There are five stages in Product Life Cycle: Some of the most important stages through which product life cycle passes are as follows: (i) Introduction (ii) Growth Stage (iii) Maturity Stage (iv) Saturation Stage (v) Decline Stage. As such, advertising revenues are often high as companies are trying to increase the levels of customer awareness and customer acceptance of the new product. The company needs to spend a significant amount of money on obtaining an adequate distribution of the product. As a Product Manager, this is what you constantly need to think about. Introduction Stage • It is the 1st stage, wherein the product is launched in the market with full scale production & marketing programme. The first strategy that a company may pursue regarding this is to do nothing and wait until there are no longer any orders for the item. One strategy company’s can try to use to avoid this is to announce the product before it is launched, hence building up customer anticipation. There might be still other products that might pass through the introduction to maturity stages but might take a longer period to reach the saturation stage and hence might take a longer period to reach the decline stage. The product must be defined and developed. Stages of Product Life Cycle (PLC) [with notes]: All products and services have certain life cycles. An entrepreneur, for example, maybe critical to getting a new product properly launched, whereas a person who will exercise tight control on finances is often needed during the maturity stage. Companies may try to revive aging products by redesigning packages and increasing convenience for the customers. Under the slow skimming strategy, a product is offered to the market at a high price, but the promotion is not as aggressive as the rapid skimming strategy. Market rejects these products and compels to die. For any product, it’s PLC will go to the decline stage, where the product’s sales and profits fall very quickly, and most competitors leave the market. Companies focus on the high-income group at the introductory stage to buy their products because products are priced higher at this stage. In a related sense, the increased competition and the desire to build a larger market share tend to reduce some slight price reduction. When this happens, marketers consider removing items from the product line to eliminate those not yielding a profit. Fashions usually develop slowly but remain popular for a shorter time. The cycle is shown on a graph with the horizontal axis as time and the vertical axis as dollars or various financial metrics. There are many features of this stage of product life cycle:Small Market: This stage involves business capturing the market. This means that a product which is distinct when new degenerates over the years into a common commodity. Perhaps a very limited number of firms will find this stage profitable. It is likely that a company earns more profit during this stage as sales go up, and promotion expenditures are spread over larger sales volume. People, for example, need traveling means, which grows and changes as time passes. When fashion loses its appeal and people are attracted to something new, the decline stage starts. As such, this tactic is often only done when a company has a unique offering, such as a new film, computer game or technologically superior device such as the iPod or iPhone. An understanding of the relationship between a product and its life cycle enables marketing managers to plan their campaigns more effectively and to be in a better position to judge product sales and profit potential. The key emphasis will be on promoting the new product, as well as making production more cost-effective and developing the right distribution channels to get the product to market. The best-managed companies, therefore, try to hold and improve their share slightly while diverting profits from successful mature products into the development and introduction of new ones. Modern product life cycles are becoming shorter and shorter as products in mature stages are being renewed by market segmentation and product differentiation. Products that follow the growth slump maturity life cycle pattern experience rapid sales growth when they are first introduced in the market and gradually fall, settling at a solid level. Third, cash flow may still be negative because of the firm’s efforts to establish a strong market share ahead of competitors. When fashion becomes increasingly popular with the general public, the mass-fashion stage begins. The introduction stage shows low sales numbers as the product is being introduced in the market. This site uses Akismet to reduce spam. The process by which the distinctiveness gradually disappears as the product merges with other competitive products, has been rightly termed by Joel Dean as “the cycle of competitive degeneration”. Those who remain in the market make fresh promotional, and distribution efforts; advertising and dealer oriented promotion are common during this stage. A product life cycle normally looks like a bell-shaped curve showing four stages at different points of the curve. The advantages of product life cycle to a firm are as follows: Your email address will not be published. Because of the speed with which they enter and leave the marketplace, the executive must create the fad – the little opportunity exists in following another company into the market. In the distinctiveness stage, few people take an interest in something nontraditional to give others that they are different. Companies under this strategy may also go for producing higher quality products, promoting them aggressively, and distributing them through selective distribution channels. Companies may also try to revive by declining product by changing the ad firm with the hope of a more creative advertisement campaign to be developed and launched by the new firm. Then competitors enter the field with imitation and rival products and the distinctiveness of the new product starts diminishing. Third, the company may experience technical difficulties at the initial stage. Products generally go through a life cycle with predictable sales and profits. the distribution matches their requirements. At this point, sales and revenues are usually low, as customers have not had much contact with the product, and can be slow to recognize the product as superior to previous offerings. 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