The conditions a product is sold under will change over time. The Product Life Cycle refers to the succession of stages a product goes through. Product Life Cycle Management is the succession of strategies used by management as a product goes through it's life cycle.
A Typical Product Life Cycle
- 1 New product development stage
- very expensive
- no sales revenue
- 2 Market introduction stage
- cost high
- sales volume low
- 3 Growth stage
- costs reduced due to economies of scale
- sales volume increases significantly
- 4 Mature stage
- costs are very low
- sales volume peaks
- prices tend to drop due to the proliferation of competing products
- very profitable
- 5 Decline stage
- sales decline
- prices drop
- profits decline
Management of the CycleThe progession of a product through these stages is by no means certain. Some products seem to stay in the mature stage forever (eg.: milk). Marketers have various techniques designed to prevent the process of falling into the decline stage. In most cases however, the life expectancy of a product category can be estimated.
A marketer's marketing mix strategies will change as their product goes through its life cycle. Advertising , for example, should be informative in the introduction stage, persuasive in the growth and maturity stages, and be reminder oriented in the decline stage. Promotional budgets tend to be highest in the early stages and gradually taper off as the product matures and declines. Pricing, distribution, and product characteristics also tend to change.
Market Evolution is a process that parallels the product life cycle. As a product category matures, the industry goes through stages that mirror the five stages of a product life cycle:
Technology life cycle
The underlying technology subsummed within a product or product category can go though similar stages. This is typically referred to as the Technology lifecycle.
Finding related topics