Sometimes people use the term business plan when they are referring to a project.
The beginning of the curve marks the introduction stage; the slope indicates growth stage; top of the curve signifies maturity; and the graph ends in the decline stage. For instance, when a seed is planted introduction ; it begins to pullulate growth ; it shoot out flowers and leaves maturity ; and after a defined period of time, it starts to shrink and eventually die out decline.
Human beings also pass through the same phases of introduction, growth, maturity and decline in their lives. The same theory applies to a product. When a new product is launched in the market, it starts gaining customers; then it stabilizes and becomes mature; then after some time, it is taken over by the introduction of better and superior competitors therefore, it is withdrawn or harvested from the market.
Benefits of Using a Product Life Cycle for Revenue Marketing managers consider product life cycle as an important measure of sales revenues.
As you can see from the figure, the slope of the curve denotes the sales of a particular product. The more the slope, the more the sales. When a product is introduced in the market, the sales are negligible. Due to marketing and promotion efforts, the demand of product starts to increase and as a result some revenue is generated.
When more and more customers begin to buy the product, the revenues of the product reaches to maximum; this stage is called maturity. A product can stay in maturity for several weeks, months or years depending on the external and internal market conditions and resources.
Finally, when a product better in features and functions is launched by a competitor into the market, the sales starts to decline; in some cases, companies have to disengage their products or services.
The conditions involving the promotion and sales of a product, involving advertising and market saturation vary over time and must be managed as it moves through the different stages of succession. What is Marketing Mix? Brand Building For the product life cycle to begin, the product must be launched in the market.
This is done after target market is identified and ensured that the need for your product or service exists. At this stage, sales will be very low because customers are not really aware of the product and its benefits.
Promotion, Advertising, Marketing The cost of advertising and initial distribution is extremely high as companies intend to create awareness of the product and target early adopters. The goal is to build market and generate demand. Stage 1 Marketing Mix Implications You need to have a fair idea of marketing mix implications for each stage.
Product Products are less in number Price Some companies keep the price high so as to cover their costs whereas others tend to keep it low so as to attract more early adopters. Distribution Initially, the distribution is done selectively Promotion Creation of awareness is the only goal of promotion Growth Look how the product is establishing market and making profit in comparison to the competitors.
Maintain focus on the promotion efforts. Notice how slowly or rapidly the product is gaining customers and generating profit. More retailers will be interested in carrying your product. Remember the goal of growth phase is to increase sales and gain customer preference.
Price If the demand of the product is high, price is maintained at high level whereas; if you want to target additional customer segments, reduce the price. Distribution To intensify distribution, discounts are offered to retailers. Promotion Improved promotional efforts. Maturity You will observe that your product has met market saturation.
Eventually, there will be a marked increase in sales and it will become a challenge for the marketing and sales team to maintain the market share as new competitors would be penetrating into the market.
Increase promotional efforts and offer more discount to the retailers in order that they give your more shelf space than competitors.
The goal of maturity stage is to extend product life cycle while maintaining market share. Third Stage Stage 3 Marketing Mix Implications Product Product is differentiated from those of competitors Price Maximum possible reduction in prices to be made Distribution Retain existing distributors by offering discounts as well as searching for more channels of distribution Promotion Intensive promotion efforts in order to establish brand loyalty Decline Carry out a marketing analysis or a survey to find out how customers perceive the product currently.
If the interest and demand is low, think of ways to take the product back to profit making position.
Possible ways could be the creation of new target segment and making modifications in the product. The goal of decline stage is either to maintain the product or discontinue it. Price If the product is to be maintained, the prices are retained.Visual Paradigm is a world-wide leading award-winning enterprise management and software development suite, which provides all the features you needs for enterprise architecture, project management, software development and team collaboration in a one-stop-shop solution.
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