Product Life cycle

Product life cycle is a business analysis that attempts to identify a set of common stages in the life of commercial products. In other words, the 'Product Life cycle' PLC is use to map the lifespan of the product such as the stages through which a product goes during its life span.



in principle, almost every product in the world is experiencing the life cycle of the product. But the length of time the product life cycle on each of these products vary, there is a rapidly lost, some are able to survive in a relatively long period of time. Especially on products-orient technologies such as Electronics products (mobile phone, computer, television), the life cycle of a product will be increasingly felt. Perhaps many of us who are less concern, but that's what often happens in our lives.

Overview

This is the stage where a product is conceptualize and first brought to market. The goal of any new product introduction is to meet consumers' needs with a quality product at the lowest possible cost in order to return the highest level of profit.

The introduction of a new product can be broken down into five distinct parts:

• Idea validation, which is when a company studies a market, looks for areas where needs are not being met by current products, and tries to think of new products that could meet that need. The company's marketing department is responsible for identifying market opportunities and defining who will buy the product, what the primary benefits of the product will be, and how the product will be use.


• Conceptual design occurs when an idea has been approve and begins to take shape. The company has study available materials, technology, and manufacturing capability and determine that the new product can be create. Once that is done, more thorough specifications are develop, including price and style. Marketing is responsible for minimum and maximum sales estimates, competition review, and market share estimates.


• Specification and design is when the product is nearing release. Final design questions are answer and final product specs are determine so that a prototype can be create.


• Prototype and testing occur when the first version of a product is create and test by engineers and by customers. A pilot production run might be made to ensure that engineering decisions made earlier in the process were correct, and to establish quality control. The marketing department is extremely important at this point. It is responsible for developing packaging for the product, conducting the consumer tests through focus groups and other feedback methods, and tracking customer responses to the product.


• Manufacturing ramp-up is the final stage of new product introduction. This is also known as commercialization. This is when the product goes into full production for release to the market. Final checks are made on product reliability and variability.

In the introduction phase, sales may be slow as the company builds awareness of its product among potential customers.

Advertising is crucial at this stage, so the marketing budget is often substantial. The type of advertising depends on the product. If the product is intend to reach a mass audience, then an advertising campaign built around one theme may be in order. If a product is specialize, or if a company's resources are limit, then smaller advertising campaigns can be use that target very specific audiences. As a product matures, the advertising budget associate with it will most likely shrink since audiences are already aware of the product.

The concept

Product life-cycle (PLC) Like human beings, products also have an arc. From birth to death, human beings pass through various stages e.g. birth, growth, maturity, decline and death. A similar life-cycle is seen in the case of products. The product life cycle goes through multiple phases, involves many professional disciplines, and requires many skills, tools and processes.

To prolong the life of a product, the manufacturer had to work hard doing various strategies so that their products can survive much longer in the market (market).

Stages of The Product Life Cycle (Product Life Cycle)

In General, the life cycle of a product or Product Life Cycle has four Stages Namely Introduction (Introduction), Development (Growth), maturity (Maturity), Decrease (Decline). The following is a brief explanation about the four stages of the product life cycle some strategies commonly use in marketing his product manufacturers base on Phase or stage of the cycle.

Introductory Phase (Introduction)

Stages of the introduction is the first stage in the product life cycle where manufacturers introduce new products to the market or the general public. Some of the features on this Introductory Stage include:

• New products launch onto the market (Market)


• Turnover sales are still low


• Production capacity is still low


• Cost per unit is still high


• Negative Cash Flow


• The Distributor is far more reluctant to take a product that still has not proven its quality.


• It needs a major promotion in order to introduce their products (a high promotion costs)

The strategy often use in Stage Introduction (Introduction):

• Encourage the adoption of customer


• Removing a huge cost in the promotion to create awareness on the product and also to notify you of new products to the community


• Using pricing strategy Launch (skimming) or the price penetration (Penetration)


• A focus distribution (in a limit area)

Stage of Development (Growth)

Stage of development (Growth) is a stage where the products are introduce that are well known and accept by consumers. Some of the features on this stage of development are:

• Expanding markets


• Turnover sales are up significantly


• Increasing production capacity


• The product began to be accept by the market


• Cash Flow is starting to turn into a Positive


• The market is growing, profits will also rise, but new competitors are going to start popping up


• The cost per unit will drop to an economical scale

The strategy that is often done in stages of development

• Create ads that create awareness of election products and strengthen the brand (branding)


• Expand the distribution channels and expand the scope of distribution.


• Improve the quality of the product, adding new features and styles as well as reproduce models or variants.


• Lowering the price of products to attract buyers and expanding market segment


• Still a great charge in promoting the product and the brand.

Stages of Maturity (Maturity)

The increase in Sales Turnover began to wane, competing with tight and fighting in seizing market share with its competitors.

• High production capacity


• Have a great profit for those who can lead the market


• Cash Flow will be in a strong positive conditions


• Competitors are weak and compete will start out of the market


• Product prices began to fall

The strategy that is often done in the stage of maturity

• Repairing and modifying products and reproduce a selection (model, color, smell, taste, aesthetics)


• Leave variant products that are not strong in the market.


• Production capacity on condition that the rational


• Implement a more competitive price


• Use the persuasive Advertisements, influence the consumer to use the product.


• Attract new users


• Intensive distribution


• Entering a new market segment


• Re-positioning

Decline Stage (Decline)

In stages decline, sales and profit will be declining and if not doing the proper strategy, products offer may be missing from the market (market). Decline Stage characteristics are as follows:

• Earnings decrease significantly and Cash flow will weaken


• The market became Saturate


• Will be many competitors out of the market


• Production capacity will be decrease

The strategy that is often use at the stage of decrease are as follows:

• Do promotions to maintain loyal Customers


• Narrow distribution channels


• Lowering the price of keeping the power competitiveness

The Strategy of Extension (Extension)

To lengthy age product, strategies that are often carry out by the manufacturer in order to slow down its products enter the stage of decline include the following:

• Advertising, try to add a new user and trying to remind them of the old.


• Declining Prices, trying to attract new customers.


• Value Adding (Adding Value), Add new features on current products (e.g. adding Wifi feature on the camera).


• Exploring new markets, trying to sell out the country.


• Update packs, Replace the packaging on a product with a brighter color and fresh.

Marketing Mix Decisions at different stages of PLC

A product life cycle is the typical stages a product goes through during its lifetime. The product life cycle is broken down into five different stages, which include the development, introduction, growth, maturity and decline stages of the product. Characteristics for each stage differ and in response to the different needs of the product as it moves through its life cycle, the market mix (various marketing tactics) use during these stages differ as well. Understanding the product life cycle can help business owners and marketing managers plan a marketing mix to address each stage fully.

Development Stage

During the development stage, the product may still be just an idea, in the process of being manufacture or not yet for sale. In this stage, the marketing mix is in the planning phase, so rather than implementing marketing strategies, the product producer is researching marketing methods and planning on which efforts the company intends on using to launch the product. The marketing mix for this stage includes ways to bring awareness of the product to potential customers through marketing campaigns and special promotions.

Introduction Stage

As the product hits the market, it enters the introduction stage of the product life cycle. Because it is a new product that customers are not yet aware of, the product sales during the introduction stage are generally low. At this time, marketing expenses are generally high because it requires a lot of effort to bring awareness to the product. The marketing mix during this stage of the product life cycle entails strategies to establish a market and create a demand for the product.

Growth Stage

As customers become aware of the product and sales increase, the product enters into the growth stage of the product life cycle. Marketing tactics during the growth stage requires branding that differentiates the product from other products in the market. Marketing the product involves showing customers how this product benefits them over the products sold by the competition; also known as building a brand preference.

Maturity Stage

As the product gains over its competition, the product enters the maturity stage of the product life cycle. The marketing mix during this stage involves efforts to build customer loyalty, typically accomplish with special promotions and incentives to customers who switch from a competitor's brand.

Decline Stage

Once a product market is over saturate, the product enters into the decline stage of the product life cycle. This is the stage where the marketing mix and marketing efforts decline. If the product generate loyalty from customers, the company can retain customers during this stage, but does not attract new sales from new customers.

For the marketing mix that remains during the decline stage, the focus is generally on reinforcing the brand image of the product to stay in a positive light in the eyes of the product’s loyal customers.

Limitations of Product Life Cycle (PLC)

Product life cycle is criticize that it has no empirical support and it is not fruitful in special cases. Different products have different properties so their life cycle also vary. It shows that product life cycle is not best tool to predict the sales.



Sometimes managerial decisions affect the life of products in this case Product Life Cycle is not playing any role. Product life cycle is very fruitful for larger firms and corporations but it is not hundred percent accurate tool to predict the life cycle and sales of products in all the situations.

Basic Elements

GROWTH

The growth phase occurs when a product has survive its introduction and is beginning to be notice in the marketplace. At this stage, a company can decide if it wants to go for increase market share or increase profitability. This is the boom time for any product.

Production increases, leading to lower unit costs. Sales momentum builds as advertising campaigns target mass media audiences instead of specialize markets (if the product merits this). Competition grows as awareness of the product builds. Minor changes are made as more feedback is gather or as new markets are target. The goal for any company is to stay in this phase as long as possible.



It is possible that the product will not succeed at this stage and move immediately past decline and straight to cancellation. That is a call the marketing staff has to make. It needs to evaluate just what costs the company can bear and what the product's chances for survival are. Tough choices need to be made—sticking with a losing product can be disastrous.

If the product is doing well and killing it is out of the question, then the marketing department has other responsibilities. Instead of just building awareness of the product, the goal is to build brand loyalty by adding first-time buyers and retaining repeat buyers. Sales, discounts, and advertising all play an important role in that process. For products that are well-established and further along in the growth phase, marketing options include creating variations of the initial product that appeal to additional audiences.

MATURITY

At the maturity stage, sales growth has start to slow and is approaching the point where the inevitable decline will begin. Defending market share becomes the chief concern, as marketing staffs have to spend more and more on promotion to entice customers to buy the product.



Additionally, more competitors have step forward to challenge the product at this stage, some of which may offer a higher-quality version of the product at a lower price. This can touch off price wars, and lower prices mean lower profits, which will cause some companies to drop out of the market for that product altogether. The maturity stage is usually the longest of the four life cycle stages, and it is not uncommon for a product to be in the mature stage for several decades.

A savvy company will seek to lower unit costs as much as possible at the maturity stage so that profits can be maximize. The money earn from the mature products should then be use in research and development to come up with new product ideas to replace the maturing products. Operations should be streamline, cost efficiencies sought, and hard decisions made.

From a marketing standpoint, experts argue that the right promotion can make more of an impact at this stage than at any other. One popular theory postulates that there are two primary marketing strategies to utilize at this stage—offensive and defensive. Defensive strategies consist of special sales, promotions, cosmetic product changes, and other means of shoring up market share.

It can also mean quite literally defending the quality and integrity of your product versus your competition. Marketing offensively means looking beyond current markets and attempting to gain brand new-buyers. Relaunching the product is one option. Other offensive tactics include changing the price of a product (either higher or lower). To appeal to an entirely new audience or finding new applications for a product.

DECLINE

This occurs when the product peaks in the maturity stage and then begins a downward slide in sales. Eventually, revenues will drop to the point where it is no longer economically feasible to continue making the product. Investment is minimize. The product can simply be discontinue, or it can be sell to another company.

A third option that combines those elements is also sometimes seeing as viable. But comes to fruition only rarely. Under this scenario, the product is discontinue and stock is allow to dwindle to zero. But the company sells the rights to supporting the product to another company. Which then becomes responsible for servicing and maintaining the product.



Therefore, understand and grasp the concept of the life cycle of a product or Product Life Cycle. That is an important thing for any manufacturer to produce and market its products. Basically, the product life cycle is the stages of a product's life journey. The process starting from the introduction to the market (market) to eventually disappear from the market.