Extending product life cycle

Definition

The product life cycle is a concept that describes the various stages that a product goes through in its existence, from its initial development to its eventual decline in the market. It helps businesses understand and manage the dynamics of their products over time.

Key Points on the Product Life Cycle

Distinct Phases:

• All products follow a pattern of growth and decline, consisting of distinct phases or stages collectively known as the product life cycle.
• Example: A graph of sales over time can illustrate the different stages of a product's life cycle, providing valuable insights for businesses.

Five Stages:

The product life cycle can be divided into five main stages:

• Research and Development: The product is in the development phase, with research, testing, and prototype creation. No sales occur during this stage, and development costs must be recovered later.
• Introduction: The product is launched into the market, accompanied by high advertising costs to gain visibility.
• Growth: Sales begin to increase, with continued high advertising costs. Profits may be realised if development and advertising costs have been covered.
• Maturity and Saturation: Sales reach their peak, and the product becomes well-known, allowing for reduced advertising costs.
• Decline: Sales start to decline as the product loses its appeal or faces competition.
• Example: When a new smartphone is in the research and development stage, it undergoes testing and prototype modifications. Upon launch, heavy advertising promotes it, leading to growth in sales. As the market becomes saturated, advertising costs may decrease, but eventually, sales decline as newer models are introduced.

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Extending product life cycle

Extension Strategies:

• As a product approaches the decline stage, businesses can employ extension strategies to prolong its life. These strategies involve altering elements of the marketing mix, such as packaging, features, pricing, or targeting new markets.
• Example: A company may extend the life of a declining product by redesigning its packaging, offering new features, reducing the price, or introducing it to a different geographic market.

Promotion and Sales Dynamics:

• Successful promotion is crucial to move a product beyond the introduction stage. Sales generally rise during the introduction and growth stages, flatten during maturity, and decline during the decline stage.
• Example: To launch a new software application, heavy promotional activity is required to create awareness and attract initial users. As the software becomes widely known and accepted, advertising expenses may decrease, but eventually, sales may wane.

Summary:

In summary, the product life cycle concept helps businesses understand and manage their products over time. It consists of five stages: research and development, introduction, growth, maturity and saturation, and decline. By employing extension strategies and adapting the marketing mix, businesses can extend the life of their products and make informed decisions about their market presence.