Question

Answer each of the following in 250 words:

1. Describe the stages of the product life cycle

2. Describe the characteristics of services

Answer 1

Describe the stages of the product life cycle

There are four stages in the product life cycle: introduction, growth, maturity, and decline.

Introduction

After all research and development has be done it is time to launch the product and begin its lifecycle. The introduction stage of the product life cycle is when the marketing team emphasizes promotion and the product’s initial distribution. Often the product will have little or no competitors at this point. Nonetheless, sales may remain low because it takes time for the market to accept the new product. At this stage of the life cycle, the company usually loses money on the product.

Growth

In the growth stage of the product life cycle, the market has accepted the product and sales begin to increase. The company may want to make improvements to the product to stay competitive. At this point, there are still relatively few competitors.

Maturity

In the maturity stage of the product life cycle, sales will reach their peak. Other competitors enter the market with alternative solutions, making competition in the market fierce. The company that introduced the new product may begin to find it difficult to compete in the market.

Decline

In the decline stage of the product life cycle, sales will begin to decline as the product reaches its saturation point. Most products are phased out of the market at this point due to the decrease in sales and because of competitive pressure. The market will see the product as old and no longer in demand.

Describe the characteristics of services

• Intangibility: Services are intangible we cannot touch them are not physical objects. According to Carman and Uhl, a consumer feels that he has the right and opportunity to see, touch, hear, smell or taste the goods before they buy them. This is not applicable to services. The buyer does not have any opportunity to touch smell, and taste the services. While selling or promoting a service one has to concentrate on the satisfaction and benefit a consumer can derive having spent on these services.

For e.g. An airline sells a flight ticket from A destination to B destination. Here it is the matter’ of consumer’s perception of services than smelling it or tasting it.

• Perishability : Services too, are perishable like labor, Service has a high degree of perish ability. Here the element of time assumes a significant position. If we do not use it today, it labor if ever. If labor stops working, it is a complete waste. It cannot be stored. Utilized or unutilized services are an economic waste. An unoccupied building, an unemployed person, credit unutilized, etc. are economic waste. Services have a high level of perish ability.

• Inseparability: Services are generally created or supplied simultaneously. They are inseparable. For an e.g., the entertainment industry, health experts and other professionals create and offer their service at the same given time. Services and their providers are associated closely and thus, not separable. Donald Cowell states ‘Goods are produced, sold and then consumed whereas the services are sold and then produced and consumed’. Therefore inseparability is an important characteristic of services which proves challenging to service management industry.

• Heterogeneity: This character of services makes it difficult to set a standard for any service. The quality of services cannot be standardized. The price paid for a service may either be too high or too low as is seen in the case of the entertainment industry and sports. The same type of services cannot be sold to all the consumers even if they pay the same price. Consumers rate these services in different ways. This is due to the difference in perception of individuals at the level of providers and users. Heterogeneity makes it difficult to establish standards for the output of service firm.

• Ownership: In the sale of goods, after the completion of process, the goods are transferred in the name of the buyer and he becomes the owner of the goods. But in the case of services, we do not find this. The users have only an access to services. They cannot own the service.

For e.g. a consumer can use personal care services or medical services or can use a hotel room or swimming pool, however the ownership remains with the providers.

• Simultaneity: Services cannot move through channels of distribution and cannot be delivered to the potential customers and user. Thus, either users are brought to the services or providers go to the user. It is right to say that services have limited geographical area. According to Carman, “Producers of services generally have a small size area of operations than do the producers of items. largely because the producer must   to get the services or vice- versa.”

When the producers approach the buyer time is taken away from the production of services and the cost of those services is increased. On the other hand it cost time and money for the buyers to come to producers directly. Here the economics of time and travel provide incentives to locate more service centers closer, to prospective customer, resulting in emergence of smaller service centers for e.g. aeroplane cannot be brought to customer, etc.

• Quality Measurement: A service sector requires another tool for measurement. We can measure it in terms of service level. It is very difficult to rate or quantify total purchase. E.g. we can quantify the food served in a hotel but the way waiter serves the customer or the behaviour of the staff cannot be ignored while rating the total process.

Hence we can determine the level of satisfaction at which users are satisfied. Thus the firm sells good atmosphere convenience of customers, consistent quality of services, etc.

• Nature of demand- Generally, the services are fluctuating in nature. During the peak tourist seasons there is an abnormal increase in the demand of services. Therefore, while identifying the salient features of services one cannot ignore the nature of demand. E.g. tourists go to hill stations during summer season wherein public transport utilities are used substantially. This indicates that flexibility is the important feature of service.