INTRODUCTION TO PRODUCT LIFE CYCLE

The product life cycle is an important concept in marketing that provides insight
into a product’s competitive dynamics. Once a new good or service is introduced
to the market, it enters the product life cycle. The product life cycle is nothing
more than the pattern of sales for a product over time. To maximize efficiency, a
product is managed through its life cycle. This usually means altering marketing
strategies and tactics as the product matures. It is the recent introduction to the
marketing inventory which acts as the key to successful product management right
from its introduction to the obsolescence.

According to Prof. Philip Kotler “An attempt to recognize

distinct stages in the sales history of the product.” The product life cycle is a
conceptual representation. It is a product aging process. Just as human beings have
a typical life cycle going from childhood, adolescence, youth and old age, so also
products follow a similar route. Product life cycle is simply graphic portrayal of
the sales history of a product from the time it is introduced to the when it is
withdrawn. To fully understand product life cycle, we will first describe its parent
concept, the demand technology life cycle.

DEMAND/ TECHNOLOGY LIFE CYCLE

Marketing thinking should not begin with the product, or even a product class, but
rather with a need. The product exists as one solution among many to meet a need.
For e.g. the human race has a need for “calculating power,” and this need has
grown over the centuries. The changing need level is described by a demand-life-
cycle curve. There is a stage of emergence (E) followed by stages of accelerating
growth(G1),decelerating growth(G2),maturity(M),and decline(D).In the case of
“calculating power, “the maturity and decline stages might not have set in yet.

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 Now a need is satisfied by some technology. The need for
“calculating power” was first satisfied by finger counting, then by abacus, still later
by slide rules, adding machines, hand calculators and computers. Each new
technology normally satisfies the need in a superior way. Each demand/technology
life cycle shows an emergence, rapid growth, slower growth, maturity and the
decline

FEATURES OF PRODUCT LIFE CYCLE

 Products move through the cycle of introduction-growth-maturity-decline at

different speed.
 Both sales volume and unit profits rise correspondingly till the growth stage.
During this period of maturity, the promotional expenses reach a normal
ratio to sales. Most of the competitors spend very normal amount on
promotion. Efforts are made to rationalize the existing budget. Though, total
expenditure does not expand, major share of the expenditure goes to
distribution and brand promotion to keep the dealer’s loyalty intact.
Advertising emphasizes the difference between one brand and those of
competitors. As a result, weaker competitors leave the market only to the
larger and stronger manufacturers. However, in the period of maturity stage,
sales volume rises but profits fall.
 The successful product management needs dynamic functional approach to
meet the unique situations of sales and profitability.

IMPORTANCE TO MANAGEMENT
The product life cycle is an excellent tool for planning and developing marketing
strategy. Effective management of a product is enhanced when the manager
understands the process by which the product is adopted and the concepts of brand

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loyalty and switching. The section on “managing the product line” is very
important for any manager marketing two or more related products. Considerations
are presented, for e.g. on product modification and how to determine if a product
should be dropped from a line. The last section explains how to manage service
businesses and discusses the marketing concept in service organizations.

INTRODUCTION TO PRODUCT LIFE CYCLE

MANAGEMENT
Product life cycle management is the process of managing the entire life cycle of a
product from its conception, through design and manufacture, to service and
disposal. It integrates people, data, processes and business systems and provides a
product information backbone for companies and their extended enterprise product
life cycle management (PLM) is more to do with managing descriptions and
properties of a product through its development and useful life, mainly from a
business/engineering point of view. Whereas product life cycle management is to
do with the life of a product in the market with respect to business/commercial
costs and sales measure.

All companies need to manage communications and

information with their customers (CRM-Customer Relation Management), their
suppliers (SCM-Supply Chain Management), their resources with the enterprises
(ERP-Enterprise Resource Planning) and their planning (SDLC-System
Development life cycle). A form of product life cycle management is called
people-centric product life cycle. While traditional PLM tools have been deployed
only on release or during the release phase, people centric PLM targets the design
phase.

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 STAGES OF PRODUCT LIFE CYCLE
A basic product life cycle consists of four stages.

1. Introduction
2. Growth
3. Maturity
4. Decline

Before we examine these stages, several points need to be made.

 First, not every product goes through every stage. In fact, many goods never
get past the introduction stage.
 Second, the length of time a product spends in any one stage may vary
dramatically. Some products, such as food items, move through the entire
cycle in weeks. Others, such a scotch whiskey and filter cigarettes, have
been in maturity stage for years and changes in a product can change its life
cycle.
 Repositioning a product can lead to a new growth cycle. Repositioning is
basically changing the perceived image on uses of product.

SC

SALES VALUE/

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PROFIT (Rs.)

PC

INTRODUCTION GROWTH MATURITY DECLINE

1. THE INTRODUCTION STAGE

Whenever a new product is introduced, it has only a proved demand and not the
effective demand. That is why, sales are low and creeping very slowly. It may be
the case with a product like instant coffee, frozen orange juice or a powdered
coffee cream.

CHARACTERISTICS

1. LOW AND SLOW SALES: The product sales are the lowest and move up very
slowly at snail’s pace. The basic reasons for this are:

 Delays in expansion of production capacity.

 Delays in making available the product to consumers due to lack of retail
outlets which are acceptable and adequate.
 Consumer resistance to change over from the established consumption
behavioral patterns.

2. HIGHEST PROMOTIONAL EXPENSES: During this period of introduction

or the development, the promotional expenses bear the highest proportion of sales.
It is so, because, the sales are of smaller volume on one side and high level

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promotion efforts to create demand on the other. Demand creation is not an easy
task as it is a matter of breaking the barriers, which is done by:

 Informing potential and present consumers of the new and unknown

product.
 Inducing a trial of the product.
 Screening distribution network.

3. HIGHEST PRODUCT PRICES: The prices charged at the beginning are the
highest possible because of:

 Lower output and sales absorbing fixed costs.

 Technological problems might not have been mastered fully.
 Higher margin to support higher doses of promotional expenses-a must for
growth.
 Very few competitors or no competitors.
 Sales to higher income groups in a limited area for cultivating the effective
demand.

2. THE GROWTH STAGE

Once the market has accepted the product, sales begin to rise. The prices may
remain high to recover some of the development costs. With high sales and prices,
profits rise sharply. This encourages competition leading to possible product
improvement. Although, the contribution to sales is sizeable from the high income
group buyers, middle income group buyers do not contributes towards sales.

CHARACTERISTICS

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1. SALES RISE FASTER: The sales start climbing up at faster rate because of:

 Killing the consumer resistance to the product.

 The distribution network-retail outlet is built to the needs.
 Production facilities are streamlined to meet the fast moving sales. Thus,
sales increases at an increasing rate over the period of time.

2. HIGHEST PROMOTIONAL EXPENSES: During the period of growth, the

promotional strategy changes. The problem is no longer one of persuading the
market to buy the product, but rather to make it to buy a particular brand. The
question is one of creating and maintaining and extending selective demand. The
advertising moves towards brand identification, awareness to have the effects of a
brand image. Special offers, concessions, allowances to stockists and dealers are
given to push a particular brand or brand group.

3. PRODUCT IMPROVEMENTS: With the high sales and prices, profits rise
sharply and because of this, there is greater incentive for the companies to enter
the market. Competitions have the advantage of entering the market because;
research and development have already been completed by innovating firm at its
costs. Once the originator has proved the pattern of market, competitors can
become stronger by coming out with modified products. Along with product
modification, they may reduce prices too. This makes the originators to further
improve the product and bring down the price to nab competition.

3. THE MATURITY STAGE

Eventually, market becomes saturated because, the household demand is satisfied

and distribution channels are full. Sales level off and over capacity in production
becomes apparent. Competition intensifies as each manufacturer wants to ensure
that he can maintain production at a level which gives him low unit cost. The

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greater the cost of production and the initial investment, the more important it is to
maintain high output so as to cover fixed costs at lower rates of revenue. Lower
prices are essential to save off the competition. Though production costs are
reduced, the margin of distributors may not taper off. The efforts are made to
extend the maturity stage. So, this period is much longer than the growth stage.

CHARACTERISTICS

1. SALES INCREASE AT DECREASING RATE: As most of the customers are

knowing the uses of the product, the sales grow at falling rates giving an overall
picture of “off level”strategies.It shows that there is apparent gap in production
level and sales level. This identifies competition. There is little growth in market as
there is declaration in sales growth leading to market saturation. Therefore,
demand mostly consists of repeat sales. Consequently competition intensifies, price
tends to fall and selling efforts become aggressive. Profits, then, are squeezed. That
is why, firms employ extension strategies to retain their market share.

2. NORMAL PROMOTIONAL EXPENSES: During this period of maturity, the

promotional expenses reach a normal ratio to sales. Most of the competitors spend
very normal amount on promotion. Efforts are made to rationalize the existing
budget. Though, total expenditure does not expand, major share of the expenditure
goes to distribution and brand promotion to keep the dealer’s loyalty intact.
Advertising emphasizes the difference between one brand and those of
competitors. As a result, weaker competitors leave the market only to the larger
and stronger manufacturers.

3. UNIFORM AND LOWER PRICES: The prices charged by the producer are
quite lower and uniform with a very narrow difference except for the real product
differentiation. The strength and vitality of higher prices fade. That is why,
extension strategies are followed. The price charged just to cover special costs in
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addition to the usual manufacturing expenses plus a low margin for the investment.
It has an advantage of low margins over broad based turnover.

4. THE DECLINE STAGE

In this stage, sooner or later actual sales begin to fall under the impact of new
product competition and changing consumer’s tastes and preferences. Prices and
profits decline. It is a stage where the market for the product has been superseded
by a technological or style change which replaces the existing demand altogether.
That is, the old products are rendered obsolete. For instance, the development of
tough water based “oil-bong” has made significant inroads into the traditional
market for oil-based varnish enamel paints. That is, alternatively, interest in the
product may fade, leading to a rapid reduction in sales.

CHARACTERISTICS

1. RAPID FALL IN SALES: As the product is pretty old, new one available, there
is a change in the trend. People are interested in buy something new. The sales fall
sharply. Over production appears to be the major problem. This induces firms to
close down as competitors have to leave or left to them. The total numbers of firms
in the arena comes down. For instance, the numbers of companies manufacturing
calculators is much less than what it was in 1960s and 1970s.

2. FURTHER FALL IN PRICES: Rapid reduction in sales creates a fear and there
will be intense competition to liquidate the stock at the earliest. There would be a
new kind of competition to have enlarged share in such a decline stage to have
maximum benefit at least profit margin.

3. NO PROMOTIONAL EXPENSES: Expenditure in support of product falls

sharply as prices become keener for fast stock liquidation. Distribution network is
reduced to the minimum with thorough rationalization. This is an advantage as

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product is known for good many years. It may enable the manufacturer to milk the
product with profit through sales are scanty.

STAGES OF THE PRODUCT LIFE CYCLE

EFFECCTS INTRODUCTION GROWTH MATURITY DECLINE

AND
RESPONSES

Competition None of Some Many rivals Few in no.

importance emulators competing with a
for a small rapid
piece of pie. shake –out
of weak
performan
ce.

Overall Market Market Defuse of Prepare

strategy establishment; penetratio brand for
persuade early n; position; removal;
adopters to try the persuade check the milk the
product. mass inroads of brand dry
market to competition. of all

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 prefer the possible
product. benefits.

Profits Negligible because Reach Increasing Declining

of high production peak competition volume
and marketing levels as a cuts into pushes
costs. result of profits costs up to
high margins and levels that
prices and ultimately eliminate
growing into total profits
demand. profits. entirely.

Retail prices High, to recover High, to What the Low

some of the take traffic will enough to
excessive costs of advantage bear, need to permit
launching. of heavy avoid price quick
consumer war. liquidation
demand. of
inventory.

Distribution Selective, as Intensive, Intensive, Selective,

distribution is employ heavy trade unprofitab
slowly built up. small allowances to le outlets
trade retain shelf slowly
discounts space. phased
since out.
dealers are
eager to
store.

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Advertising Aims at the needs Make the Use Emphasiz
strategy of early adopters. mass advertising as e low
market a vehicle for price to
aware of differentiatio reduce
brand n among stock.
benefits. otherwise
similar
brands.

Advertising High, to generate Moderate, Moderate, Minimum

emphasis awareness and to let sales since most expenditur
interest among rise on the buyers are es
early adopters and sheer aware of required to
persuade dealers to momentu brand phase out
stock the brand. m of characteristic the
word- of s. product.
mouth
recommen
dations.

Consumer Heavy, to entice Moderate, Heavy, to Minimal,

sales and target groups with to create encourage to let the
promotion samples, coupons, brand brand brand
expenditures and other preference switching, coast by
inducements to try . hoping to itself.
the brands. convert some
buyers into
loyal users.

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MARKETING STRATEGIES IN PRODUCT LIFE CYCLE
1. INTRODUCTION STAGE: In launching a new product, marketing
management can set a high or a low level for each marketing variables, such as
price, promotion, distribution and product quality. Considering only price and
promotion, management can pursue one of the four strategies as shown:

1. High promotion high price – Rapid skimming strategy

2. High promotion low price – Rapid penetration strategy

3. Low promotion high price – Slow skimming strategy

4. Low promotion low price – Slow penetration strategy

1. A RAPID – SKIMMING STRATEGY: It consists of launching the new product at

a high price and a high promotion level. The firm charges a high price in order to
recover as much gross profit per unit as possible. It spends heavily on promotion to
convince the market of the product’s merits even at the high price. The high
promotion acts to accelerate the rate of market penetration. The strategy makes
sense under the following assumptions: a large part of the potential market is
unaware of the product, those who become aware are eager to have the product and
can pay the asking price, and the firm faces potential competition and wants to
build up brand preference.
2. A SLOW – SKIMMING STRATEGY: It consists of launching the new product at
a high price and low promotion. The high price helps recover as much gross profit
per unit as possible, and the low level of promotion keeps marketing expenses
down. This combination is expected to skim a lot of profit from the market. This

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strategy makes sense when the market is limited in size, most of the market is
aware of the product, buyers are willing to pay a high price and potential
competition is not imminent.

3. A RAPID – PENETRATION STRATEGY: It consists of launching the product at

a high price and spending heavily on promotion. This strategy promises to bring
about the fastest market penetration and largest market share. This strategy makes
sense. When the market is large, the market is unaware of the product, most buyers
are price sensitive, there is strong potential competition, and the company’s unit
manufacturing costs fall with the scale of production and accumulated
manufacturing experience.

4. A SLOW – PENETRATION STRATEGY: It consists of launching the new

product at a low price and low level of promotion. The low price will encourage
rapid product acceptance, and the company keeps its promotion costs down in
order to realise more net profit. The company believes that market demand is
highly price elastic but minimally promotion elastic. This strategy makes sense
when the market is large, the market is highly aware of the product, the market is
price sensitive, and there is some potential competition.

2. GROWTH STAGE: During this stage, the firm uses several strategies to
sustain rapid market growth as long as possible.
 The firm improves product quality and adds new product features and
improves styling.
 The firm adds new models and flanker products.
 It enters new product segments.

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  It increases its distribution coverage and enters new distribution channels.
 It shifts from product – awareness advertising to product – preference
advertising.
 It lowers price to attract the next layer of price sensitive buyers.
The firm that pursues these markets– expansion strategies will
strengthen its competitive position. But this improvement comes at additional cost.
The firm in the growth stage faces a tradeoff between high market share and high
current profits. By spending money on product improvement, promotion and
distribution, it can capture a dominant position. It foregoes maximum current profit
in the hope of making even greater profits in the next stage.

3. MATURITY STAGE: In mature stage, some companions abandon their

weaker products. They prefer to concentrate their resources on their more
profitable products and on new products. Marketers should systematically consider
strategy of market, product and marketing – mix modification.

A. MARKET MODIFICATION: The company might try to expand the market for
its mature brand by working with the two factors that make up sales volume.
Volume = No. of brand users * Usage rate per user
The company can try to expand the no. of brand users in three ways:
a. Convert non- users: The company can try to attract non-users to the product. For
e.g., the key to the growth of air freight service is the constant search for new users
to whom air carriers can demonstrate the benefit of using air freight over ground
transportation.
b.Enter new market segments: The company can try to enter the new market
segments – geographic, demographic and so on – that use the product but not the

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brand. For e.g., Johnson & Johnson successfully promoted its baby shampoo to
adult users.
c. Win competitor’s customers: The company can attract competitor’s customers to
try or adopt the brand. For e.g., Pepsi – cola is constantly tempting coca-cola users
to switch to Pepsi-cola, throwing out one challenge after another.
Volume can also be increased by convincing current brand
users to increase annual usage of the brand. Here are three strategies:
a. More frequent use: The company can try to get customers to use the product
more frequently. For e.g., orange juice marketers try to get people to drink orange
juice on occasions other than breakfast time.
b. More usage per occasion: The company can try to interest users in using
more of the product on each occasion. Thus, a shampoo manufacturer might
indicate that the shampoo is more effective with two risings than one.
c. New and more varied users: The company can try to discover new product
uses and convince people to use the product in more varied ways. Food
manufacturers, for e.g., list several recipes on their package to broaden the
consumer’s uses of the product.

B. PRODUCT MODIFICATION: Managers also try to stimulate sales by

modifying the product’s characteristics. This can take several forms.
a. Quality improvement: This strategy aims at increasing the functional
performance of the product – its durability, reliability, speed and taste. A
manufacturer can often overtake its competitors by launching the “new and
improved” machine tool, automobile, television set, or detergent.
b. Feature improvement: Feature improvement aims at adding new feature (like
size, weight, material, additives and accessories) that expand the product’s
versatility, safety and convenience.
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c. Style improvement: It aims at increasing the aesthetic appeal of the product. The
periodic introduction of new car models amounts to style competition rather than
quality or feature competition.

C.MARKET-MIX MODIFICATION: Product managers might also try to stimulate

sales by modifying one or more marketing-mix elements. They should ask the
following questions about the non product elements of the marketing-mix in
searching for ways to stimulate a mature product’s sales.
a. Prices: Would a price cut attract new triers and users? If so, should the list price
be lowered, or should prices be lowered through price specials, volume or early-
purchase discounts, freight absorption, or easier credit terms? Or would it be better
to raise the price to signal higher quality?
b.Distribution: Can the company obtain more product support and display in the
existing outlets? Can more outlets be penetrated? Can the company introduce the
product into new types of distribution channel?
c.Advertising: Should advertising expenditure be increased? Should the advertising
message or copy be changed? Should the media-vehicle mix be changed? Should
the timing, frequency, or size of ads be changed?
d.Sales promotion: Should the company step up sales promotion-trade deals, cents-
off, rebates, warranties, gifts and contests?
e.Personal selling: Should the number or quality of sales people be increased?
Should the basis for sales force specialization be changed? Should sales force
incentives be revised? Should sales territory be revised? Can sales-call planning be
improved?
f.Services: Can the company speed up delivery? Can it extend more technical
assistance to customers? Can it extend more credit?

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4. DECLINE STAGE: The Company faces a number of tasks and decisions to
handle its aging products.
A. IDENTIFYING THE WEAK PRODUCTS: The first task is to establish a
system for identifying weak products. The company appoints a product-review
committee with representatives from marketing, R&D, manufacturing and finance.
This committee develops a system for identifying weak products. The controller’s
office supply data for each product showing trends in market size, market share,
price, costs and profit. This criterion includes the number of years of sales decline,
market share trends, gross profit margin and return on investment. The managers
responsible for dubious products fill out rating forms showing where they think
sales and profits will go, with or without any changes in marketing strategy. The
product review committee examines this information and makes a recommendation
for each dubious product-leave it alone, modify its marketing strategy or drop it.

B.DETERMINING MARKETING STRATEGIES: Some firms will abandon

declining markets earlier than others. Much depends on the level of the exit
barriers. The lower the exit barriers, the easier it is for firms to leave the industry
and the more tempting it is for the remaining firms to remain and attract the
customers of the withdrawing firms. The remaining firms will enjoy increased
sales and profits. In the study of company strategies in declining industries, there
are five decline strategies available to firm.
 Increasing the firm’s investment (to dominate or strengthen its competitive
position).
 Maintaining the firm’s investment level until the uncertainties about the
industry are resolved.

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  Decreasing the firm’s investment level selectively, by sloughing off
unprofitable customer groups, while simultaneously strengthening the firm’s
investment in lucrative niches.
 Harvesting (or milking) the firm’s investment to recover cash quickly.
 Divesting the business quickly by disposing of its assets as advantageously
as possible.
Harvesting calls for gradually reducing a product or
business’s costs while trying to maintain its sales. The first costs to cut are R&D
costs and plant and equipment investment. Divesting would have tried to increase
the attractiveness of the business, not run it down.

C. THE DROP DECISION: When a company decides to drop a product, it faces

further decisions. If the product has strong distribution and residual goodwill, the
company can probably sell it to a smaller firm. If the company can’t find any
buyers, it must decide whether to liquidate the brand quickly or slowly. It must
also decide on how much parts inventory and service to maintain for past
customers. Example, Johnson & Johnson
DEATH IS NOT INEVITABLE:
Not all products face an inevitable death as they move through the
life cycle. Sometimes they can be given new life through repositioning or product
modification that allows them to enter a new growth phase. Johnson & Johnson’s
success with baby shampoo repositioning gave management the confidence to try
the same tactic again. A series of ads touted Johnson’s baby lotion as being not
only for the baby, but also for the adults. Check protection, leg shaving, face
washing, all over body massaging, and after sun moisturizing. The use of creative
marketing strategies to prolong the life of a product is called innovative maturity.
Tactics to achieve innovative maturity includes these:
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  Promoting more frequent use of the product by current consumers.
 Developing more varied use of the product by current consumers.
 Creating new consumers for the product by expanding the market.
 Finding new uses for the product.

PROSPECTS AND PROBLEMS OF PRODUCT LIFE CYCLE

CONCEPT
This concept of product life cycle is so significant that it can be
used as a major tool by marketing manager in market forecasting, planning and
control. Though it helps us in having highly competitive marketing strategies, its
specific uses can be seen in its application in the following areas.
PROSPECTS:

1.IN SALES FORECASTING: One of the most dramatic uses of product life
cycle in sales forecasting is its application to explain the violent rise and fall of
sales in case of a given product. A sales forecaster, having perfect knowledge
about the product life cycle, will be able to establish cause and effect relations and
helps to arrive at concrete conclusions. Under changing business conditions with
changing life cycle, some definite solutions can be suggested, as sales forecasting
essentially a problem solving area of management process.

2. IN PRODUCT PLANNING: A product is the outcome of the research and

development. At what stage it is to be improved, remodeled or discarded is
dependent on product life cycle. It is very clear that during the infancy period -
original issue works, during growth – defects are rectified, during maturity –
sophistication comes in and at last the product is discarded.

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3. IN PRODUCT PRICING: Through the manufacturer is to decide at a very
outset, whether he is to go in for ‘high price’ and skim the market with the risk of
attaching too much competition or to go in for ‘low price’ and to aim at greater and
more rapid market penetration, he is to do it in consonance with the changes in
product life cycle stages. If he follows lower prices, he has the advantage of
keeping away the competitors; however, the profit may not allow him to go in for
the extension strategies during the period of maturity. That is why; he is to start
with high prices so that he can reduce in course of time to take advantage of price
competition such as branding.

4. IN PRODUCT CONTROL: Product life cycle concept is an effective control

tool in case of those firms which have multi-product base. Such a firm when it
offers simultaneously number of products in a market, it is but natural that all
products so offered may have some degree of success. Some might be doing
exceedingly well, others so, and still others below expectation. It is product life
cycle that can be used to monitor the product position so that the nature and extent
of change required in marketing strategy can be sought to exploit the product
potentially in enjoying maximum possible market share.

5. IN ADVERTISING: The process of persuasion is known as advertising if done

in impersonal way. The major aim of advertising is to create, maintain and extend
demand for a product or a service or an idea. The same policy followed in the
different stages of product life cycle may not fetch rich dividends. The role of
advertising must change phase wise to get the best rewards for the efforts put in
terms of talent, time and treasure in advertising. Thus, the role of advertising is to
kill the consumer resistance in the introduction stage, extending the demand for the
product in growth stage, maintaining the demand in the period of maturity. The
role of advertising is dormant in the last stage of decline. In other words, in the

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first stage it speaks of product availability, in the second product differentiation, in
the third stage product improvement and in the last stage grand clearance sale.

While assessing the strengths of product life cycle as a marketing

tool, one should not turn deaf ears to the problems because; some very serious
doubts and problems are raised about the relevance and the use of this concept.

PROBLEMS

1. ABSENCE OF ABSOLUTE CONFORMITY: Though we are informed, in

general, that every product conforms to the traditional life cycle pattern, it is so
always that all products have this conformity. Thus, products like steel, coal,
cement, gold, silver, aluminium, patent medicines, bicycles and the like have
economic fluctuations rather than pattern fluctuations.

2. STAGE SPAN FLUCTUATES: Length and pattern of product life cycles can
vary significantly from product to product. There is no reason to believe that all
products inevitably pass through all the four stages, some might proceed, for e.g.,
straight from growth into decline because of the introduction of some superior new
product. Other products may have a prolonged introduction stage before coming
into wide acceptance. That is, real product histories do not get hand in hand with
the statement that products pass from one to the successive stages as a matter of
course.

NEW PRODUCT DEVELOPMENTS

An identifying and developing new product idea – and effective strategies to go
with them – is often the key to a firm’s success and survival. But this is not easy.
New product development demands effort, time and talent – still the risks and costs
of failure are high. A new product may fail for many reasons. Not offering a
unique benefit or understanding the competition is common mistake. Some

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R
C
S
V
D
G
N
E
M
P
T
I
O
L
companions rush to get a product on the market - perhaps without developing a
complete marketing plan. Sometimes the idea is good, but there are design
problems – or the product costs much more to produce than was expected. To
avoid such mistakes, it is useful to follow an organized new product development
process.

NEW PRODUCT DEVELOPMENT PROCESS

1. IDEA GENERATION: New ideas can come from a company’s own sales
or production staff, middleman, competitors, consumer surveys, or other
sources – such as trade associations, advertising agencies or government
agencies. Analysing new and different views of the company’s markets
helps spot opportunities that have not yet occurred to competitors – or even
to potential customers. Basic studies of present consumer behavior point up
opportunities, too. When looking for ideas, the consumer’s view point is all
important. It may be helpful to consider the image that have of the firm.
2. SCREENING: It involves evaluating the new ideas with the product –
market screening criterion. The criterion includes the nature of the product –
market the company would like to be in as well as those it wants to avoid.
The qualitative criterion includes the statement that helps the company select
ideas that will allow it to lead from its strengths and avoid its weakness.
Ideally, the company matches its resources to the size of its opportunities. A
“good” new idea should eventually lead to a product that will give the firm a
competitive advantage – hopefully one that will last.
ROI IS A CRUCIAL SCREENING CRITERION.

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 Getting by the initial screening criterion does not guarantee success for the
new idea. But it does show that at least the new idea is “in the right
ballpark” for this firm. If any ideas pass the screening criterion, then a firm
must set priorities for which ones go on the next step in the process. This can
be done by comparing the ROI (return on investment) for each idea –
assuming the firm is ROI oriented. The most attractive alternatives are
pursued first.
3. IDEA EVALUATION: When an idea moves past the screening step, it is
evaluated more carefully. Note that no tangible product has yet been
developed – and this can handicap the firm in getting feedback from
customers. For help in idea evaluation, firms use concept testing – getting
reactions from customers about how well a new product idea fits their needs.
Concept testing uses market research – ranging from informal focus groups
to formal surveys of potential customers. Idea evaluation is more precise in
industrial markets, potential customers are more informed about their need –
and their buying is more economical and less emotional. Further, given the
derived nature of demand in industrial markets, most needs are already being
satisfied in some way. So new products are ‘substitutes’ for existing ways of
doing things.
4. DEVELOPMENT: Product ideas that survive the screening and idea
evaluation step must now be analysed further. Usually, this involves some
research and development and engineering – to design and develop the
physical part of product. Input from the earlier efforts helps guide this
technical work. But it is still desirable to test models and early versions of
the product in the market. This process may have several cycles – building a
model, testing it, revising product specification based on the tests and so on.

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 5. COMMERCIALIZATION: A product idea that survives this far can
finally be placed on the market. First, the new product people decide exactly
which product form or line to sell. Then, they complete the marketing mix –
really a whole strategic plan. And top management has to approve an ROI
estimate for the plan before it is implemented. Finally, the product idea
emerges from the new product development process – but success requires
the co-operation of the company. Putting a product on the market is
expensive. Manufacturing facilities have to be set up and enough products
have to be produced to fill the channels of distribution. Further, introductory
promotion is costly – especially if the company has to develop new channels
of distribution.

CONCLUSION

The product life cycle concept is especially important to marketing strategies

planning and describes that each product spend different length of time in each
stage (i.e. introduction, growth, maturity and decline stage). It shows that different
market mixes and even strategies are needed as a product moves through its cycle.
This is an important point because profit change during the life cycle with most of
the profits going to the innovators or fast copiers. However, the better your
financial control, the more you will be able to track individual product.

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 BIBLIOGRAPHY
 Kotler, Philip, “Marketing Management” Tata Mc Grew Hills Publications,
2008.
 McCarthy, E.J., “Basic Marketing – a managerial approach”, Tata Mc Grew
Hills Publications,1990.
 McDaniel , Carl.Jr , “Marketing”1987.
 Sontakki ,C.N., “Marketing Management”Kalyani Publications,2008.
 Websites:
www.google.com
www.wikipedia.com

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