CHARACTERISITCS OF THE VARIOUS PRODUCT LIFE CYCLE

NAME: NARTEY STEPHEN

COURSE: ADVERTISING

SESSION: LEVEL 300 (TOP-UP WEEKEND)

                         

QUES: WHAT ARE THE CHARACTERISITCS OF THE VARIOUS PRODUCT LIFE CYCLE

Ø  IDENTIFY THE LUGGARDS IN THE PRODUCT LIFE CYCLE

According to Klaus Brockhoff (1967) “Econometrica- Journal of the Econometric Society” a product life cycle is a well known concept in marketing theory that shows the life of a product in the market with respect to business/commercial costs and sales measures. It is generally assumed to comprise four phases- the introductory, growth, decline and saturated stages. A product life-cycle gives the functional relationship between the sales of a product, being the dependent variable and time, the independent variable. The various phases of a product life cycle is graphically represented in a bell-shaped curve form.

      Product Life Cycle Diagram   

In other words, a new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix.

Notwithstanding, the various phases of the product life cycle have characteristics;

In the introduction stage, the firm seeks to build product awareness and develop a market for the product. So, it is usually characterized by high costs of production, slow sales volumes at the start, little or no competition, demands have to be created, and customers have to be prompted to try the product. The manufacturer makes no money at this stage. Icepak sachet water on the Ghanaian market can be cited as an example of a product in its introductory stage.

In the growth stage, the firm seeks to build brand preference and increase market share. At this stage of a product life, costs reduced due to economies of scale, sales volume increases significantly, profitability begins to rise, public awareness increases, competition begins to increase with a few new players in establishing market. There is also an increased competition as MTN, mobile operator in Ghana, which is as its growth stage is facing. Because of this competition, it is engaged in ‘price wars’ with its competitors.

At the maturity phase, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit. Characteristics such as lowered costs as a result of production volumes increasing and experience curve effects are indicative of this stage. Also, sales volume peaks and market saturation is reached at the maturity stage. There is an increase in competitors entering the market and usually prices of the product tend to drop due to the proliferation of competition. The P.K chewing gum and the ROB balm can be said to be at its maturity stage. They are engaged in brand differentiation and feature diversification to maintain or increase their market share. There is also a decline in industrial profits at this stage.

At the decline and saturation stage, costs become counter-optimal, ales volume decline, prices, profitability diminish, profit becomes more a challenge of production/distribution efficiency than increased sales. Products such as 7-Up, a soft drink that used to be on the Ghanaian market had declined hence, it demise.

The duration of product life cycle stages is unpredictable. It is not possible to predict when maturity or decline of a product will begin.

*Luggards form a customer group that is mostly risk-averse and are always hesitant to adopt new products. They are price sensitive and will not buy products until prices have seen significant declines. They buy when products are at their decline or saturation stages. Luggards are the last group to adopt a product.