MARKETING PLAN EXPLORER
Copyright 2002, Professor Jerome M. Katrichis
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III. EXTERNAL SITUATION ANALYSIS
E. Product Life Cycle
Students often confuse the life of a product with a marketing concept referred to as the product life cycle. The life of a product refers to how long the product lasts after it is purchased. The product life cycle discusses how long the product can be offered on the market. The two can be very different. For example, a computer can have a useable life of three or more years after it is purchased, but the producer will introduce new models about every six months. This section is about product life cycle and not about useable life of the product. The useable life of the product should be discussed in the nature of demand section.
Because the life cycle of a product can impact appropriate actions for the organization, this section specifically looks at the typical length and current stage of the product life cycle for the product category, product lines and individual models.
While authors tend to differ with respect to how many different stages there are in a product life cycle, it seems most useful to think in terms of four stages: introduction, growth, maturity and decline.
In the introduction stage sales tend to grow at a slow but steady rate. Customers are really only starting to get used to the idea of the product so marketing activities tend to be highly informational and focus on primary demand ("buy this kind of product") rather than selective demand ("by my brand").
During growth sales finally take off and are increasing at an increasing rate. This is the stage when many competitors tend to jump in to the market. Marketing activities tend to shift to selective rather than primary demand.
During maturity the rate of sales growth slows. Replacement sales become a factor and any growth that is experienced may be due to external factors such as population growth. This is the most competitive stage and typically witnesses the weaker competitors leaving the market. Maturity can last indefinitely.
During decline sales are actually dropping and will continue to drop. During decline timing the departure of your firm from the industry is the most important issue. If your organization leaves too slowly the declining products can take inordinate amounts of management time and resources away from other opportunities. If it departs too quickly it may forego substantial profit opportunities created by the departure of other firms.
|Internal Situation Analysis|
|External Situation Analysis|
|Problems and Opportunities|
|Generation of Alternatives|