All products and services have certain life cycles.

The life cycle refers to the period from the products first launch into the market until its final withdrawal and it is split up in phases. During this period significant changes are made in the way that the product is behaving into the market. Since an increase in profits is the major goal of a company that introduces a product into a market, the products life cycle management is very important. Some companies use strategic planning and others follow the basic rules of the different life cycle phase. The understanding of a products life cycle, can help a company to understand and realize when it is time to introduce and withdraw a product from a market. A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix. The product revenue and profits can be plotted as a function of the life-cycle stages as shown in the graph below:

Product Life Cycle Diagram

Introduction Stage In the introduction stage, the firm seeks to build product awareness and develop a market for the product. The impact on the marketing mix is as follows:

Product branding and quality level is established and intellectual property Pricing may be low penetration pricing to build market share rapidly, or Distribution is selective until consumers show acceptance of the product. Promotion is aimed at innovators and early adopters. Marketing

protection such as patents and trademarks are obtained.

high skim pricing to recover development costs.

communications seeks to build product awareness and to educate potential consumers about the product. Firms focus on those buyers who are the most ready to buy, usually higher-income groups. Prices tend to be high because costs are high. Because it takes time to roll out a new product, work out the technical problem, fill dealer pipelines, and gain consumer acceptance, sales growth tends to be slow at this stage. Companies that plan to introduce a new product must decide when to enter the market. To be first can be rewarding, but risky and expensive. To come in later makes sense if the firm can bring superior technology, quality, or brand strength. Speeding up innovation time is essential in an age of shortening product life cycle. Being early can pay off. Most studies indicate that the market pioneer gains the most advantage. The early entrants in the cell phone service operations like BPL Mobile, Max Touch, Orange, Hutch etc are the examples who have used Rapid Skimming strategy. Growth Stage In the growth stage, the firm seeks to build brand preference and increase market share.

Product quality is maintained and additional features and support services

may be added.

Pricing is maintained as the firm enjoys increasing demand with little Distribution channels are added as demand increases and customers accept Promotion is aimed at a broader audience.

competition.

the product.

The growth phase offers the satisfaction of seeing the product take-off in the marketplace. This is the appropriate timing to focus on increasing the market share. If the product has been introduced first into the market, (introduction into a virgin1 market or into an existing market) then it is in a position to gain market share relatively easily. A new growing market alerts the competitions attention. The company must show all the products offerings and try to differentiate them from the competitors ones. A frequent modification process of the product is an effective policy to discourage competitors from gaining market share by copying or offering similar products. Intel Corporation is one of the companies that usually withdraw products during their peak to replace them with other ones of better and newer technology. Promotion and advertising continues, but not in the extent that was in the introductory phase and it is oriented to the task of market leadership and not in raising product awareness. A good practice is the use of external promotional contractors. This period is the time to develop efficiencies and improve product availability and service. Cost efficiency and time-to-market and pricing and discount policy are major factors in gaining customer confidence. Good coverage in all marketplaces is worthwhile goal throughout the growth phase. Managing the growth stage is essential. Companies sometimes are consuming much more effort into the production process, overestimating their market position. Accurate estimations in forecasting customer needs will provide essential input into production planning process. It is pointless to increase customer expectations and product demand without having arranged for relative production capacity. A company must not make the

mistake of over committing. This will result into losing customers not finding the product on the self. Maturity Stage At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit.

Product features may be enhanced to differentiate the product from that of Pricing may be lower because of the new competition. Distribution becomes more intensive and incentives may be offered to Promotion emphasizes product differentiation.

competitors.

encourage preference over competing products.

When the market becomes saturated with variations of the basic product, and all competitors are represented in terms of an alternative product, the maturity phase arrives. In this phase market share growth is at the expense of someone elses business, rather than the growth of the market itself. This period is the period of the highest returns from the product. A company that has achieved its market share goal enjoys the most profitable period, while a company that falls behind its market share goal, must reconsider its marketing positioning into the marketplace. During this period new brands are introduced even when they compete with the companys existing product and model changes are more frequent (product, brand, model). This is the time to extend the products life. Pricing and discount policies are often changed in relation to the competition policies i.e. pricing moves up and down accordingly with the competitors one and sales and coupons are introduced in the case of consumer products. Promotion and advertising relocates from the scope of getting new customers, to the scope of product differentiation in terms of quality and reliability.

The battle of distribution continues using multi distribution channels2. A successful product maturity phase is extended beyond anyones timely expectations. A good example of this is Tide washing powder, which has grown old, and it is still growing. Decline Stage As sales decline, the firm has several options:

Maintain the product, possibly rejuvenating it by adding new features and Harvest the product - reduce costs and continue to offer it, possibly to a loyal Discontinue the product, liquidating remaining inventory or selling it to

finding new uses.

niche segment.

another firm that is willing to continue the product. The decision for withdrawing a product seems to be a complex task and there a lot of issues to be resolved before with decide to move it out of the market. Dilemmas such as maintenance, spare part availability, service competitions reaction in filling the market gap are some issues that increase the complexity of the decision process to withdraw a product from the market. Often companies retain a high price policy for the declining products that increase the profit margin and gradually discourage the few loyal remaining customers from buying it. Such an example is telegraph submission over facsimile or email also pagers get outdated after call charges became cheaper for mobile. Sometimes it is difficult for a company to conceptualize the decline signals of a product. Usually a product decline is accompanied with a decline of market sales. Its recognition is sometimes hard to be realized, since marketing departments are usually too optimistic due to big product success coming from the maturity phase. This is the time to start withdrawing variations of the product from the market that are weak in their market position. This must be done carefully since it is not often apparent which product variation brings in the revenues. The prices must be kept competitive and promotion should be pulled back at a level that will make the product presence visible and at the same time retain the loyal

customer. Distribution is narrowed. The basic channel is should be kept efficient but alternative channels should be abandoned.