Product Life Cycle and Milestones

Each new product entering the consumer market is destined to go through four periods. Stages of the product life cycle are called : introduction, growth, maturity and decline. No matter how high-quality the new product is, after a certain period of time it will be forced out of the market by an improved model.

The product life cycle begins with entering the market - the implementation phase. The most important period for the novelty. The task of marketers is to prepare the market. In the course there is a wide advertising: promo-actions, distribution of samples, rollers on TV, banners in the street, etc. That is, everything is done to ensure that the output of goods on the market is accompanied by high demand. In this case, the manufacturer often incurs significant losses. But they help to convey information about the brand to the consumer, to excite his desire to try the novelty. The firm is ready for the losses of the first year, as it knows that they are the so-called springboard for obtaining high profits in the future. If the manufacturer wants to win the market with high quality of the product, the distribution of free samples will be an excellent step to attract attention. Consumers will immediately be able to evaluate the novelty and in the future when choosing a store they will be ready to purchase exactly the product they like. At this stage, two types of pricing can be used: low cost or high.

For most of the products, manufacturers initially set a low cost to attract buyers. In the end, if consumers like the goods, they are ready and in the future to buy it for a great price. For products of the "luxury" series, manufacturers immediately set a high price. This strategy in marketing is called "skimming cream." Rich people are willing to pay a high price for really high quality. Gradually, the cost will decrease, but this move will be made by the supplier to win a larger market.

We continue to consider the life cycle of products. The second stage is growth. At this stage, the producer's profit continues to increase, but at a faster pace. This is due to the fact that those people who have already bought the goods, begin to acquire it again. But the company does not stop there and continues to make high advertising costs, gaining even more attention of consumers. And an increasing number of people are buying a novelty, as it becomes more famous. Here its role is played not only by advertising, but also by the recommendations of consumers who have tested the goods. Therefore, the producer gets more and more net profit.

What other processes in the product life cycle occur? It is at this stage that competitors often take an active part in the struggle. And the firm has to invent more and more new methods of retaining consumers. Alternatively, you can slightly reduce prices, expand the range of products (for example, shampoo for dandruff, for men, for light hair, etc.), create creative advertising, etc.

The life cycle of products necessarily includes a stage of maturity. On it, the producer earns through repeated purchases of goods by consumers. The covered market segment practically does not change any more. The product has taken a stable position in the market, it is well known to the general public. The attacks of competitors have little influence on the organization's policies. But the manufacturer's profits no longer increase, and sometimes they start to fall. He can still use various innovative actions, for example, to find a new use for the product. Advertising does not have a big effect on the consumer, as the customer base has developed. Increase the cost of the company can force the emergence of a strong competitor in the market. In this case, the manufacturer lists high funds for advertising and seeks new ways to activate consumer demand.

The life cycle of production ends in a recession. At this stage, it is important to decide whether to continue to stimulate demand or withdraw the product from production. In the case of high costs, the company removes the goods from the market. But if the manufacturer sees that the profit from sales is still high enough, then he continues to support demand, inventing more and more marketing moves.