PGDM - An Overview of Product Life Cycle

A.Evolution of Technology: -

The term technological evolution captures explanations of technological change that draw on  mechanisms from evolutionary biology. Evolutionary biology has one of its roots in the book “On  the origin of species” by Charles Darwin. In the style of this catchphrase, technological evolution  might describe the origin of new technologies. Technology runs our lives these days. Smartphones,  tablets and computers – we really can’t seem to function without them. In a very short amount of  time, technology has exploded in the market and now, many people cannot imagine a life without it.

It is important to understand how technology evolves and why it matters to understand how we left  the dark ages (which really wasn’t all that long ago) to where we are today. All technologies are born out of purpose. For example, search engines were created to sort through  the massive amounts of data online. With each new upgrade technology compounds existing  technologies to create something better than what was previously used before. And on and on it  goes.

With the lightning speed of technological evolution, it is no wonder many people have struggled to keep up. To be fair, the scope of technology’s expanse is so great, wrapping everything up into a  single blog post is practically impossible.

Here is just a brief glimpse into how rapidly the Internet and technology as a whole have evolved  in recent years.

B.Product Life Cycle: -

A Product has a life of its own and goes through cycles. Although different products have  different types of life cycles, the traditional product life cycle for most products

If you are considering entering an industry and making a product, knowing where the product  is in its life cycle can provide valuable information of how to position your product in the  market in terms of price, promotion, and distribution.

Products typically go through four stages during their lifetime. Each stage is different and requires marketing strategies unique to the stage.

The product life cycle involves the stages through which a product goes from the time it is introduced in the market till it leaves the market. A product life cycle consists of four stages:  introduction, growth, maturity, and decline. A lot of products continue to remain in a  prolonged maturity state.

However, eventually, in every product life cycle, the product eventually phases out from the  market. This may be due to several factors such as saturation, competition, a decrease in  demand, and even a reduction in sales. A product life cycle analysis can help companies in  creating strategies that enable them to sustain the longevity of a product and even adapt to  market conditions.

C.Introduction Stage: -

The introduction stage is the first stage in the product life cycle. The highlighting factor of this  stage is that the product is new in the market, sales are slow and to push it higher the company has to incur heavy expenditure on the advertisement to make it appealing to customers.

The introduction stage is the first stage in the product life cycle where a company tries to build  awareness about the product or service in a market where there is less or no competition.  Once the company makes adequate publicity about the product either by promotion or  through branding, it can look at other aspects such as pricing, as well as distribution. Pricing  a product in the introduction stage is very important to gain market share. A popular pricing  strategy followed by most companies is the skimming price strategy. In this pricing strategy,  a company usually charges a very high price to customers, who are willing to purchase a  product.

Price skimming is common especially when mobile phones are launched with new and  improved features. Companies with established brand names make sure that the new product  has some features which stand unique and the owner takes a pride in owning that mobile  phone. A few examples of unique features are mobile charging, a fingerprint scanner to unlock  a phone, etc. Even flash sales that companies adopt for launching a product have high prices.  For example, when Google launched its Nexus series 6, it launched this mobile through an  e-shopping platform with a price tag of Rs 44,000. The phone had state-of-the-art specs which  supported the high price tag.

D. Growth Stage: -

In this stage, sales grow rapidly. Buyers have become acquainted with the product and are willing to buy it. New buyers enter the market and previous buyers come back as repeat buyers. Production may need  to be ramped up quickly and may require a large infusion of capital and expertise into the  business. Cost reductions occur as the business moves down the experience curve and  economies of size are realized. Profit margins are often large. Competitors may enter the  market but little rivalry exists because the market is growing rapidly. Promotion and pricing  strategies are revised to take advantage of the growing industry.

The usual characteristic of a successful new product is a gradual rise in its sales curve during  the market development stage. At some point in this rise, a marked increase in consumer  demand occurs and sales take off. The boom is on. This is the beginning of Stage 2—the  market growth stage. At this point potential competitors who have been watching  developments during Stage, I jump into the fray. The first ones to get in are generally those  with an exceptionally effective “used apple policy.” Some enter the market with carbon  copies of the originator’s product. Others make functional and design improvements. And at  this point product and brand differentiation begin to develop.

The ensuing fight for the consumer’s patronage poses to the originating producer an entirely  new set of problems. Instead of seeking ways of getting consumers to try the product, the  originator now faces the more compelling problem of getting them to prefer his brand. This  generally requires important changes in marketing strategies and methods. But the policies  and tactics now adopted will be neither freely the sole choice of the originating producer, nor  as experimental as they might have been during Stage I. The presence of competitors both  dictates and limits what can easily be tried—such as, for example, testing what is the best  price level or the best channel of distribution.

As the rate of consumer acceptance accelerates, it generally becomes increasingly easy to open new distribution channels and retail outlets. The consequent filling of distribution  pipelines generally causes the entire industry’s factory sales to rise more rapidly than store  sales. This creates an exaggerated impression of profit opportunity which, in turn, attracts  more competitors. Some of these will begin to charge lower prices because of later advances  in technology, production shortcuts, the need to take lower margins in order to get  distribution, and the like. All this in time inescapably moves the industry to the threshold of  a new stage of competition.

E.Maturity Stage: -

In this stage, the market becomes saturated. Production has caught up with demand and  demand growth slows precipitously. There are few first-time buyers. Most buyers are repeat  buyers. Competition becomes intense, leading to aggressive promotional and pricing  programs to capture market share  from competitors or just to maintain market share. Although experience curves and size  economies are achieved, intense pricing programs often lead to smaller profit margins.  Although companies try to differentiate their products, the products actually become more  standardized.

The first sign of its advent is evidence of market saturation. This means that most consumer  companies or households that are sales prospects will be owning or using the product. Sales  now grow about on a par with population. No more distribution pipelines need be filled. Price  competition now becomes intense. Competitive attempts to achieve and hold brand  preference now involve making finer and finer differentiations in the product, in customer  services, and in the promotional practices and claims made for the product.

Typically, the market maturity stage forces the producer to concentrate on holding his  distribution outlets, retaining his shelf space, and, in the end, trying to secure even more  intensive distribution. Whereas during the market development stage the originator  depended heavily on the positive efforts of his retailers and distributors to help sell his  product, retailers and distributors will now frequently have been reduced largely to being  merchandise-displayers and order-takers. In the case of branded products in particular, the  originator must now, more than ever, communicate directly with the consumer.

The market maturity stage typically calls for a new kind of emphasis on competing more  effectively. The originator is increasingly forced to appeal to the consumer on the basis of  price, marginal product differences, or both. Depending on the product, services and deals  offered in connection with it are often the clearest and most effective forms of differentiation.  Beyond these, there will be attempts to create and promote fine product distinctions through  packaging and advertising, and to appeal to special market segments. The market maturity  stage can be passed through rapidly, as in the case of most women’s fashion fads, or it can  persist for generations with per capita consumption neither rising nor falling, as in the case  of such staples as men’s shoes and industrial fasteners.

F.Decline Stage: -

When market maturity tapers off and consequently comes to an end, the product enters  Stage 4—market decline. In all cases of maturity and decline, the industry is transformed.  Few companies are able to weather the competitive storm. As demand declines, the  overcapacity that was already apparent during the period of maturity now becomes endemic.  Some producers see the handwriting implacably on the wall but feel that with proper  management and cunning they will be one of the survivors after the industry-wide deluge  they so clearly foresee.

To hasten their competitors’ eclipse directly, or to frighten them into early voluntary  withdrawal from the industry, they initiate a variety of aggressively depressive tactics,  propose mergers or buy-outs, and generally engage in activities that make life thanklessly  burdensome for all firms and make death the inevitable consequence for most of them. A  few companies do indeed weather the storm, sustaining life through the constant descent  that now clearly characterizes the industry. Production gets concentrated into fewer hands.  Prices and margins get depressed. Consumers get bored. The only cases where there is  any relief from this boredom and gradual euthanasia are where styling and fashion play  some constantly revivifying role.

G.Examples of Product Life Cycle:-

Many products or brands have gone into decline as consumer needs change or new  innovations are introduced. Some industries operate in several stages of the product life  cycle simultaneously, such as with televisual entertainment, where flat screen TVs are at  the mature phase, on-demand programming is in the growth stage, DVDs are in decline and  video cassettes are now largely redundant. Many of the most successful products in the  world stay at the mature stage for as long as possible, with small updates and redesigns  along with renewed marketing to keep them in the thoughts of consumers, such as with the  Apple iPhone.

Here are a few well-known examples of products that have passed or are passing through  the product life cycle:

1. Typewriters

The typewriter was hugely popular following its introduction in the late 19th century due to  the way it made writing easier and more efficient. Quickly moving through market growth to  maturity, the typewriter began to go into decline with the advent of the electronic word  processor and then computers, laptops, and smartphones. While there are still typewriters  available, the product is now at the end of its decline phase with few sales and little demand.  Meanwhile, desktop computers, laptops, smartphones, and tablets are all experiencing the  growth or maturity phases of the product lifecycle.

2. Video Cassette Recorders (VCRs)

Having first appeared as a relatively expensive product, VCRs experienced large-scale  product growth as prices reduced leading to market maturation when they could be found in  many homes. However, with the creation of DVDs and then more recently streaming  services, VCRs are now effectively obsolete. Once a ground-breaking product VCRs are  now deep in a decline stage from which it seems unlikely, they will ever recover.

3. Electric Vehicles

Electric vehicles are experiencing a growth stage in their product life cycle as companies  work to push them into the marketplace with continued design improvements. Although  electric vehicles are not new, the consistent innovation in the market and the improving sales  potential mean that they are still growing and not yet in the mature phase.

4. AI Products

Like electric vehicles, artificial intelligence (AI) has been in development and use for years,  but due to the continued developments in AI, there are many products that are still in the  market introduction stage of the product life cycle. These include innovations that are still  being developed, such as autonomous vehicles, which are yet to be adopted by consumers.

H.S Curve of Technology:

• This figure shows two ‘S-curves’ on graphical axes. The vertical axis is labeled  ‘Performance/Adoption’ and the horizontal axis is labeled ‘Time/Improvement’.  Each S-curve is a line on the graph in the approximate shape of the letter ‘S’ –  the line moves horizontally before moving upwards, and then it flattens and  tails off.
• The first line starts in the bottom left corner of the graph and is labeled ‘Old  technology, process or paradigm’. Although the lines do not touch, an area of  overlap between the two is shown. This area is labeled ‘Paradigm paralysis?’.  The second line is labeled ‘Step change in technology, process or paradigm’.
• In radical innovation, the ‘gap’ or discontinuity shown in the Figure given  above conveys the sense of a break from one technology to the other, newer,  radical technology. Thus, a radical technology fulfills the same need but is  based on a different knowledge and practice base. An example might be a  photographic film being largely replaced by digital storage media in digital  cameras. Paradigm paralysis is when an organization resists the shift to a new  idea, process, or product.