Is a strategy to predict the product over a period of time in the market environment in terms of several stages such as Introduction, Growth, Maturity and Decline. In other words, it refers the graphical representation of the product sales history from the time of introduction to decline or withdrawn in terms of Sales, Cost of production, Profit, Competition, promotion, etc.
Stages
in Product Life Cycle
Introduction:
Under this stage a product introducing first time in the market. The product is
promoted to create awareness in the minds of consumers, The sales level is at
low rate, High cost of production due to lower production, profit not exist and
high promotion expenses.
Growth:
Under this stage the product acceptable by the consumers. Therefore, sales at
increasing trend with small amount of profit. On account of competitor’s price
become more flexible, distribution channels are expanded and also need high
promotional expenses. The stage is also called as Break – Even Stage, where
total cost is equal to revenue. If any excess revenue over cost treated as
profit
Maturity
or Saturation: It is the longest stage of the product.
Under this the product becomes more mature and stable in the market with sales
in increasing trend. Sufficient profit, intense competition and more substitute
available in the market. Hence the marketer or producer has to concentrate more
on product modification, affordable price, extended distributed channel, brand
loyalty of the product.
Decline:
Is a stage where product are become obsolete or producer withdraw the product
form market. Sales are decreasing gradually, more competition, profit
decreasing, cost of product in the increasing trend because low production. At
this stage price become the primary weapon of competition and considerably
reduce expenditure on advertising and sales promotion. Cost control becomes the
key to generate profits.
Graphical Representation of Product Life Cycle
Product
Planning
Is
the systematic determination of the product line in terms of various products
to be offered by the enterprise to his customers. It is designed to achieve
some of the specific objectives of the organization. Such as:
- Meet the consumer needs and requirements
- Assess firm and product SWOT Analysis
- Better allocation of marketing resources
- Help for the organization to survive the market
- Generate sufficient sales etc
