Prepared by : Sir Asif Nawaz Institute For Commerce Karachi
The product life cycle is an important concept in marketing. It describes the stages a product goes through from when it was first thought of until it finally is removed from the market. Not all products reach this final stage.
Some continue to grow and others rise and fall. As consumers, we buy millions of products every year. And just like us, these products have a life cycle. Older, long-established products eventually become less popular, while in contrast, the demand for new, more modern goods usually increases quite rapidly after they are launched.
The product life cycle has 4 very clearly defined stages, each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products.
Introduction Stage :
This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing,
and the marketing needed to launch the product can be very high,especially if it’s a competitive sector
The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.
During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to
consider any product modifications or improvements to the production process which might give them a competitive advantage.
Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive
production methods and cheaper markets.
Product Life Cycle Examples
It’s possible to provide examples of various products to illustrate the different stages of the product life cycle more clearly. Here is the example of watching recorded television and the various stages of each method:
The Consumer or Buyer Decision Making Process is the method used by marketers to identify and track the decision making process of a customer journey from start to finish. It is broken down into 5 individual stages
1 – Problem Recognition:
The first stage of the process is working out what exactly you or the customer needs. The customer feels like something is missing and needs to address it to get back to feeling normal.
2 – Information search:
This is the search stage of the process. One that is continually changing from old fashioned shopping around to the new shop front which is Google (other search engines are available - apparently).
3 - Evaluation of Alternatives:
This is the time when questions start being asked. Is this really the right product for me do? Do I need a different product? If the answers are either “No it’s not right” or “yes I need a different product” then stage 2 may recommence. The stage 3 to 2 transition may happen several times before stage 4 has been reached. Once the customer has determined what will satisfy their want or need they will begin to seek out the best deal.
4 – Purchase:
The customer has now decided based on the knowledge gathered what to purchase and where to purchase what they desire. At this stage a customer has either assessed all the facts and come to a
logical conclusion, made a decision based on emotional connections/experiences or succumbed to advertising/marketing campaigns, or most likely a combination of all of these has occurred.
5 – Post Purchase satisfaction or Dissatisfaction:
The review stage is a key stage for the company and for the customer likewise. Did the product deliver on the promises of the marketing/advertising campaigns? Did the product match or exceed Expectations ?
If a customer finds that the product has matched or exceeded the promises made and their own expectations they will potentially become a brand ambassador influencing other potential customers in their stage 2 of their next customer journey, boosting the chances of your product being purchased again. The same can be said for negative feedback.
It is the process whereby a business sets the price at which it will sell its products and services, and may be part of the business's marketing plan. In setting prices, the business will take into account the price at which it could acquire the goods, the manufacturing cost, the market place, competition, market condition, brand, and quality of product.
The pricing decisions for a product are affected by internal and external factors.
A. ) Internal Factors:
While fixing the prices of a product, the firm should consider the cost involved in producing the product. This cost includes both the variable and fixed costs. Thus, while fixing the prices, the firm must be able to recover both the variable and fixed costs.
While fixing the prices of the product, the marketer should con- sider the objectives of the firm. For instance, if the objective of a firm is to increase return on investment, then it may charge a higher price, and if the objective is to capture a large market share, then it may charge a lower price.
The price of the product may also be determined on the basis of the image of the firm in the market. For instance, HUL and Procter & Gamble can demand a higher price for their brands, as they
enjoy goodwill in the market.
The stage at which the product is in its product life cycle also affects its price. For instance, during the introductory stage the firm may charge lower price to attract the customers, and during the growth stage, a firm may increase the price.
B) External Factors:
While fixing the price of the product, the firm needs to study the degree of competition in the market. If there is high competition, the prices may be kept low to effectively face the competition, and if competition is low, the prices may be kept high.
The marketer should consider various consumer factors while fixing the prices. The consumer factors that must be considered includes the price sensitivity of the buyer, purchasing power, and so on.
Government rules and regulation must be considered while fixing the prices. In certain products, government may announce administered prices, and therefore the marketer has to consider such regulation while fixing the prices.
The marketer must consider a number of channel intermediaries and their expectations. The longer the chain of intermediaries, the higher would be the prices of the goods.
Personal Selling is defined as the demonstration of products and services to the potential customers and convincing them to purchase it. Also known as Salesmanship. It is a two way process, where both buyer and seller derives benefit. It is a face to face interaction between the prospective customer and the sales representative whereby the salesman displays the goods to the customer, describe its features & utility, demonstrates its functioning, answers the customer’s questions, tells the price & discount available and persuades them to buy it. In this kind of selling, the customer gets the full fledged information
about the product and can physically verify it, to come to a decision. Many times, direct visits at the customer’s houses are also done to promote sales. With the help of this tool, the message can be conveyed to every customer separately, and immediate response is available from them. In addition to this, demand for a product is also created along with the expansion of the market. This type of selling can be seen in saree shops, stores of electronic items, car showrooms, etc.
Sales Promotion refers to a marketing tool that helps in initiating sales, by employing special incentive scheme for a limited period to lure the prospective customers of the target market, to undertake an action. Under this selling method, the offer is available to the customers for a fixed term only and not throughout the year i.e. only for festivals or special occasions, or end of the season or on the ending of the year. It involves all those activities other than advertising and personal selling that help in hiking up There are a number of merits of sales promotion like it grabs the attention of target audience and oosts up the sale in a short span of time. Moreover, this tool proves beneficial to dispose of the excess stock.
Two-way process of reaching mutual understanding, in which participants not only exchange (encode-decode) information, news, ideas and feelings but also create and share meaning. In general, communication is a means of connecting people or places. In business, it is a key function of management—an organization cannot operate without communication between levels, departments and employees.
Process Of Communication:
The person who intends to convey the message with the intention of passing information and ideas to others is known as sender or communicator
This is the subject matter of the communication. This may be an opinion, attitude, feelings, views, orders, or suggestions.
Since the subject matter of communication is theoretical and intangible, its further passing requires use of certain symbols such as words, actions or pictures etc. Conversion of subject matter into these symbols is the process of encoding.
(4) Communication Channel:
The person who is interested in communicating has to choose the channel for sending the required information, ideas etc. This information is transmitted to the receiver through certain channels which may be either formal or informal.
Receiver is the person who receives the message or for whom the message is meant for. It is the receiver who tries to understand the message in the best possible manner in achieving
the desired objectives.
The person who receives the message or symbol from the communicator tries to convert the same in such a way so that he may extract its meaning to his complete understanding.
Feedback is the process of ensuring that the receiver has received the message and understood in the same sense as sender meant it.
While all of the steps in this process are valuable, I would argue that this is the most important because this is where you lay the foundation for the rest of your marketing research. Before beginning your marketing research, you need to decide what the problem is you're trying to figure out. In this first phase of the process, you need to establish your research objectives. Developing questions that will help
you clearly define your problem is very beneficial during this phase.
Once you know what the problem is you're addressing, it's time to develop and design the research plan. There are many methods you can incorporate into your plan. To keep your costs down.
Once you start to collect your data, make sure it's valid and unbiased. Use a mixture of the methods mentioned above to get relevant data from all angles. The ideal type of information to gather would be analytical/scientific as well as emotional data that you couldn't get from looking at a graph. In my experience, personal stories can give you a lot of the insight you're looking for.
Once you've gathered information, it's time to interpret the data. When doing this, it's important to look for trends as opposed to specific pieces of information. As you're analyzing your data, don't try to find patterns based off your previous assumptions prior to collecting the data. It's OK if your hypothesis is wrong. That's why you do the testing and don't go with assumptions.
Your research is complete. It's time to present your findings and take action. Start developing marketing campaigns. Put your findings to the test and get going! The biggest takeaway here is that although this round of research is complete, it's not over. Your research should never be over. You should always be analyzing your data on a regular basis to see where you can improve.