Download The Product Life Cycle

The Product Life Cycle
Dr. Dorothy Paun, [email protected]
Product Life Cycle (PLC)
After launching a new product, marketers hope
the product has a long, profitable life
 The Product Life Cycle (PLC) is a theoretical
model of what can happen to a product’s
sales and profits over time. The PLC has four
stages: introduction, growth, maturity, and
decline
 Marketers use the PLC framework because it
describes how a product’s sales and profits
might unfold over time AND suggests
marketing mix strategies for each PLC stage
Sales & Profits Over the PLC
PLC Sales, Profits & Competitors
Sales Over the Product Life Cycle
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Introduction: the product is being introduced to
consumers, so sales are low
Growth: consumers have learned about and like
the product, and rapidly increasing sales
Maturity: the market becomes saturated. Sales
mature, meaning sales increase but at a slowing
rate, then sales reach a maximum, and then
sales begin decreasing for the first time
Decline: changing consumer needs or the
product is no longer relevant or useful leads to
decreasing sales
Profits Over the Product Life Cycle
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Introduction: losses may occur due to low sales
and high research and development and various
product introduction expenses
Growth: very high profits, profits dramatically
increase due to recouping new product expense,
then profits reach a maximum
Maturity: decreasing profits because of
competition
Decline: profits continue decreasing and may
become losses due to low consumer demand
Competitors Over the PLC
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Introduction: no competitors (due to a patent
which gives the inventor the exclusive right to
their invention) or very few competitors due to
high barriers to entry
Growth: rapidly growing number of competitors
Maturity: the number of competitors stabilizes
and then begins decreasing
Decline: further decreasing number of
competitors
Consumer Adoption of Products
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Everett Rogers (1962) created the Diffusion of
Innovation (DOI) theory to describe stages in the
consumer adoption of new products over time
There are five consumer stages: innovators, early
adopters, early majority, late majority, and
laggards
What type of an adopter are you? Does it depend
on the type of product?
Over Time >
Reflect on Your Muddiest Point
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Reflect on what we have discussed
Write down what you find unclear or
confusing — your “muddiest point”
Identify one or two things that you can do or
questions you can ask to improve your
understanding of this muddy area
PLC Marketing Mix Strategies
Introduction Stage
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Sales: Low
Profits: Losses may occur
Competitors: None to few
Marketing objective: Create product awareness and
trial
Customers: Innovators
Product: Offer a basic product
Price: Target innovators with a skimming price
Place: Use selective distribution
Promotion: Use heavy promotion to build primary
demand (product awareness) and to get stores /
distributors to carry the product
Growth Stage
Sales: Rapidly increasing
• Profits: Very high, reach a maximum
• Competitors: Growing number
• Marketing objective: Maximize market share
• Customers: Early adopters
• Product: Improve product, offer several product
versions
• Price: Adjust price to meet competition
• Place: Increase distribution
• Promotion: Heavy competitive advertising
•
Maturity Stage
Sales: Mature, reach a maximum
• Profits: Decreasing
• Competitors: Stable number, then decreasing
• Marketing objective: Maximize profits while
defending market share
• Customers: Early and late majority
• Product: Differentiate product (more product
versions) to satisfy different consumer segments
• Price: Further reduce price
• Place: Intensify distribution
• Promotion: Emphasize brand name and benefits to
encourage brand switching
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Decline Stage
Sales: Decreasing
• Profits: Further decreasing profits that may become
losses
• Competition: Further decreasing, few in number
• Marketing objective: Reduce expenditures
• Customers: Laggards
• Product: Reduce product versions
• Price: Consider price increase if most competitors
are gone
• Place: Decrease distribution, drop unprofitable
outlets
• Promotion: Reduce to only loyal customers
•
Reflect on Your Muddiest Point
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
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Reflect on what we have discussed
Write down what you find unclear or
confusing — your “muddiest point”
Identify one or two things that you can do or
questions you can ask to improve your
understanding of this muddy area
PLC Example: Camera
History of the camera:
 A camera obscura is a box with a pinhole and
lens that projects an image. Ancient Chinese and
Greeks used them to project images on paper,
which they then traced.
 In 1544 Reiners Frisius of Leuven University in
Belgium used a camera obscura to watch a solar
eclipse and published his method. Frisius’ article
led to a wide spread adoption of the camera
obscura
 George Eastman pioneered photographic film, and
sold his first camera, the “Kodak” camera in
1888. The Kodak was pre-loaded with film for
100 photos, and the camera needed to be sent to
the Kodak factory for processing the photographs
History of the Camera (Con’t)
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Digital cameras do not use film, they store images
and sound digitally, which are displayed
immediately. The first commercial digital camera
was launched by Kodak in 1991
Today digital cameras are bundled with many
devices, such your phone
In your opinion, in what stage in the PLC is the
camera today?
GoPro Video Case Study
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The GoPro is a lightweight, compact,
mountable, shockproof, and waterproof to
130 feet camera/camcorder
I suggest that you pause this Panopto
recorded lecture and 1) watch this module’s
video case study called GoPro Ad (this is a
five minute advertisement) and the 2) 60
Minutes Interview with Nick Woodman
(GoPro founder) video case study
In your opinion, in what stage in the PLC is
the camera today?
Sustainability & Product Obsolescence
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Planned product obsolescence refers to causing
products to become break down or become
obsolete prematurely
 Using materials and components that will break,
wear, rust, or rot sooner than they should
 Holding back functional features, and introducing
them later to make older models obsolete
 Perceived obsolescence: continually changing
consumer concepts of acceptable styles to
encourage more and earlier buying
The Story of Stuff video case study provides
extensive information and insights about planned
product obsolescence
GRI Product Responsibility
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PR1 product health and safety impacts are assessed for
improvement
PR2 non-compliance with regulations and voluntary codes
concerning product health and safety impacts during their
life cycle
PR3 product and service information and labeling
PR4 non-compliance with regulations and voluntary codes
concerning product information and labeling
PR5 surveys measuring customer satisfaction with products
PR6 sale of banned or disputed products
PR7 number of incidents of non-compliance concerning
marketing communications, including product advertising,
promotion, and sponsorships
PR8 number of complaints regarding breaches of customer
privacy and losses of customer data
PR9 fines for non-compliance with laws and regulations
concerning the provision and use of products
Environmental Sustainability Portfolio
EXPANDED PRODUCT LIFE CYCLE
1) Introduction
2) Growth
3) Maturity
4) Decline
5) Sustainable Product Withdrawal and Disposal, to avoid negative
environmental externalities
Reflect on Your Muddiest Point



Reflect on what we have discussed
Write down what you find unclear or
confusing — your “muddiest point”
Identify one or two things that you can do or
questions you can ask to improve your
understanding of this muddy area