The goal of product life cycle marketing is to reduce prototyping costs, improve the quality of the product, identify revenue contribution and available sales opportunities and reduce time to market products. The methodology takes into account the successive steps taken to manage the life cycle of a product, right from inception to the disposal of the manufactured product. The methodology not only integrates people, data and system but also provide product information for companies and enterprises.
Product Life Cycle Marketing Methodology
The methodology helps companies to cope with challenges and complexity of developing new products for a worldwide market. A company that hopes to create a successful new product needs to understand its market, consumers as well as its competitors. Obviously, billions of consumers purchase products every year, and all the products purchased or in store have their life cycle. Generally, the demand for new, modern products increase rapidly. Old, long-established products reduce in popularity within the consumer market.
There are different product life cycle stages and each has its own characteristics. Most companies understand that the products they sell have a limited lifespan. For that reason, they prefer to invest heavily on new products so that they continue to run a successful business. This also makes sure that the business continues to grow and generate revenue as normal as it continues to grow.
Product Life Cycle Marketing Stages:
Every product in the market has a life and each goes through several cycles. Generally, the life cycle of a product has four clear stages, each with its own characteristics. Because each stage is different, it will require marketing strategies that are unique to that particular stage. The characteristics of each stage in the life cycle of a product will mean different things for a business that manages the life cycle of particular products.
An enterprise or company that wants to start making products should understand where a product is in its life cycle. This understanding provides valuable information that will help to position a product in the market in term of distribution, promotion and price.
The introduction stage is the first stage in the life cycle of a product. This is where an enterprise or company introduces a new product to the market. It is also at this time that an enterprise or company introduces a previously unknown product to buyers. At this stage, the production process is new and the sales of the products in question are few. All the pricing plans at this stage are focused on first-time buyer, usually with an intention to entice them into buying and testing the product that has been introduced in the market.
It is important to note that even though sales are slow in this stage, they pick up gradually as time flies. This stage could be the most expensive stage in the life cycle of a product, especially if the company is launching a new product. This means that the cost of research and development, consumer testing and marketing needs will be high. This is true more so if the products is within a highly competitive sector.
The growth stage is where the sales of the products in question begin to grow. At this stage, buyers are already acquitted with the product and for that reason they are willing to buy. New buyers will come to the market and purchase the products and previous or old buyers will become repeat buyers of the products previously introduced in the market.
The growth stage features a quickly ramped up production and an infusion of expertise and capital into the business. A business will realize its economic of size at this stage, cost reduction will occur and in addition, a large profit margin will be realized. Even though competitors are free to enter the market, the level of rivalry will be low because of the rapid growth of the market. The overall amount of profit will increase because a business or company is already enjoying the economies of scale in production.
Companies are able to spend more money on promotional activities to maximize the potential of this stage. It is at the growth stage that a company will spend more time revising pricing and promotional strategies with an intention of taking advantage of the rapidly growing industry.
The maturity stage is the third stage in product life cycle marketing. This is the stage where the market actually becomes saturated. There are very few first time buyers to the business because most of buyers engaged to the products on sale are repeat buyers. Production not only catches up with the demand but also competition becomes fierce in the market.
The main objective for marketers at this stage is to find out how they can maintain their position in an already grown and flourishing market. The intense market competition leads to companies developing aggressive pricing and promotional programs with the hope to capture market share to compactors or to maintain their market share. A business that does not market or promote its business wisely is likely to lag behind in terms of its general generals sales, marginal profit and the overall amount of profit.
The decline stage is the last stage in the life cycle of a product. It can be the most disappointing part of the life cycle of a product for sure. It is at this stage that sales start to decline. Buyers are already shifting their focus towards new products that are coming to the market. This is a crazy stage. For a business that does not know how to maintain its position in a competitive market, it could mean failure, profit reduction, loss of investment and eventual closure.
It is important to note that at this stage, competition is intense in the market. Profits in the business begin to dry up because of low profit margin and a drastic decline in sales value. There are businesses that will close down completely, leaving the production industry never to come back. Those that remain in the business will revive their interest in production and if they are successful in reviving the market, sales will start to grow.
In order to understand the sales opportunities and reduce prototyping costs, it’s important to understand the product life cycle marketing methodology.