Product Life Cycle

What do these groups of products have in common?

Chequebook Typewriter Handwritten letters

E-mail Portable DVD

players Touch Screens Organic Food

Personal ComputersCredit CardsFaxes

Hybrid CarsBluerayVoice RecognitionEye scans

Answer:

They are all in approximately the same stage in the Product Life Cycle

What is the PLC?

based upon the biological life cycle. For example:

a seed is planted; it begins to sprout; it shoots out leaves and puts down roots as it

becomes an adult; after a long period as an adult the plant begins

to shrink and die out

Products follow a very similar pattern, illustrated by the PLC.

The Product Life Cycle has 4 stages:

1. Introduction2. Growth3. Maturity4. Decline

The 5th Stage

The final stage of the PLC is known as the Decision Point.

At this stage, marketers must make important decisions regarding the product’s future.

PLCs describe the changes in consumer demand over time

No product can be in demand forever

Changes in trends, lifestyles, technology, etc

Now in more detail…

Read pages 41 – 46 in your textbook and make detailed notes on the 5 stages of the PLC

Problems with the PLC

In reality very few products follow such a prescriptive cycle.

The length of each stage varies enormously. The decisions of marketers can change the

stage, for example from introduction to maturity by price-cutting.

Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in.

What types of supply situations would match the stages in the product life cycle?

Monopoly Oligopoly Pure Competition

Monopoly = one supplier Introduction phase Examples?

Oligopoly = a few suppliers Growth phase Examples?

Pure Competition = many suppliers Maturity phase Examples?

Pulling it Together: The Product Life Cycle

• Sales are low to stimulate demand

• Money spent on promotion

• Sales level off

• Higher competition

• Less promotion

• More sales and competition

MonopolyMonopolistic Competition Oligopoly

Pure Competition

Nontraditional PLCs

Fads

Trends

Niche

Seasonal

Fads

A product, service or idea that is extremely popular for a short period of time and then becomes unpopular just as quickly

Fads are commonly novelty toys, games, songs, TV shows

Ex. Tamagachi, Pogs

It’s possible to make or lose a lot of money on fads

Marketers will make money if they can sell a large quantity of the product and then get out of the market as the fad reaches its peak

Marketers will lose money if they enter at the wrong time or stay in too long; they may be left with a large inventory that no one wants to buy

Trends

Trends are different from fads as they have more long-lasting effects

A trend is a massive movement towards a particular style or value

As a result, “trendy” products may take on a traditional PLC

Ex. Organic food, yoga, skinny jeans

Niche

Niche products are those with a very short growth stage leading to a solid (but not financially spectacular) maturity stage

These products dominate a small section of the market, because they are unique and have little competition

Examples?

Seasonal

Some product follow a cyclical life cycle, continually going through periods of high and low demand

Marketers work to create opportunities outside of the peak season

Examples?

Recent Trends and Fads? Vampires

Twilight series The Vampire Diaries True Blood

Kids books that aren’t really kids books Harry Potter Lemony Snicket Eragon/Brsinger

Social Networking MSN High Five MySpace FaceBook Twitter

Group ActivityIn small groups, you will receive a piece of chart paper with one of the following trends on it. You will have 2 minutes to brainstorm as many past and current trends within your category, then the papers will rotate and you’ll get the next one.

Past and Current Trends: Reality TV Medical TV Shows Boy Bands Fashion Food/Drink Hobbies/Leisure Activities