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Product life-cycle May 19, 2009

Posted by mariobarreiro in Marketing.
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The product life-cycle concept refers to the course that a product’s sales and profits take over its life time. It can describe a product class (e.g. laptops), a product form (e.g. designing) or a brand (e.g. Apple Mac Book) (Kotler et al, 2002: 518).

plc 
Brassington & Pettitt (2003: 304) Fig. 8.1

The cycle is divided in five different stages. The first one is the pre-launch stage, where the product is in the developing phase, and therefore there are not sales neither profits. This reflective journal will focus in the other four stages within the cycle: introduction, growth, maturity and decline (Brassington & Pettitt, 2003: 303-308).

 

Introduction

In the introduction stage the product is launched and the sales increase in a slow manner. Usually profits are negative where promotion expenses are high because the company needs to inform the customers about the product. If it is a new product or a new category, they will spend even more money to spread its benefits (Kotler et al, 2002: 520).

Currently, Blu-ray devices can fall under this statement.

The Playstation 3 carries a Blu-ray player and Microsoft is using it as a war tool against Apple, who as well as Toshiba, does not support Blu-ray (Ruby, 2009). By the moment, the sales of players and movies in this format have not increased dramatically.

 

Growth

In this stage sales climb quickly, and the company keeps educating customers and begins to introduce new features to the previous basic product. Competitors will appear due to the new profitable market (Kotler et al, 2002: 521).

Twitter, a micro blogging service, is in this stage right now.

UK Internet visits to Twitter have been increased six times in March 2009, and 32 in the last year (Goad, 2009).

hitwise
Source: http://weblogs.hitwise.com/robin-goad/2009/04/what_would_a_google_twitter_marriage_mean.html

 

Maturity

Once the sales growth slowdowns, the product enters a maturity stage. This stage is usually longer than previous stages but the competition is higher, with prices cuts and more sales promotions. To stay alive, companies need to increase consumption and attract new users. Therefore, they have to innovate in the market (repositioning the brand), modify the product and modify the marketing mix (Kotler et al, 2002: 521).

Innovate in the market

Aquarius was launched in Spain in 1991 as a sports drink and the next year it was the official drink for the Barcelona ’92 Olympics. However in 2005 it was repositioned to a refreshment drink for everyone (http://www.conocecocacola.com/default.cfm)

Modify the product

With games such as Brain Training, Nintendo reached the market of mature people who have never played video-games with its portable Nintendo DS.

Modify marketing mix

Mobile phone industry is an example of marketing mix modifications. Companies have created packages of minutes and texts adapted to the requirements of each user.


Decline

Finally, the sales dip because of customers and profits decrease, and eventually companies withdraw from the market. However, sales not always plunge to zero (Kotler et al, 2002: 523).

For instance, the Playstation 3 was launched at the end of 2006, and in January 2009 Sony has announced a price cut in Playsation 2, which is still making sales (Archer, 2009).

 

To sum up, the product life-cycle is a tool for marketers to try to understand which marketing policy the company should follow in each stage (Jobber & Fahy, 2003: 134).

As a result, there are tools like HammerTap (http://www.hammertap.com/) which helps ‘eBuyers’ and ‘eSellers’ (people that buy and sell through eBay) to know which products are hot or not (which stage in the cycle), allowing them to improve profits and save costs following the most suitable strategies to sell and buy.

 

hammertap
Source: http://www.hammertap.com/

Web Articles:

Books:

  • F. Brassington and S.Pettitt. 2000. Principles of Marketing. 2nd ed. Prentice Hall
  • D. Jobber and J.Fahy. 2003. Foundations of Marketing. McGraw-Hill Education
  • P. Kotler et al. 2002. Principles of Marketing. 3rd European Edition. Prentice Hall

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