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Marketing and the Product Life Cycle
Marketing is the term used to describe all the activities involved in getting goods and services from the businesses that
produce them to the consumers who wish to purchase them. Marketing includes research, development, sales, distribution,
advertising, and promotion. It does not include the actual production of goods and services.
Without marketing, not much would get sold. Consumers wouldn't know what goods and services were available. They wouldn't
know about new trends or fashions, or how products have been improved. Manufacturers wouldn't know what to make. Importers,
wholesalers, and retailers wouldn't know what to carry. Marketing is important to all businesses – it often means the difference
between success and failure. Marketing ensures that businesses actually sell the goods and services they offer.
Brand Management: The Product Life Cycle
Every product has a brand. By creating a brand identity for a product – the way the company wants consumers to view or think
about the product or service – brands help businesses and their products establish an identity in the competitive marketplace. The
primary function of any business's marketing department is to manage that business's brand or brands. Marketers create plans for
distributing, promoting, pricing, and developing the business's brand(s). They also help put these plans into action.
To effectively market a brand, marketers must know where the brand is in
terms of the product life cycle. The traditional product life cycle consists of
five parts: product introduction, growth, maturity, decline, and decision
point. A graph of the product life cycle, which can also be called the style
curve, illustrates product sales over time. Almost all products are popular
for a period of time and then their popularity declines. Some products, from
automobiles to fashions, are designed to be in style for only one season.
The product enters the marketplace through a product introduction, often
called a launch. Sometimes, businesses introduce a product nationally or
even internationally. At other times, they introduce their products by city,
region, or province. At the introduction stage of the product life cycle,
Product Life Cycle
consumers don't even know that the product exists. The business needs to
inform them about the product's features, availability, package design, and brand identification. Usually, curious or adventurous
consumers (or consumers who like to be the first to own new products) buy the product first.
Marketers often call these first consumers early adopters. Other consumers look to early adapters, or trendsetters, for style
information. Trendsetters can be celebrities, sports heroes, politicians, or even students in your school. Professional athletes often
help businesses introduce new products. When a television star wears a new hairstyle, for example, fans of that star often copy
him or her. Other early adopters copy the clothing and dress styles worn by famous people at celebrity events such as award
shows.
During the introduction stage, marketers focus on selling to early adopters. Early adopters tend to read style magazines such as
Flare, Cosmopolitan, or GQ. They attend parties, galas, openings, award ceremonies, and charity events. Their photos appear in
newspapers and magazines, and they're regularly followed by celebrity news and entertainment programs.
Dress designers, jewellery manufacturers, hair stylists, cosmetics companies, and many other businesses often provide their
products to early adopters for free-and not just to the rich and famous. In the U.S., for example, Nike supplies free basketball
shoes to star players on high school teams. If these basketball players wear the shoes, other early adopters may see the product
and want to try it, too.
Many products, however, are introduced without elaborate planning. A new yogurt, for example, doesn't need the same publicity as
a new designer's fashion line. In the case of a new yogurt, advertising campaigns and sales promotions (including free trials)
promote the product in its introductory stage.
Growth
Once early adopters find and use a new product, others soon try it and sales increase rapidly. The original kick scooter, called
"The Razor," is an example of a product that moved through the introductory stage very rapidly. JD Corporation introduced the
scooter in Taiwan and Japan in 1996, then in North America in 1998. The product attracted the interest of early adopters, and its
popularity skyrocketed in only a couple of years.
During the growth stage, marketers manage their products very carefully. As a product's popularity increases, competitors enter
the market. These competitors modify the original product either by adding features and improving quality or by making a similar
product more cheaply and offering it at a lower price. Within two years of the Razor's introduction, other brands of kick scooters
flooded the market, including Vapor, Just-Go, Flying, and Royce Union. The marketers at JD Corporation had to keep a close eye
on the competition.
A fight for market share usually leaves casualties. If a business doesn't make a profit on a particular product, it either moves into
other product lines or it fails. The businesses that survive advertise and distribute their products as widely as possible. Consumers
see the product everywhere-those who want to buy the product know what to buy and where to buy it.
Maturity
At the maturity stage, growth is flat – it does not increase or decrease. New consumers replace those who leave to purchase a
competing product. Companies manage mature products through continued advertising. This advertising keeps the brand in the
public eye and reminds consumers of the advantages this product has over the competition. Kellogg's Corn Flakes, Coca-Cola, and
Ganong chocolates are all products at the maturity stage.
By the time a product reaches maturity, the manufacturer has long since paid for all the major costs of production and product
development. Because a mature product has established, effective distribution methods, the costs of sales and distribution are
low. As a result, products at the maturity stage usually make large profits. Businesses can use income generated by their mature
products, often called cash cows, to develop and fund new products.
Decline
At some point, most products fail to attract new customers to replace the customers who leave to buy other brands. As sales
decrease, the product enters the decline stage. Seasonal changes or new competition may cause a temporary decline. But if the
decline continues, businesses research their markets to determine whether consumers are actually rejecting the brand. A small
change in price or a new advertising campaign can reverse a temporary decline. If, on the other hand, consumers just decide to no
longer buy the brand, then the business has a serious problem.
At the final stage of the product life cycle, the decision point, marketers make very important brand-management decisions.
Often, they reformulate, repackage, and reintroduce a "new and improved" product. For example, an old brand of liquid detergent
could reenter the market with a convenient new pour spout.
Most often, however, decision-point management involves new promotion and repricing. An advertising agency, for example, might
develop a campaign to target a new segment of the market. If the campaign succeeds, the brand becomes more popular. A lower
price may also boost the brand's popularity. If these marketing strategies work, the brand regains its original sales figures. If the
decline continues in spite of efforts to stop it, the manufacturer discontinues the product and removes it fro m the market.
NON- TRADITIONAL PRODUCT LIFE CYCLES
Many products do not go through the stages of the traditional product life cycle.
There are at least three non-traditional product life cycles: fad, niche, and
seasonal.
Fads
A fad is a product that is extremely popular for a very short period of time. You
may remember the Tamagotchi craze in the late 1990s. Tamagotchis were digital
pets on a key chain that you could "hug" and "feed" by pushing buttons. If you
didn't care for the Tamagotchi properly, it "died." The fad lasted about six months,
and then it died. Even so, many imitation products entered the market during this
short period.
Companies can make or lose a great deal of money on fads. If a business can
sell most of its stock and get out of the market for this product just as the fad
reaches its peak, the business will make an excellent profit. Many fad marketers –
especially imitators who create a cheaper version of the fad, called a knockoffenter the market at the wrong time, or stay too long. When a fad dies, it dies very
quickly, and many businesses get caught with a large product inventory that no
one wants to buy.
Non-Traditional Product Life Cycles
Niches
Some products have a very short growth stage that leads to a solid, but not financially spectacular, maturity stage. These products
have a niche – a section of the market in which they dominate and into which very few competitors enter. Niche marketers usually
invent their products and hold exclusive patents or formulas. By the time other businesses can invent a competing product, the
original manufacturer has already distributed its brand to most of the businesses or stores that wish to purchase it. Competitors,
then, have no one to sell their product to. Often, niche marketers manufacture specialty parts. Recently, niche marketers have
shown rapid growth in the high-tech industry, manufacturing specialized computer parts for large computer firms.
Barriers to Entry
Many factors prevent competitors from being profitable in a given market. These factors, called barriers to entry, include the small
market size, the cost of research and development, advertising expenses, factory and equipment costs, design costs, lack of distribution
channels, and the cost of raw materials. High barriers to entry usually mean that competitors don't enter a market, leaving a niche
marketer alone.
Seasonal
Try to sell a Christmas tree the day after Christmas, or a snow blower on the hottest day in August. Ice-cream parlours have
lineups from July to the end of August, but are often closed in January and February. These examples demonstrate that many
products are popular only during a specific time or season. The product becomes popular again only when the season returns.
The new season, however, brings with it new styles. Even Christmas ornaments change in style from year to year. Retailers,
wholesalers, importers, and manufacturers of seasonal products need to make the most of their selling season. These businesses
must keep adequate stock. However, if they have too much inventory left over at the end of the season, many of the products will
be out of style when the season starts again the next year. This balancing of product quantity with sales is called inventory
management.
The Effect of the Product Life Cycle on Businesses
A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as
the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing
mix.
Introduction Stage
In the introduction stage, the firm seeks to build product awareness and develop a market for the product. The impact on the marketing
mix is as follows:
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Product branding and quality level is established and intellectual property protection such as patents and trademarks are
obtained.
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Pricing may be low penetration pricing to build market share rapidly, or high skim pricing to recover development costs.
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Distribution is selective until consumers show acceptance of the product.
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Promotion is aimed at innovators and early adopters. Marketing communications seeks to build product awareness and to
educate potential consumers about the product.
Growth Stage
In the growth stage, the firm seeks to build brand preference and increase market share.
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Product quality is maintained and additional features and support services may be added.
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Pricing is maintained as the firm enjoys increasing demand with little competition.
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Distribution channels are added as demand increases and customers accept the product.
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Promotion is aimed at a broader audience
Maturity Stage
At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to
defend market share while maximizing profit.
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Product features may be enhanced to differentiate the product from that of competitors.
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Pricing may be lower because of new competition.
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Distribution becomes more intensive and incentives may be offered to encourage preference over competing products.
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Promotion emphasizes product differentiation.
Decline Stage
As sales decline, the firm has several options:
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Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
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Harvest the product – reduce costs and continue to offer it, possibly to a loyal niche segment.
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Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product.
The marketing mix decisions in the decline phase will depend on the selected strategy. For example, the product may be changed if it is
being rejuvenated, or left unchanged if it is being harvested or liquidated. The price may be maintained if the product is harvested, or
reduced drastically if liquidated.
The marketing mix may be modified as follows:
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The number of products in the product line might be reduced. Rejuvenate surviving products to make them look new again.
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Prices may be lowered to liquidate inventory of discontinued products. Prices may be maintained for products serving a niche
market.
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Distribution becomes more selective. Channels that are no longer profitable are shut down. Store locations are closed.
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Promotion expenditures are lower and aimed at reinforcing the brand image for continued products. Customers only need to be
reminded that the product is still available (example: Coca Cola)