About the Product Life Cycle
Product life cycle stands as the keystone of the marketing structure. From the life cycle flows all of marketing.
The product life cycle is represented as a simple bell graph that plots product sales over time in a way that provides guidance to a product or marketing manager as she allocates company resources and determines strategies and tactics (from manufacturing to point of sale).
Life Cycle
The product life cycle shows that all products will eventually become unprofitable, that product sales and revenue go through four distinct stages---introduction, growth, maturity and decline---and that each stage requires different product and marketing strategies.
Introduction
A product manager introducing a new product must build end-user awareness of product benefits in a way that connects the market and the product.
Fully allocated cost will exceed revenues. The product will generate negative earnings.
The product manager works to move her product above its fully allocated price and into the growth stage. She will use promotion, primarily marketing communications aimed at innovators and early adopters, to create market awareness and generate interest among potential customers.
Growth
During the growth stage, the product manager works to create brand preference and grow market share. He will do that by modifying the product, based on market feedback (research) that lets him focus on additional user needs.
He will extend the reach and frequency of his marketing communications effort, working to build ever-increasing demand and preference for his product vs. generic and non-generic alternative solutions available to the user. He will add distribution channels.
Maturity
Sales growth slows and generic competition appears. The product manager works to defend market share and maximize profits. She may enhance product features to differentiate the product. The selling price may start to erode under competitive price pressures.
Marketing communications emphasize product differentiation.
Decline
As sales and earnings move down the curve toward break-even, the product manager will attempt to "re-create" it by adding new features that bring additional user benefits (creating a "new" product), or will search for new or different uses for it (baking soda as a refrigerator deodorant, for example).
If renewing fails to slow the decline, company management will decide whether to "harvest" the product by reducing costs and continuing to offer it to loyal customers (niche marketing) or to discontinue the product. If the company decides to discontinue, it will liquidate inventory and reallocate manufacturing resources to other activities, or it will sell the entire business, often to a smaller company with lower fixed costs and overhead.
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