A PRESENTATION

ON
PRODUCT LIFE CYCLE
BY
ABHINAW PANDEY
DIBYENDU MUKHERJEE
SUBHRAPROVA ROY
 ORIGIN

THE idea of the Product Life Cycle was first

developed in 1965 by Theodore Levitt in an article
entitled “Exploit the Product Life Cycle” published
in the Harvard Business Review on 1 November
1965.
 Benefit of the Product Life Cycle model

For a business, having a growing and sustainable

revenue stream from product sales is important
for the stability and success of its operations. The
Product Life Cycle model can be used by
consultants and managers to analyze the maturity
stage of products and industries. Understanding
which stage a product is in provides information
about expected future sales growth, and the kinds
of strategies that should be implemented.
 Product Life Cycle model
• The “Product Life Cycle” is the name given to the stages
through which a product passes over time. The classic
Product Life Cycle has four stages:
1. Introduction
2. Growth
3. Maturity and
4. Decline
Product Life Cycle model(Continued….)
 Introduction Stage
• At the market introduction stage the size of the market, sales volumes
and sales growth are small. A product will also normally be subject to
little or no competition. The primary goal in the introduction stage is
to establish a market and build consumer demand for the product.

Some of the considerations in the introduction stage

include:

• Product development: research and development of the basic

technology and product concept, determining the product
features and quality level.
• Pricing: should penetration pricing or a skimming price
strategy be used? A skimming price strategy might be
appropriate where there are very few competitors.
• Distribution: distribution might be quite selective until
consumer acceptance of the product can be achieved.
• Promotion: marketing efforts are aimed at early adopters, and
seek to build product awareness and to educate potential
consumers about the product.
Examples are
Examples of products which
3G mobile are at present in
phones.
the introduction stage are 3G mobiles, Blue
ray disk.
 Growth
• If the public gains awareness of a product and consumers come to
understand the benefits of the product and accept it then a company can
expect a period of rapid sales growth, enter the “Growth Stage”. In the
Growth Stage, a company will try to build brand loyalty and increase
market share.
• Profits are driven by increased sales or by cost reductions gained from
economies of scale.
Some of the considerations in the Growth Stage include:

• Product improvement: product quality might be improved,

additional features and support services added, and packaging
updated.
• Pricing: if consumer demand is high the price might be
maintained at a high level.
• Distribution: distribution channels might be added as consumer
demand increases.
• Promotion: promotion is aimed at a broader audience. A
company might spend a lot of resources on promotion during the
Growth Stage to build brand loyalty.
• Examples of products which are at present
in the growth stage are Portable DVD
players,
 Maturity
When a product reaches maturity, sales growth slows and sales volume
eventually peaks and stabilises. This is the stage during which the
market as a whole makes the most profit. A company’s primary
objective at this point is to defend market share while maximising profit.
In this stage, prices tend to drop due to increased competition, fixed
costs are low and marketing expenditure is less due to strong brand
awareness.
Some considerations for the mature product market include:

• Product differentiation: increased competition in the mature product

market means that a company must find ways to differentiate its product
from that of competitors. Strong branding is one way to do this.
• Pricing: prices may be reduced because of increased competition. Firms
in the market should be careful not to start a price war.
• Distribution: distribution intensifies and incentives may be offered to
encourage preference to be given over competing products.
• Promotion: promotion will focus on emphasising product differences
and creating/maintaining a strong brand.
• Examples of products which are at present
in the maturity stage are Personal
computers, credit cards etc.
 Decline
A product enters into decline when sales and profits start to fall. A
decline might occur because the market has become saturated, the
product has become obsolete, or customer tastes have changed.
As sales decline, a company has three strategy
options:
• Hold: maintain production and add new features and find
new uses for the product. Reduce the cost of manufacturing
(e.g. move manufacturing to a low cost jurisdiction).
Consider whether there are new markets in which the
product might be sold.
• Harvest: continue to offer the product, reduce marketing
expenditure, and sell possibly to a loyal niche segment of the
market.
• Divest: Discontinue production, and liquidate the
remaining inventory or sell the product to another firm.
 Some considerations for a declining market
include:

• Product consolidation: the number of products

may be reduced, and surviving products
rejuvenated.
• Price: prices may be lowered to liquidate
inventory, or maintained for continued products.
• Distribution: distribution becomes more
selective. Channels that are no longer profitable are
phased out.
• Promotion: Expenditure on promotion is reduced
for products subject to the Harvest and Divest
strategies.
Examples of products which are at present in the
decline stage are Typewriters, CRT Televisions,etc.
 Criticisms
• The Product Life Cycle is useful for monitoring sales results
over time and comparing them to products with a similar life
cycle. However, the Product Life Cycle model is by no
means a perfect tool. Products often do not follow a defined
life cycle, not all products go through each stage, and it is
not always easy to tell which stage a product is in at any one
time. Consequently, the life cycle concept is not well-suited
for the forecasting of product sales.
• The length of each stage will vary depending on the product
and the marketing strategies employed.
For example - A Product Life Cycle may be as short as a
few months for a fad or as long as a century or more for a
product like petrol cars.
THANK YOU