Importance of product life cycle in marketing
Product life cycle is the life cycle of the product market. A product into the market, its sales and profit will change with time. The process shows from more to less and from less to more. Just as the same human life, from birth, growth to maturity and eventually to decline, this is the product life cycle phenomenon. Products only through research and development, test marketing, and then enter the market, its market life cycle be considered the beginning. Products out of the market, it means the end of the life cycle. (Gorchels, 2000, p17) Product life cycle is divided into introduction, growth, mature, decline in four stages.
A new product into the market, is introducing phase. At this time, customers do not know the products yet, only a few new customers may purchase, the sales volume is very low. In order to expand sales, requires a lot of cost for the promotion, but also promote the product. At this stage, because of technical reasons, the product cannot be mass production. Thus, sales growth higher than the costs. Enterprises, instead of getting the profit, but may be a loss. Products to be further improved. (marketingteacher.com,2010)
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At this time customers are already familiar with the product, a large number of new customers began to buy in, the market is slowly expanding. Then, Company began mass production of the product, production costs will reduce, sales volume will rapidly increase and Profit growth will be rapid. Profitable competitor that will have to enter the market to compete, so that similar products supply increases, prices fall, profit growth is slowing, and finally reach the highest point of the profit life cycle. (quickmba.com, 2010)
Demand is becoming saturated, the potential customer has very little sales growth slow down until the turn, marks the product into maturity. At this stage, competition has increased, price reductions, promotional costs, corporate profits declined.
With the development of science and technology, new products or new alternatives will appear. This will change buying habits of customers, turned to new products. So that the original product's sales and profits will reduce quickly. Thus, the product has entered a decline.
Traditionally, as a product through its life cycle functions at least to make money move to lower-cost locations, especially in developing countries. This dichotomy into question, because it is becoming increasingly common, even in high-tech products, is a new product for immediate location of the low labor cost. Multinationals with global production networks, so that they can effectively allocate the design, production and distribution by global factors of production. This also depends on outsourcing and subcontracting. (people.hofstra.edu, 2010)
In this essay, I want to find out how product life cycle is important for marketing, and how it affects. How to manage the product life cycle? What is the significance of product lifecycle? In all stages of product life cycle, what marketing strategy should be taken? Product life cycle apply to all products? Are there specific products for the corresponding product life cycle? By studying these questions, we can better understand the product life cycle.
To achieve these research objectives, benchmarks need to combine empirical research methods to study ways to ensure the scientific conclusions. In general, by learning from the literature, a theoretical model and empirical analysis to research. Then, adjust the relevant measurements and samples to be improved to form the final questionnaire. In order to understand the product life cycle, the importance of marketing and its impact. By reading some books on the product life cycle theory, to find the meaning of product life cycle. Combination of the product life cycle theory, verification of product life cycle at different stages of what should be the marketing strategy. And advantages and disadvantages of the product life cycle. Draw conclusions, Can product life cycles be extended. Using the questionnaire method, about 50 people for investigation. Learn about the products consumers buy the same period, it will always be the same type of product, or will buy the product replacement and upgrading of products. Use of questionnaires used to do the empirical analysis, product life cycle theory derived from it apply to all products, and specific products have a special product life cycle. The questionnaire will be e-mail and web-based survey methods for different age groups in different occupations to investigate. To ensure the accuracy of the questionnaire.
According to product life cycle theory, we know, the typical product life cycle is generally divided into four phases, namely introduction, growth, mature and decline.
Product range is the same function and purpose of all products. Product form is the same type of products, the auxiliary function, use or sale of a physical difference between different products. The brand refers to the production and sales of specific products. Product range than the product life cycle forms of brand long life cycle of some product categories may be infinitely extended maturity. Product forms displaying a typical life cycle of the process, from introduction period, through growth, maturity, the decline of the last period. As for the brand product life cycle, generally irregular, it is subject to market conditions and corporate marketing decision-making, influence brand awareness and so on. High brand awareness its life cycle on the long, if not on the short. For example, as international famous brand "Coca-Cola" is still so popular for centuries.
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According to the survey, there is a special product life cycle; particular style of product life cycle, including product life cycle model, fashion-based product life cycle, boom-type product life cycle, scallop-shaped product life cycle of four special types, and their product life cycle S curve is not the usual type.
Style: is a feature of human life, but the outstanding performance of the basic approach. Style, once produced, may last for generations, according to people's interest, it presents a circular pattern of recycling, sometimes pop, but the time may not be popular.
Fashion: refers to a field, now accepted by all and welcome style. Fashion-based product life cycle is characterized by very few people have just accepted the listing, but the number accepted increased slowly over time , has finally been widely accepted, and finally slowly recession, consumers began turning their attention to another more attractive to their fashion.
Fad: is a menacing and soon attracted public attention of fashion, commonly known as fashionable. The life cycle of boom-type products are fast-growing and fast decline, mainly because it is only momentary curiosity or to meet human needs, attracted only a small number of excitement, the maverick, often unable to meet the needs of even more intense.
Scallop-type product life cycle refers primarily to extend product life cycles continue to extend further, often because of product innovation, or from time to time to discover new uses. (12manage.com, 2010)
Product life cycle plays an important role in the market. However, in different stages, need a different marketing strategy. According to consumer survey, consumers use the products of various stages of consumer psychology is different. Must seize the consumer psychology, grasp market developments, so at any time to change marketing strategy.
The advantages of the product life cycle theory: the product life cycle provides a plan for marketing point of view. It is divided into different strategies during the product; marketers can target different characteristics of each stage to take a different marketing mix strategy. In addition, sales of the product life cycle and time to consider only two variables, easy to understand.
Disadvantages: product life cycle start and end point criteria for the classification difficult to confirm. Not the entire product life cycle curve is the standard S-type, there are many special product life cycle. ) Cannot determine the product life cycle in the end the project level for a single product or a product set level. The curve only considers the relationship between sales and time, not related to costs and prices and other variables that affect sales. Easily lead to "marketing myopia", that the product has come to a recession and there is still too early to exclude the market value of a good product out of the product line. Product recession does not mean that can not be recycled. Such as through the appropriate improvement strategy, the company may scale new product new life cycle.
Product life cycle theory of meaning: the product life cycle theory reveals that any products and bio-organisms, like a birth - growth - maturity - decline of the process of innovation, developing new products. With product life cycle theory, can analyze and judge the product life cycle at which stage, suggesting that the trend of the future development of products, life products in the market correctly, and according to the characteristics of different stages to take the appropriate marketing mix strategies, enhance enterprise competition ability, and improve economic efficiency of enterprises. Product life cycle is extended.
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