Standardization Is An Appropriate Strategy In Which Stage Of The Product Life Cycle?

98 The Product Life CycleWhat are the stages of the product life cycle?

Product managers create marketing mixes for their products as they move through the life cycle. The product life cycle is a pattern of sales and profits over time for a product (Ivory dishwashing liquid) or a product category (liquid detergents). As the product moves through the stages of the life cycle, the firm must keep revising the marketing mix to stay competitive and meet the needs of target customers.

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Stages of the Life Cycle

As illustrated in (Figure), the product life cycle consists of the following stages:

Introduction: When a product enters the life cycle, it faces many obstacles. Although competition may be light, the introductory stage usually features frequent product modifications, limited distribution, and heavy promotion. The failure rate is high. Production and marketing costs are also high, and sales volume is low. Hence, profits are usually small or negative.

Growth: If a product survives the introductory stage, it advances to the growth stage of the life cycle. In this stage, sales grow at an increasing rate, profits are healthy, and many competitors enter the market. Large companies may start to acquire small pioneering firms that have reached this stage. Emphasis switches from primary demand promotion to aggressive brand advertising and communicating the differences between brands. For example, the goal changes from convincing people to buy flat-screen TVs to convincing them to buy Sony versus Panasonic or Sharp.

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The Product Life Cycle as a Management Tool

The product life cycle may be used in planning. Marketers who understand the cycle concept are better able to forecast future sales and plan new marketing strategies. (Figure) is a brief summary of strategic needs at various stages of the product life cycle. Marketers must be sure that a product has moved from one stage to the next before changing its marketing strategy. A temporary sales decline should not be interpreted as a sign that the product is dying. Pulling back marketing support can become a self-fulfilling prophecy that brings about the early death of a healthy product.

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Strategies for Success at Each Stage of the Product Life CycleCategoryIntroductionGrowthMaturityDecline
Marketing objectives Encourage trial, establish distribution Get triers to repurchase, attract new users Seek new user or users Reduce marketing expenses, used to keep loyal users
Product Establish competitive advantage Maintain product quality Modify product Maintain product
Distribution Establish distribution network Solidify distribution relationships Provide additional incentives to ensure support Eliminate trade allowances
Promotional Build brand awareness Provide information Reposition product Eliminate most advertising and sales promotions
Pricing Set introductory price (skimming or penetration pricing) Maintain prices Reduce prices to meet competition Maintain prices

What is the product life cycle?Describe each stage of the product life cycle.What are the marketing strategies for each stage of the product life cycle?

Summary of Learning Outcomes

What are the stages of the product life cycle?

After a product reaches the marketplace, it enters the product life cycle. This cycle typically has four stages: introduction, growth, maturity, and decline (and possibly death). Profit margins are usually small in the introductory phase, reach a peak at the end of the growth phase, and then decline.

Price indicates value, helps position a product in the marketplace, and is the means for earning a fair return on investment. If a price is too high, the product won’t sell well and the firm will lose money. If the price is too low, the firm may lose money even if the product sells well. Prices are set according to pricing objectives.

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Glossary

product life cycleThe pattern of sales and profits over time for a product or product category; consists of an introductory stage, growth stage, maturity, and decline (and death).

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