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Introduction of Product Life Cycle: All products possess ‘life cycles.’ A product's life cycle, abbreviated PLC, the life cycle refers to the period from the product’s first launch into the market until its final withdrawal and it is split up in phases. Since an increase in profits is the major goal of a company that introduces a product into a market, the product’s life cycle management is very important. The understanding of a product’s life cycle, can help a company to understand and realize when it is time to introduce and withdraw a product from a market, its position in the market compared to competitors, and the product’s success or failure.The product’s life cycle - period usually consists of five major steps : Product Development, Introduction Stage, Growth Stage, Maturity Stage and finally Decline Stage. These phases exist and are applicable to all products or services from a certain make of automobile to a multimillion-dollar lithography tool to a one-cent capacitor.
These phases can be split up into smaller ones depending on the product and must be considered when a new product is to be introduced into a market since they dictate the product’s sales performance.2. Stages of Product Life Cycle:•Product Development:Product development phase begins when a company finds and develops a new product idea. This involves translating various pieces of information and incorporating them into a new product.
A product is usually undergoing several changes involving a lot of money and time during development, before it is exposed to target customers via test markets. Those products that survive the test market are then introduced into a real marketplace and the introduction phase of the product begins. We now make the product do something it did not do in the past. This is a more significant product modification.
Examples might be model changes in cars where significant components like air conditioning or theft protection devices have been added. These are important additional benefits that have been added to the product. Personal computers are undergoing rapid advances in which significant new functions (benefits) are constantly added. Similar advances are occurring in software development.•Introduction Stage:The introduction phase of a product includes the product launch with its requirements to getting it launch in such a way so that it will have maximum impact at the moment of sale. This period can be described as a money sinkhole.
Large expenditure on promotion and advertising is common, and quick but costly service requirements are introduced. A company must be prepared to spend a lot of money and get only a small proportion of that back. In this phase distribution arrangements are introduced. Having the product in every counter is very important and is regarded as an impossible challenge. Some companies avoid this stress by Hiring external contractors or outsourcing the entire distribution arrangement.
This has the benefit of testing an important marketing tool such as outsourcing The introduction stage has more recently been termed the product development process. Rapid change, increasing competition, complexity, organizational stress and high customer expectations have combined to support a process for reducing product development time. With time as a critical factor in today’s market, speed to market can create a competitive advantage. Instead of being viewed as a single stage, the introductory stage has become the product development process with as many as seven different parts..
Idea generation is the first step, with input gathered from customers, users, market research, outside inventors, competitors, other markets and employees. The mortality rate for ideas is extremely high.It takes a huge amount of input in the idea generation phase to ensure a flow of new product ideas that actually make it to the commercial start-up phase. Each new idea goes through an idea evaluation or screening process. This can range from a very informal review by one or two people to a more formal review by a new product development team. It usually involves determining whether the product fits with the objectives of the company.
The strengths and weaknesses of the product are evaluated. The idea is reviewed in light of current or expected market trends. Eventually the product’s volume and revenue potential are estimated. An idea that survives preliminary evaluation will be passed along for a technical and market evaluation.Can it be produced and marketed? Does the concept make sense to potential customers? Rough estimates are generated for costs, required investment, sales and profit margin.
The fall-out in these first two stages is tremendous. Ideas that make it through the first two evaluations are usually turned over to the company’s engineers for product and process design work. This involves a great deal of liaison work between marketing and engineering with a lot of input from prospective customers. If the design looks good and the processes make sense, the idea moves into the early development stage.Here prototypes are developed, marketing plans are undertaken and a business plan is developed.
Frequently prototypes are shown or tested by prospective customers. Test markets are conducted, and the plans are revised as needed. Once completed, the prototypes and plans are reviewed again against expected objectives. If everything is on track, the new product moves into final development. Financial estimates are reviewed against the objectives.
The tooling begins, and advertising and promotion programs are finalized and initiated.A good example of such a launch is the launch of “Windows XP” by Microsoft Corporation.Windows XP is a line of proprietary operating systems developed by Microsoft for use on general-purpose computer systems, including home and business desktops, notebook computers, and media centers. The letters "XP" stand for eXPerience. Windows XP is the successor to both Windows 2000 and Windows Me, and is the first consumer-oriented operating system produced by Microsoft to be built on the Windows NT kernel and architecture.
Windows XP was first released on October 25, 2001, and over 400 million copies are in use, according to a January 2006 estimate by an IDC analyst.[3] It is succeeded by Windows Vista, which was released to volume license customers on November 8, 2006, and worldwide to the general public on January 30, 2007.The most common editions of the operating system are Windows XP Home Edition, which is targeted at home users, and is also targeted at power users and business clients. Windows XP Media Center Edition has additional multimedia features enhancing the ability to record and watch TV shows, view DVD movies, and listen to music.
-Videophones certainly are in the introductory stage of the product life cycle. Limited numbers of consumers can afford this technology. As prices come down for videophones, and as consumers recognize the relative advantage of this form of communication over existing communication products, sales may begin to grow and the videophone should transition into its growth stage.•Growth Stage:The growth stage is where the rising tide of consumer interest lifts the boats of all participants. If there were no competitors in the introduction stage, they are now a factor. Consequently, additional product features and support may be needed.
Prices are steady to declining, as every participant in the industry is focused on market share and becoming the low-cost producer. Costs are declining with increasing volumes, and profits are improving. Distribution is increasing as well. Competitors are attracted to enter the market.
Usually this is the stage that requires the heaviest investment in marketing to educate, build share and support sales activity. While a marketing plan was developed in the introduction stage, adjustments to the marketing mix are usually required in the growth stage.The marketing mix includes the four Ps: product, price, place (distribution) and promotion. During the growth stage place becomes a hot bed of activity.
Frequently this involves – or will in the maturity stage – changes to product, price and promotion. The product may need modifications for new markets with different packaging, warranty and service requirements. Price may come into play not just as list price but in discounts, financing, terms and other options. Promotion activities such as advertising and public relations will change as new channels of distribution are entered and need to be supported.As additional competitors enter the market, two things happen that begin to slow the increase in profits as maturity is approached. First, as the number of competitors increases, so does the intensity of competitive interaction.
Coping with increased competition generally translates into increased spending on strategies aimed at generating selective demand. Selective demand is demand for the firm’s brand. This means that firms, in their battle for market share, will spend larger and larger sums to "buy market share" from competitors. Moreover, increased competition naturally drives prices down. Second, as maturity approaches, the growth in sales naturally slows.
This slowing is primarily a result of the declining pool of new adopters for the product category. This transition to market saturation further intensifies competitive interactions and generates additional price reductions. This, of course, ultimately translates into even greater spending as firms fight more intensely for market share.Wall’s Ice Cream growth was an outstanding 40%, achieved through an exciting stream of innovations, aggressive market penetration, 360 Degree Communication (TV Commercials, Outdoor, Print and Visibility activation) and constant attention to consumer affordability.
During the year, 25 new products were launched; some examples are: Kulfi, Moo, Super Twin, Magnum Caramel ; Nuts Bar, Cornetto Super relaunch, In Home premium range, Cornetto Junior, Magnum premium range and Donut.Managing the growth stage is essential. Companies sometimes are consuming much more effort into the production process, overestimating their market position. Accurate estimations in forecasting customer needs will provide essential input into production planning process. It is pointless to increase customer expectations and product demand without having arranged for relative production capacity.
A company must not make the mistake of over committing. The company must show all the products offerings and try to differentiate them from the competitors’ ones. A frequent modification process of the product is an effective policy to discourage competitors from gaining market share by copying or offering similar products.Other barriers are licenses and copyrights, product complexity and low availability of product components. Promotion and advertising continues, but not in the extent that was in the introductory Promotion and advertising continues, but not in the extent that was in the introductory phase and it is oriented to the task of market leadership and not in raising product awareness. A good practice is the use of external promotional contractors.
This period is the time to develop efficiencies and improve product availability and service. Cost efficiency and time-to-market and pricing and discount policy are major factors in gaining customer confidence. Good coverage in all marketplaces is worthwhile goal throughout the growth phase.
