Business Framework no. 3: Marketing - Product Life Cycle

An overview of the framework, every Framework contains:

• The purpose of the framework,
• A brief overview of the outline,
• Case example - to illustrate the use of a frame in the real world
• Conclusion - take-out key

 

The product life cycle is a four stage process that products or services offered by organisations go through, namely, introduction, growth, maturity and decline. It is used as a tool to identify the current life cycle stage of a product, forecast future sales and plan new strategies suitable for a particular stage.

Stage 1 Introduction: 

At this stage, the product sales are low as potential customers are unaware of the product. Hence, there is major focus towards product awareness and generating trials through huge investments in marketing campaigns and advertisements.

Stage 2 Growth: 

Based on positive outcomes from the introductory stage, the product moves to the growth stage. At this stage, product sales increase due to growing demand. As the demand grows, the product production and its availability increases.

Stage 3 Maturity: At this stage, the product production and marketing cost decline. The product sales are the highest in comparison to the previous stages, however, they are flattened in nature. Hence, there is a need to rebrand and reposition these products.

Stage 4 Decline: At this stage, the product witnesses low sales due to stiff competition from similar products offered either at a low price or with certain improvements. Hence, in order to sustain in the market, products can be differentiated or can be replaced by another one.

Sample Example:

In Spite of the emergence of digital cameras, Kodak neglected to change as per the market situation and decided to continue with the film roll business. As the popularity of digital cameras grew, people stopped using film rolls as they were no longer required. As the products did not go through any changes based on the market changes, the film roll business declined.

Let’s understand the journey of Kodak’s film role business:

Stage 1 Introduction: Kodak’s film roll business started in the 1980s. Huge investments were made to develop the film roll and to create awareness about it through advertisements. However, the product sales were low.

Stage 2 Growth: The advertisements that took place during the introductory stage, helped in building trust in customers' minds for the film roll. Further investments were made to promote film roles with an aim to increase its sales.

Stage 3 Maturity: The emergence of the digital cameras led to a decrease in use of film roles, thereby leading to decrease in its sales. An incorrect strategy was chosen to not make any changes to the core product. However, in this scenario, other product avenues could be looked at to make decisions to sell which product to the customers.

Stage 4 Decline: Customers moved to digital cameras and stopped using film roles. No initiatives took place to differentiate or replace the film roles, which led to the end of the film role business. However, in this scenario, had other product avenues been analysed, decisions on selling the right product to the customer to satisfy their needs would have been made. This could have also led to a case of selling mobile phones with cameras in place of film roles.

Conclusion

Based on the market scenario, companies need to change their marketing strategies and their product to stay relevant in the market.

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