Product

Life Cycle
Theory
Lesson 3.3
 Lesson Objectives
• Compare life cycle and product life cycle;
• Discuss the product life cycle theory;
• Explain what goes on at each of the stages of the
product life cycle;
• Differentiate price skimming from price penetration; and
• Elaborate on the strategies that can be employed in the
decline stage

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 NEW APPLIANCES OLD APPLIANCES

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 WHAT IS PRODUCT LIFE CYCLE?

• It refers to the length of time a product is introduced in

the market until it is removed from the market.
• It is a marketing strategy developed by Raymond
Vernon in 1966 to help companies plan out the progress
of their new products.

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 WHAT IS PRODUCT LIFE CYCLE?

• Some of the products may stay in a long maturity state,

BUT all products eventually phase out of the market due
to-
1. Saturation
2. Increased competition
3. Decreased Demand
4. Dropping sales

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 WHAT IS PRODUCT LIFE CYCLE?
• This concept is used by- Management and
Marketing department

• When it is appropriate ✓Increase advertising,

time to,
✓Reduce prices,
✓Expand to new markets,
✓Redesign pachaging.

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 PRODUCT LIFE CYCLE STAGES:
Y

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 INTRODUCTION STAGE

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 INTRODUCTION STAGE

Substantial investments in-

• Advertising • Marketing

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 INTRODUCTION STAGE

•The company is first able to get a sense of

how the consumers will react to a product, if
they like it or not and how successful it
may be.

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 PRICE SKIMMING VS. PRICE PENETRATON
•Price Skimming •Price Penetration
sets prices sets price lower
higher to attract to build a
customers most customer base
interested in the for new products
product or service or services
to maximize
short-term
profits.
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 GROWTH STAGE

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 GROWTH STAGE

•A significant increase in consumer

demands occurs
•Sales started to take off.
•More new customers are becoming
aware of the product and trying it

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 GROWTH STAGE

•A significant increase in consumer

demands occurs
•Sales started to take off.
•More new customers are becoming
aware of the product and trying it

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 GROWTH STAGE

•At this stage, products are

increasingly being purchased by
lower income groups, and
profitability reaches the highest
level.

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 GROWTH STAGE

•The product rises in popularity and

competitors start to take notice and try
to enter the market. There is now a
fierce competition as competitors
introduce similar products.

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 MATURITY STAGE

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 MATURITY STAGE

•This is the MOST PROFITABLE stage

in Product Life Cycle. As the
production volume increasing, the cost
of producing marketing declined.

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 MATURITY STAGE

•At this stage, the product is purchased

by all income groups, but the majority
are in the low-income group.

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 MATURITY STAGE

•The maturity phase is characterized by

intense competition
-Product diferentiation and generating
brand awareness become a must.
- Retaining customer brand loyalty is the
key.
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 MATURITY STAGE

•Companies need to keep their product

relevant as competition increases

-Price Undercutting
- Promotional Efforts

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 MATURITY STAGE

•One of the biggest challenges is

Maintaining Profitablity and Preventing
Sales from further declining.
•Also, saturation is a challenge in the
maturity stage.

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 DECLINE STAGE

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 DECLINE STAGE

•The decline stage for every product is

unavoidable because of the deletion of
the product from the market.
•Consumers behavior changes as there is
decreasing demand for the product.
•And EVENTUALLY, IT WILL BE
DISCONTINUED
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