Question

What is the purpose of the Product Life Cycle? Identify and explain the four stages of the product life cycle. In your response, be sure to include an indication of how sales, profits, product, price, promotion and place change with each stage. Explain what marketers can do to extend the length of the product life cycle? Provide examples to showcase your ideas.

Answer 1

The main purpose of product life cycle is to identify strategies to be used in different stages of product development for increasing the sale & profitability for the organization and at the same time retain the customer base.

1st stage (Introduction stage) – In this phase product enters the market and people start knowing about it. Product launching cost will be high in this phase as compared to the turnover of the product. The main objective of this stage is to identify the audience you are going to target. Marketing and advertising is the important factor here since you are launching your product for the very first time and you would like to attract as many as people for buying your product. Pricing of the product needs to be strategized properly, identification of distributors is important as they might feel reluctant in distributing your product initially.

2nd stage (Introduction stage) – In this stage people already know about your product and started buying it. A market share of your product will increase and profitability will also increase. The important point is to increase brand awareness to a wider audience.

3rd stage (Maturity stage) – In this stage your product is already in the market and have been used by a lot of customers. You will see saturation in the sale of the product. Innovation plays and important part here, it’s a time of planning new product based on new technology as a replacement of your product.

4th stage (Decline stage) – This is the final stage of the product life cycle where you will observe a decline in the sales. Management should have a proper exit strategy and think about closing the product or launching a new product as a replacement so that customer base can be retained.

Continuous improvement in the quality and other parameter of the product is the only way to extend the product life cycle.

1. Try to attract new customers (Advertising and finding a new customer base)

2. Reduce price of the product before reaching the decline stage will eventually help in retaining the sales.

For Example, I am selling a product in the market with a warranty of 1year initially, I have seen people liking my product, but my competitor is selling similar kind of product with 2years warranty. Either I will have to add on new features or decrease my product price to be in competition, what if I add a few more features and the price is also less than the competitor there will be a definite rise in the sale of my product. So looking for continuous improvement and increasing brand loyalty in customer is the key here.