Overview The product can be defined as goods, services or both; in the other words it's anything that satisfies customer need. Each product has its own limited life, however it shares the same aspect and we define the period that the product goes through as the "Product life cycle." The Product life cycle consist of four stages starting from introduction stage, growth stage, maturity stage and decline stage. At the introduction stage, the product is not popular and can't really make a lot of profit. Its marketing cost may be high in order to test a market and set up a distribution channel. At the growth stage, the product start making a profit, the sales increase rapidly with some cost on marketing especially brand building.
Competitors enter the market, often in large number depending on how attractive the market is. When a profit starts to decline, it's the sign of 'Maturity stage'. At maturity stage, the sales continue to increase but at the decreasing rate until become stable, because of price competition. The product reaches its peak at this stage, most companies fight aggressively to maintain their market share. The competition is very intense, unfortunately a small firms will die one by one. During the decline stage, the profit start to drop gradually, each firm has to manage carefully.
There " re not many choice to choose now; take the most out of it before exit or expand the market by using marketing mix strategies in order to extend product life. Can product life cycle concept be applied into the real world? It definitely can, actually the Product life cycle concept is only a part of the marketing mix and is used to determine the different stages that a product can be expected to go through. On the top of that, the ability to indicate which stage the product is in is important. Once the stage is recognized, the marketer can formulate the marketing objectives for that particular stage as well as develop a marketing strategy perhaps in advance.
The great advantage of applying the right strategy allows the company to gain the highest profit for each stage and maintain the highest possible market share. Are there any strengths or weaknesses? Strengths - The product life cycle is considered as both straightforward and powerful model. By using the model as guidance, effective and timely marketing will take the product through each stage and can be planned in advance. The product life cycle can also be use to alert the marketer, when the product is in the stages of growth and maturity, to integrate extension strategies during this period to maintain the high profit level.
Weaknesses - It is hard to tell which stage the product is in, as there are constant short-term fluctuations due to external factors, consequently marketing actions could be taken too early or too late. By failing recognize the stage of product in the product life cycle model; it can cause business failure for especially a small business. In conclusion, it is fair to say that the model can only be used to help identify the symptoms of each stage. Each product will spend different lengths of time in each stage and there is no physical way of showing this on the product life cycle model. However, the better your financial control, the more you will be able to track individual product.