altering a product’s characteristic, such as its

Quality, performance, or appearance, to try to increase the product’s sales.

Modifying the Market
With market modification strategies, a firm tries to do three things:
1. Find new users - new market niches
2. Increase use - promote more frequent consumption especially during low
Use periods.
3. Creating new use situations - identify new applications

Repositioning the Product
Product repositioning is changing the place a product occupies in a consumer’s mind relative to competitive products. This is done to increase sales by changing one or more of the four marketing mix elements.

Reasons to reposition a product include:

  • Reacting to a competitors position
  • Reaching a new market
  • Catching a Rising Trend
  • Changing the value offered

              Trading up - adding value through additional features or higher quality materials
Trading down - reducing the number of features, quality or price.


III Branding and Brand Management
A basic decision in marketing products is branding, in which an organization uses a name, phrase, design, symbol or combination of these to identify its products and distinguish them from those of competitors. Create a unique identity.

  • Brand name - is any word, design, sound, shape or color, or a combination

Of these to create an identity and distinguish a seller’s goods or services.

  • Some brand names can be spoken with others cannot, such as a logotype or logo
  • Recognizing competing products by brand allows consumers to be more efficient shoppers.  They can:

                                       1. Avoid products they are dissatisfied with
2. Become more loyal to those they like

Successful and established brands take on a brand personality, a set of human characteristics associated with a brand name.

Consumers often assign personality traits to products - traditional, romantic, rugged, sophisticated, rebellious - and choose brands that are consistent with their own or desired self-image.

Brand Equity - the added value a  given brand name gives to a product beyond the functional benefits provided.

  • Brand Equity provides a competitive advantage
  • Consumers are often willing to pay a higher price for a product with

Brand equity.

To build brand equity you must:

  • Develop a positive brand awareness
  • Establish the brands meaning in the minds of consumers in terms of both functional and abstract values or dimensions
  • Create an intense, active loyalty relationship between consumers and the brand

Brand equity provides a financial advantage for the brand owner.

  • Successful, established brands have an economic value, they can be bought or


  • They can appreciate in value when effectively managed - and lose value when

Not well managed.

  • Brand licensing is a contractual agreement whereby one company (licensor)

Allows its brand name(s) or trademark(s) to be used with products or services
Offered by another company (licensee) for a royalty or fee.

Branding Strategies
1. Multiproduct branding - when a company uses one name for all its products in
A product class. Sometimes called family branding or corporate branding.

2. Multibranding - give each product a distinct name and is useful when each
Brand is intended for a different market segment.

            2. Private branding or Private Labeling - when it manufacturers products but
Sells them under the brand name of a wholesaler or retailer.

The packaging component of a product refers to any container in which it is offered for sale and on which label information is conveyed.

  • a label is an integral part of the package and typically identifies the product or

brand, who made it, how it is to be used, package contents and ingredients

  • The customer’s first exposure  to a product is the package and label and both

Are an expensive and important part of marketing strategy.

  • Packaging and labeling costs companies more than $100 billion annually and

Account for about 15 cents of every dollar spent by consumers for products.

  • Label information on the package communicates how to use the product and

What the product is made of.  These are legal requirements of disclosure.

  • Labeling system in US provides a uniform formant for nutritional and dietary
  • Packaging can have brand equity benefits for a company
  • Packaging plays an important functional role, such as storage, convenience,

Protection, or product quality ( theft prevention)

  • Consumer protection is an important function - safety seals, and “open-dating” (which states the expected shelf life of the product.

The marketing of services also uses the four P’s framework but with some differences.

A Service (product)
Exclusivity - a major difference between products and services is that services cannot be patented, which results in many imitators.

Branding - because services are intangible, the brand name is particularly important in the consumer purchase decision. Brand names help make the abstract nature of services more concrete.

Most services have a limited capacity due to the inseparability of the service from the service provider and the perishable nature of the service (time).

B. Price
In the service industry price is referred to in various ways - hospitals (charges), lawyers have (fees), airlines have (fares), and hotels have (rates).

Price plays two essential roles in services:

  • Affects consumer perception. Since services are intangible,

Price can indicate quality of the service.

  • Many services use off-peak pricing, which consists of charging a different

Price during different times of the day or days of the week or seasons.

C. Place (distribution)
Place is a major factor in developing a service marketing strategy because of the inseparability of services from the producer.

  • The availability of electronic distribution through the internet now provides

Global coverage for some services.

D. Promotion
The value of promotion for many services is to show the benefits of purchasing the service by stressing availability, location, quality, competitive advantage, etc.
*In the past advertising has been viewed negatively by many nonprofit
And professional organizations. 

  • Publicity has played a major role in the promotional strategy of nonprofit

Services and some professional organizations.

  • Many nonprofits use free public service announcements (PSAs) to promote

Their messages.


Source: http://occonline.occ.cccd.edu/online/lbright/MKT100WK10.doc

Web site to visit: http://occonline.occ.cccd.edu

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Product Life Cycle


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Product Life Cycle