The second stage is known as the Growth Stage. This stage is mainly characterized, for successful products, by a tremendous increase in sales. New customers are added while existing customers are making repeated purchases. By now however, competitors have introduced similar products, with a large number of sales and competitors the price is lowered to make the product more attractive for potential buyers. This is one of the tools of a system that is used in this stage known as Product Differentiation, where the marketing strategy is implemented that seeks to create a difference in people’s minds between the company’s brand and their rival’s that are targeting the same market. Other tools in this system can be, for example, offering extensions on warranties, offering new product features and other extra services. In terms of distribution, the demand and sales growth cause a big increase. An example, of a product at this stage are the new mobile phones. Currently, there are many competitors in this market and companies are going out of their way to introduce new features to cell phones, like polyphonic ring tones, built in cameras, computer connections and free after sale services. With so many brands to choose from, the prices have also decreased and the major market holders are differentiating themselves from each other, for example Nokia, stresses on “Connecting People”, while Siemens promises everyone the “DigitALL Experience”.
The next stage for products is the Maturity stage. Typically, this is the longest part of the cycle. At this point of time, their sales peak, there are also many number of competitors and because of this, the brands starts to look very much alike. With a high number of sales and competitors the price drops further for customers. The product diversifies in terms of brands and models. The advertising team tries to further stress brand differences and benefits, while the marketing department tries to maximize profits while defending the market share and extending the lives of their brands. Some well known brands that are in this stage currently are Coke Cola, Pepsi and Barbie. Most of their profits at this time are spent on Research and Development for product modification or to increase production efficiency and quality. Pepsi introduced Pepsi Twist last year, while the some of the latest Barbie dolls can understand different languages!
The final stage is the decline stage. In this stage marketers cut back on promoting when a better product appears or the need for the product disappears. During this stage, the costs and the profits are low. The unprofitable outlets are discontinued and therefore the distribution also decreases. Many firms conduct a Product Audit, to help identify products with declining sales, and profit trends. Those products which are determined to have no more possibilities for product extension are considered for deletion. A common term used in this stage is Technological Obsolescence, where because of an advance in technology a product is no longer needed, an example of this is the type writer, which was replaced by the personal computer and printer. Fashion Obsolescence is where the sales of a product decrease dramatically because it loses appeal and there are newer more stylish options, an example of this could be perfumes and clothes. Postponed Obsolescence is where a product is not improved till present demand and inventories drops quickly.
Some organizations nowadays specialize in extending the life of a product, so as it to maximize profit. An example of a company that does this is Adexa Solutions. Complex products such as automobiles, defense systems and computers often have a short lifecycle, due to fast pace of change in technology, this implies that manufacturers should pay attention to all facets of the product lifecycle planning and management process, from design through distribution and customer service, to make the process streamlined and synchronized. Adexa Product Life Cycle Management gives companies the information and software to plan, manage and schedule product lifecycles by accelerating the introduction of new products, and optimizing all product life cycle phases. Adexa is able to do this by creating product demand forecasts based on the history of similar products, allocate production capacity across new and existing products and analyze inventory, capacity, and profit margins to determine the optimal end-of-life timeframes
In general, the life cycles of products are much shorter, which is the reason for extensive research and development. Most companies try to take advantage of their existing strengths when manufacturing new products. This strategy is known as Product Life Extension Strategy, the best example of this would be Coke Cola. In the eighties, there was just one Coke, nowadays we have Diet Coke, Caffeine Free Coke, Cherry Coke, Diet Cherry Coke, Vanilla Coke, Diet Vanilla Coke and not to forget - Coke Classic! Another commonly used strategy used in Brand Franchise Extension is using an existing well known brand to promote new products. An example of this is Nike, who started of with sports shoes, and has now moved into the watch, clothes, accessories market.
Sources :
- Schoell, Dessler, Reincke
Introduction to Business, 7th Edition
Allyn Bacon Publishing 1993
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