Product Life Cycle

Is every product or service subject to the same stages in the Product Life Cycle?

Paper instructions:i
This questions requires that students start with a list of the typical stages (5–6 total) of the Product Life Cycle. These are:

0) ‘Research and development’. Sometimes students include this as
stage 1, but here we call it stage ‘0’.
1) Launching of the product.
2) Take off.
3) Maturity.
4) Shake-out.
5) Decline.

A short description of each stage should follow along with its implications for marketing-mix strategies.

1. Introduction: The uptake of a new product is often slow. There are several reasons for this. Technology is new and uncertain. Distributors still have contracts with older products. Buyers are still unaware of the new product or are uncertain of its benefits. Competition from other brands and products is low at this stage. For example, in the initial stages of the home personal computer, companies like Olivetti were major players while giants like IBM were more concerned with large mainframe and institutional computers.

2. Growth phase: Growth of sales occurs at an accelerating rate. The causes of growth can be varied but one can surmise that if first users are satisfied they then pass on favourable word of mouth for the product. Wider distribution and more visibility increase sales. More competitors enter, but actually expand the market. For example, the growth of car technology in the early twentieth century allowed over 200 domestic car companies to exist in the United States in 1905 versus only three domestic automakers today.

3. Shake-out phase: Demand is still increasing but at a slower rate. The weakest competitors are leaving the market. Concentration and merger activity begins. Airlines and passenger air travel witnessed numerous mergers and failures since the terrorist attacks on 11 September 2001, which lowered passenger travel.