Marketing Aptitude - Product Life Cycle
Category : Banking
Product
A product may be defined as a bundle of utilities consisting of various features and accompanying services. The bundle of utilities or the physical and psychological satisfactions that the buyer receives is provided by the seller when he sells a particular combination of product features and associated services.
Products or goods can be classified into two broad categories depending upon the use for which they are meant. These categories are
Consumer goods can be classified as follows
(i) Convenient Goods e.g., cold drinks, cigarettes, magazines and newspapers, etc.
(ii) Shopping Goods e.g., furniture items, dress materials, shoes, etc.
(iii) Speciality Goods e.g., fancy goods, stamps, coins, etc.
Industrial goods can be classified as follows
(i) Fabricating Goods e.g., pig iron going into steel, yarn being woven into cloth, etc.
(ii) Equipment Goods e.g., portable drills, hand tools, etc.
(iii) Supplies Goods e.g., floor wax, pins, pens, etc. Electrical goods such as TVs, video, stereo systems, etc. used for home entertainment are known as Brown goods.
The goods which are used for their production, are called capital goods.
Difference between Consumer Goods and Industrial Goods
Basis |
Consumer Goods |
Industrial Goods |
Nature of customer |
Consumers of consumer goods are the ultimate consumer |
Its consumers are the manufacturing and industrial units. |
Market extension |
The market of such goods is very large and extensive. |
The market of such goods is not so large and extensive. |
Number of costumers |
Number of customers for consumer goods is very large. |
Number of costumers for industrial goods is generally limited. |
Number of demand |
The demand of consumer goods is called autonomous demand or direct demand. |
The demand of industrial goods is called derived demand or indirect demand. |
Marketing strategy |
Advertising programme and sales promotion methods play an important role in the sale of such goods. |
The personal contact with buyers play an important role in the sale of such goods. |
Quantity of purchase |
Generally, consumer goods are purchased in a small quantity. |
Generally, industrial goods are purchased in bulk quantity. |
|
|
|
|
|
|
|
|
The Product Life Cycle (PLC) is the life span of a product from the stage of development through testing, promotion, growth and marketing, to the stage of decline and perhaps regeneration.
The product life cycle comprises of five stages
Stage 1
Market Introduction In this stage, some innovative products may be launched. Innovation means product designing, new ideas and creativity. This stage of the cycle could be the most expensive for a company. The cost of things like research and development, consumer testing and the marketing needed to launch the product can be very high, especially if it is a competitive sector,
Stage 2
Market Growth This stage is typically characterised by a strong growth in sales and profits. As the company can start to benefit from economies of scale in production, the overall profit margins will increase. Price stabilises or falls slightly, depending on how fast demand increases. The category of consumers in the growth stage of product is somewhat more price sensitive, more risk averse and therefore, somewhat more hesitant to adopt the product,
Stage 3
Market Maturity Sales continue to grow during the early part of maturity, but at a much slower rate than experienced during the growth phase. At some point, sales reach at the peak. This peak may last for extended periods of time. In fact, the maturity phase of the life cycle is the longest phase for most products.
Stage 4
Market Saturation In this stage, the arnout of product provided in a market has been maximised in the current state of market place and selling price has been constant. At the point of saturation, further growth can only be achieved through product improvements, market share gains or a rise in overall consumer demand.
Stage 5
Market Decline This is the last stage of Product Life Cycle (PLC). At this stage, there is a down turn in the market. Profit margins touch a low level, competition becomes severe and customers start using newer and better products.
Following are the importance of product life cycle
According to this concept, the product will die out over a period of time irrespective of the fact that the product had made tremendous progress during the post. Knowing this fact, management always try to improve its existing product or to develop a new product.
The quantum and rate of profits increases or decreases with the quantum of turn over. In introductory stage, profits are negligible, then they go up and after sometime they begin to fall and gradually they move to nil. Thus, the management can well predict the firm’s profits in different stages of the life cycle of the product.
Different policies, procedures and strategies are followed in the different stages of the life cycle of a product. So, management can prepare the marketing programmes accordingly and may get success.
Importance of Product Life Cycle also includes
(i) Help in promotional decision.
(ii) Help in product control.
(iii) Facilitates sales forecasting.
We need to distinguish three special categories of product Life cycles; styles, fashions and fads.
Decisions taken by the producers on the given three aspects
The new-product planning involves a series of steps from idea generation to commercialisation
Step 1
Idea Generation It is a continuous, systematic search for new product opportunities. It involves delineating sources of new ideas and methods for generating them.
Step 2
Product Screening After the firm identifies potential products, it must screen them. In product screening, poor, unsuitable or otherwise unattractive ideas are weeded out from futher actions.
Step 3
Concept Testing A firm needs to acquire consumer feedback about its product ideas. Concept testing presents the consumer with a proposed product and measures attitudes and intentions at this eary stage of development.
Step 4
Business Analysis Business analysis for the remaining product concepts is much more derailed than product screening. These are some of the factors considered in this stage of planning-demand projections, cost projections, competition, etc.
Step 5
Product Development It converts a product idea into a physical form and identifies a basic marketing strategy. It involves product construction, packaging branding, etc.
Step 6
Test Marketing It involves placing a product for sole in one or more selected areas and observing its actual performance under the proposed marketing plan.
Step 7
Commercialisation After testing is completed, the firm is ready to introduce the product to its full target market, commercialisation involves impleting a total marketing plan and full production.
Tit-Bits
You need to login to perform this action.
You will be redirected in
3 sec