Product Life Cycle and New Product Development

THE PRODUCT LIFE CYCLE

Product Life Cycle Overview

  • Definition: The Product Life Cycle (PLC) describes the stages that a new product goes through from introduction to decline.

  • Key Concept: Products are continuously revamped, retooled, and repositioned to adapt to evolving consumer needs and competitive challenges.

Stages of the Product Life Cycle

  • Introduction:

    • Characteristics: Few competitors, limited market awareness.

    • Marketing Objective: Build product awareness.

    • Price Strategy: Use a skimming or penetration strategy to enter the market.

    • Distribution: Limited distribution channels.

    • Promotion: Focus heavily on advertising to create awareness.

    • Profit: Minimal profits as it is the initial stage.

  • Growth:

    • Characteristics: Many competitors entering the market.

    • Marketing Objective: Focus on product differentiation and building brand loyalty.

    • Price Strategy: Prices are slowly reduced as competition increases.

    • Distribution: Distribution is increased to reach more customers.

    • Promotion: Emphasis on advertising to highlight differences from competitors.

    • Profit: Increased profits that reach their maximum level before stabilizing.

  • Maturity:

    • Characteristics: Market saturation with many competitors.

    • Marketing Objective: Ensure full product line availability and innovate with new ideas.

    • Price Strategy: Price discounts are commonly used.

    • Distribution: Achieved full distribution, reaching all available markets.

    • Promotion: Focus shifts to pricing and sales promotions with minimal advertising.

    • Profit: Maximized profits that may level off as the market stabilizes.

  • Decline:

    • Characteristics: Reduced number of competitors, as some leave the market.

    • Marketing Objective: Product rationalization; retain only best-sellers or discontinue underperforming products.

    • Price Strategy: Very low prices to clear remaining stock.

    • Distribution: Distribution is reduced as demand falls.

    • Promotion: Minimal aggressive promotion, focusing on pricing to clear inventory.

    • Profit: Decreasing or minimal profits.

Shapes of the Product Life Cycle

  • High-Learning Products: Require significant time for adoption.

  • Low-Learning Products: Quickly adopted by consumers.

  • Fashion Products: Follow trends with cyclical patterns of demand.

  • Fad Products: Rapidly gain popularity, followed by a quick decline in demand.

Product Life Cycle Strategies

Extending the Product Life Cycle (PLC)

  1. Modifying the Product:

    • Product improvements, line extensions to attract new customers or reinvigorate interest.

  2. Modifying the Market:

    • Finding new customers demographic groups.

    • Increasing product usage frequency.

    • Creating new situations for product use, enhancing market opportunities.

  3. Repositioning a Product:

    • Changing the perception of the product in the marketplace to enhance its appeal (e.g., McDonald's