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Ch-7(Product Life Cycle)

Ch-7(Product Life Cycle)

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Chapter-7
Product Life Cycle
Chapter: - 7.
PRODUCT LIFE CYCLE:
-
Successful new products may not last forever, during its life. Sales /profits generated for
by-product may vary.
-
Variance depends on the market demand for product changing needs level is described by
demand cycle curve such as:
-
Demand may also decline due to a change in technology.
-
Based on demand for a product it may be possible to create a concept that provides insights
of the product\u2019s competitive dynamics. This is called PRODUCT LIFE CYCLE.
-
PLC concept implies:
\ue000
Products have a limited life.
\ue000
Product sales pass through distinct stages with each stage posing
Challenges/Opportunities/ Problems.
\ue000
Profits rise/fall during different stages of product life cycle.
\ue000
Products require different marketing/manufacturing./ finance/ purchase/
HR strategies at each stage of Product Life Cycle.
-
In most cases historical/ empirical data shows the sales/profits of a product as following a
pattern (as per diagram)
-
Pattern is:
1
M
E = Emergence.
D
G1 = Accelerating Growth.
G2 = Decelerating Growth.
Demand
G2
M = Maturity.
G1
D = Decline.
E
Time

Sales
Sales/
Profit

Profit
Introduction
Maturity
Decline
Growth
Chapter-7
Product Life Cycle
-
Product Life Cycle curve is typically divided into 4 stages:
\u2022
Introduction:
\ue000
Product introduced in market.
\ue000
Slow sales growth.
\ue000
No profits as expenses are high.
Growth:
\ue000
Period of rapid market acceptance.
\ue000
Profit increases.
Maturity:
\ue000
Sales growth slows down.
\ue000
Profits stability then decline to fight competition.
Decline:
\ue000
Sales decreases
\ue000
Profits decreases
-
Stages are marked by changes in rates of sales growth.
PLC concept can be used to analyse:
\ue000
Product category (liquid/oral care/ skin care).
\ue000
Product form
(white liquid/paste/cake).
\ue000
Products
(vodka/ toothpaste/ soap).
\ue000
Brands
(Smirnoff/ Colgate herbal/ Lux).
- Product categories have largest PLC\u2019s. Many product category stay in maturity stage of
PLC indefinitely.
-
Product forms follow PLC structure, i.e., better than product category as they pass
through I/G/M/D strategies faster.
- Products follow std. PLC or PLC variances.
- Brands have shorter PLC\u2019s however their PLC\u2019s may be structured by investing brand
with suitable products & image.
PLC Variants:
-
There may exist many PLC patterns in addition to standard PLC. Some common variants
are:
2
Sales
Sales
Sales
Time
Time
Time
(1)
(2)
(3)
Chapter-7
Product Life Cycle
(1) Growth/Slump/Maturity Pattern :
-
Sales grow, and then fall to petrified level.
- Example: Small kitchen appliances (Spoons), Cease fire.
(2) Cycle-Recycle Pattern :
-
Sales grow, then decreases.
- Company gives another promotion push for another smaller growths.
- Example: Pharmaceuticals.
(3) Scalloped Pattern :
-
Sales pass through a series of PLC\u2019s due to discovery of new uses/characteristics.
- Example: Nylon.
Style / Fashion / Fad Life Cycle:
- Three special categories of PLC need to be distinguished.
- PLC\u2019s pertaining to Style/Fashion/Fad.
Style:
- style is a basic/distinctive mode of expression
appearing in a field of human endeavors.
- Once a style is invented, it can last for generations,
at times going in/ going out.
o
Example: Styles in Home, Clothes.
Fashion:
- Fashion is a currently accepted/popular style in a
given field.
o
Example: Clothes: Jeans.
Music: Hindi-Pop.
- Fashion Pass through four Stages:
o
Distinctiveness Stage:
\ue000
Same customer take interest in something new that sets them apart.
o
Emulation Stage:
\ue000
Other customers take an interest out of desire to emulate fashion leaders.
o
Mass-Fashion Stage:
\ue000
Fashion becomes very popular & manufacturing gear up for mass
production.
o
Decline:
\ue000
Consumer starts moving towards other fashion.
Fad:- Fads are fashion that comes quickly into the public
eye, are adopted with great zeal, peak easily and
decline fast.
- Acceptance cycle is short.
3
Sales
Time
Sales
Time
Sales
Time

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