PRODUCT LIFE

CYCLE&
APPLICATIONS
PRESENTED BY: NAGEETA
RELATIONSHIP BETWEEN PRODUCT
LIFE CYCLE AND BCG MATRIX
PRODUCT LIFE CYCLE

• The product life cycle is the process a product goes through from when it is first
introduced into the market until it declines or is removed from the market.

•  It is a strategy tool that helps companies plan for new product development and refine
existing products.
• It is explanatory model it does not help in decision making.
STAGES IN PRODUCT LIFE CYCLE

1. Market development
2. Growth
3. Maturity
4. Decline
COMPENSATORY BEHAVIOR

• Compensatory behavior: it is signing that product is not meeting with customer demand.
when your customer using product in a way other than you expect or intend in your mind
that’s compensatory behavior.
• Due to compensatory behavior in old products either it, creates opportunities for new
entrant and new entrant make new products by using emergent strategy at introduction
level or current incumbent sustain their product by providing additional features in it.
JOBS TO BE DONE

• It is framework for defining, categorizing, capturing, and organizing all your customer
needs.
• This is activity where we fulfill customer desires by removing all compensatory
behaviors.
• Basically, firm is trying to emotional and functional jobs to be one.
INTRODUCTION

• This is initial stage where new entrant

launch a new product by taking
advantage of opportunity created by
incumbent .
• Emergent strategy
• Low end disruption
• innovation
• Jobs to be done in response of
compensatory behavior
INTRODUCTION

•Market development or introduction stage

•High per unit cost
•Low sales
•Negative cash flows
•Limited competition
•Demand for product has to be created
•Strategies:
•Price penetration/skimming
•Focus on single distribution channel
•Advertising
INTRODUCTION

• It is difficult to launch a new product when already high competition is present, and competitors are using their critical
resources effectively. So, for new entrant it is difficult to introduce new product with low end disruption due to effect of
five forces.
• Current incumbent are already well established in market creating a tough competition for new entrant it means before
entrance of new entrant.
1. entry barriers are high

2. Bargaining power of supplier is high

3. Threat of rivalry low

4. Bargaining power of buyer is low

5. Threat of substitute is low

After entrance of new entrant these five forces will shift reverse
GROWTH

• Product differentiation and brand

differentiation
• Adding more value into products
• Providing profit /benefits to
customer by giving them additional
features at same price by reducing
its cost using operational
effectiveness.
GROWTH

• Consumer awareness
• Sales takeoff
• Competition increases
• Profit increases
• Strategies:
• Product and brand differentiation due to high level of competition
• Expand market
• Expand distribution channels
• Enhancement in production e.g. adding value
MATURITY STAGE

• product is at well established in market

• Two options either extend life cycle or decline
stage.
• Extend life cycle by identifying
1. new markets
2. Product modification/sustainability
MATURITY

• Market modification
a) Identify new markets
b) Increase frequency of use by current customer
• Product modification/sustainability
• Change product quality or packaging
• Extension in product line
MATURITY

• Sale volume peak

• Market saturation
• Intensive distribution
• Promotion based on differentiation strategy
• This is the stage where you extend life cycle
MATURITY STAGE

• This is stage where it creates opportunities for new entrant if customer desires are not
fulfilled means compensatory behavior in current product.
• Five forces will shift .
DECLINE

• Market decline
• Unit cost rise again
• Decline stage due to two possible
reasons;
• Technology
• Consumer preferences
This Photo by Unknown Author is licensed under CC BY-SA