We're regularly bombarded by advertisements telling us about exciting new features of existing products: a car that now has SatNav as standard, perhaps; a brand of shampoo with a new, improved formula; or a snack that now contains even more delicious fruit.
Yet, at the same time, if we go to the shops, there are hundreds of products which are seemingly not advertised at all.
So why are some established products regularly given make-overs and generous new marketing budgets, while others are apparently left to sell themselves?
One answer is that the marketers are acting according to where the item is in its product lifecycle.
Just as people go through infancy, childhood, adult hood and old age, so too do products and brands. And just as we swing from being needy, to being overall contributors to our families or to society, and then back to being needy again over the course of our lives, so – in effect – do products.
The four phases usually used to describe a product's life cycle are:
During the earlier parts of the product lifecycle, the cost of promoting the product may be larger than the revenue it brings in. However, for successful products that are marketed effectively, the product will become increasingly profitable during the Growth and Maturity phases. A typical lifecycle for a well-managed product is shown in Figure 1, below.
As products moves from lifecycle phase to lifecycle phase, the elements of the marketing mix used to promote them change.
The duration of each lifecycle phase can be controlled, to a certain extent. This is particularly true of the Maturity phase: this is the most important one to extend from a financial point of view because this is the period when the product is at its most profitable.
Typical tactics designed to extend the maturity phase include:
One criticism of the product lifecycle concept is that it in no way predicts the length of each phase, and nor can it be used to forecast sales with any accuracy.
Another is that the model can be self-fulfilling: If a marketer decides that a product is approaching its Decline phase, and so stops actively marketing it, the product's sales will almost inevitably decline. This might not have happened had it been managed as if it was still in its Maturity phase.
Furthermore, it's possible that by improving a product aggressively on an ongoing basis, growth can continue for a long time. Just think of the market for PCs in the 1980s and 1990s: Successful producers launched new and better products month after month after month.
Successful marketers need to draw on a wide range of data and analysis to help them decide which phase a product is in, and whether that phase can be extended. And while this model is useful and thought-provoking, they need to base their decisions on a good understanding of the facts.
The Product Lifecycle model describes how products go through the four phases of Introduction, Growth, Maturity and Decline after they are launched. Each phase requires a different mix of marketing activities to maximize the lifetime profitability of the product. In general, this involves early investment to help secure revenue later on.
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