Product Life Cycle

By:- Aayushi Shriya Kannaujia

Introduction

All products and services have certain life cycles. The life cycle refers to the period from the product’s

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 in respect of sales into the market.

The understanding of a product’s life cycle, can help a company to understand and realize when it is time to introduce and withdraw a product from a market, its position in the market compared to competitors, and the product’s success or failure.

PRODUCT LIFE CYCLE MODEL DESCRIPTION

The product’s life cycle - period usually consists of five major steps or phases:

Product developmentProduct introductionProduct growthProduct maturity Product decline These phases exist and are applicable to all

products or services.

Product Life Cycle Graph

PRODUCT DEVELOPMENT PHASE

Product development phase begins when a company finds and develops a new product idea.

This involves translating various pieces of information and incorporating them into a new product.

A product is usually undergoing several changes involving a lot of money and time during development, before it is exposed to target customers via test markets. Those products that survive the test market are then introduced into a real marketplace and the introduction phase of the product begins.

During the product development phase, sales are zero and revenues are negative. It is the time of spending with absolute no return.

INTRODUCTION PHASE

The introduction phase of a product includes the product launch in such a way so that it will have maximum impact at the moment of sale.

Customers are characterized as 'innovators.' Production costs tend to be high on a per unit basis. Marketing costs required for creating customer

awareness, interest, and trial and for introducing the product into distribution channels are high.

Profits, because of low sales and high unit costs, tend to be negative or very low.

GROWTH PHASE

Sales increase rapidly during the growth phase. This increase is due to: Advertisement, promotion.

Cost are declining on a per unit basis because increased sales lead to longer production runs.

Profits rise significantly and rapidly during this stage.

Customers are mainly early adopters and early majority.

Competition continues to grow throughout this stage.

MATURITY PHASE

When the market becomes saturated with variations of the basic product, and all competitors are represented ,the maturity phase arrives.

Costs continue to rise during maturity because of market saturation and continually intensifying competition.

The only remaining customers to enter the market will be the late majority and the laggards.

Competition is most intense during this stage.

DECLINE PHASE

Sales continue to deteriorate through decline. And, unless major change in strategy or market conditions occur, sales are not likely to be revived.

Distribution is narrowed. Costs continue to rise. Large sums are still spent on promotion, particularly

sales promotions aimed at providing customers with price concessions.

Profits continue to erode during this stage with little hope of recovery.

Customers again, are primarily laggards.

STRATEGIES of EACH PHASE

Stages Introduction Growth Maturity Decline

Sales Low Rapidly Rising Peak Declining

Cost (per customer)

High Average Low Low

Profit Negative Rising High Decline

Marketing Objective

Create product awareness and trial

Maximize market share

Maximize profit

Reduce expenditure

Product Basic product Product, extensions,service

Variations Phase out weak items

Price Cost-plus To penetrate market

To match competitors

Cut Prices

Distribution Selective Intensive More intensive

Selective

Advertisement

Among early adopters

In mass market

Stress on benefits

Only to retain loyal customers

PRODUCT LIFE CYCLE IN RESPECT TO THE TECHNOLOGY LIFE CYCLE

As a new technology matures so is the product or service that uses this technology.

In the early days of a new technology, early adopters and technology enthusiasts drive a market since they demand just technology.

This drive and demand is translated as the introduction phase of a new product by many companies.

As technology grows old, customers become more conservative and demand quick solutions and convenience.

In this case a product usually enters in the realm of its growth and as time passes its maturity.

Types of Product Life cycle

A style is the manner in which a product is presented and certain styles come and go. The current style for mobile phone is touch screen and this style will last until a new technology style appears. So the shape of a style life cycle is like a wave, as one style fades out, another appears.

Style

Types of Product Life cycle

A fashion is a current trend or popular style in a particular field. A fashion can have a long or short life cycle. Certain clothing fashions last for a short period and the product life cycle will decline very rapidly, whilst others will decline slowly or even turn into what is known as a timeless classic.

Fashion

Types of Product Life cycle

A fad is a product that is around for a short period and is generated by hype. As you can see (in the graph below) for a fad product sales peak very quickly, as this product has a very short life cycle. Sometimes a product may follow the standard product life cycle but have one stage of the cycle which has a fad type of unusually high peak in sales.

Fad

Classic and Fad

Products are termed classic when they are never out of the market. They become the need and can remain in market with slight alterations only Eg. .Blue jeans.

Apparel Industry :At a Glance

Fad-Usually extreme stylesBright colorsLarge accessories

Example: Capris,Full skirtsClassic- Simple in design

Never go out of fashion May experience slight alterations

Example: blue jeans,black dress,blazer.

CASE STUDY:ASOS.com

ASOS.com is the UK’s market leader in online fashion retailing. It offers own-label, branded fashion and designer goods. Its headquarters are in Camden Town in North London.

The company was set up in June 2000. It stocks over 22,000 product styles on its website and

introduces up to 1,000 new products to its ranges. It aims primarily at a target audience of 16-34 year olds. This case study shows how ASOS.com uses the product life

cycle to ensure its product portfolio continues to meet the needs of its customers and provide up-to-date fashions in the fast-moving online retail industry.

ASOS.com

In the fashion industry there is a fairly short product life cycle because trends and tastes change regularly. For example, the ASOS.com website features a range of own-brand dresses which are a ‘must-have’ fashion item for the summer of 2009. The product life cycle for an ASOS.com own-brand dress typically follows the following sequence:

Introduction – The dress is made available to customers on the website. Fashion leaders adopt the new item. ASOS.com initially gives a lot of prominence to newly launched products on its website, for example, by having links directly to these items from the homepage and weekly newsletters.

ASOS.com(contd.)

Rapid growth – ASOS.com needs to ensure adequate stocks so as not to disappoint customers. Once the item moves into the growth stage it tends to promote itself as customers see the item in newspapers and magazines.

Maturity – At this stage, ASOS.com will remind people about the product online, through for example, trend features on the website and in its newsletter. It may order more stock to ensure supply. For example, one dress from the summer 2008 collection is still selling well and has regular repeat orders.

Saturation – At this point, ASOS.com may decide to reduce the price to clear remaining stock. Sales provide an opportunity to make space in the warehouse for new products.

Decline –It is replaced by a new product. Fashion and trends have moved on

Development-In this phase, the ASOS.com buying team choose materials, styles and colours to produce dress design. Suppliers then produce and distribute the goods to ASOS.com’s warehouse in the UK ready for introduction to the market.

Benefits of product life cycle to Asos.com

Understanding the product life cycle also gives ASOS.com managers greater control.

They can plan the introduction and withdrawal of products. Some product lines will be highly seasonal. Other products such as classic blue jeans will have much longer life cycles and provide regular long-term revenue for the business.

They are able to predict when revenue will flow in and calculate the profitability of product lines.

Benefits..(contd.)

They can support products through the entire life cycle. They can plan pricing strategies to extract as much revenue as possible at every stage. For example:

promotional discounts can be used to encourage large numbers of people to purchase a new product when it is launched

premium pricing may apply to a new limited edition dress price reductions are often used at the end of the life cycle

when the item is less popular and sales are declining

USE OF PRODUCT MANAGEMENT FOR SUCCESSFUL PRODUCT LIFE CYCLE

Product management is a middle level management function.

It is used to manage a products life cycle and enables a company to take all the decisions needed during each phase of a product’s life cycle.

BENEFITS OF PRODUCT LIFE CYCLE MANAGEMENT

Reduced time to market Increase full price sales Improved product quality and reliability Reduced prototyping costs Ability to quickly identify potential sales opportunities and revenue

contributions Savings through the re-use of original data A framework for product optimization Reduced waste Savings through the complete integration of engineering workflows Seasonal fluctuation management Improved forecasting to reduce material costs Maximize supply chain collaboration

Product Lifecycle Management for Apparel

Replace multiple and disconnected systems and isolated documents used for product development.

Incorporate supply chain (Mills/Agents) expertise and knowledge early in product development processes to positively impact decisions and performance related to product development calendars, material trends, cost, and quality decisions

Effectively allocate and manage resources by tracking all seasonal line planning calendars, milestones, approvals and responsibilities in a single system integrated with all other aspects of product development

Quickly and dynamically react to shifts in industry trends and consumer tendencies.

REFERENCES

Product life cycle Product life cycle Fad classic Asos.com

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