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The 6 Stages of the Product Life Cycle [+Examples]
Published: November 30, 2022
When I was 12 years old, I used to be confused about my cousin's CD collection. Why have CDs when I could go on iTunes and listen to all my favorite songs? This is a perfect example of a product life cycle (PLC) in action.
No one wants their product to become “obsolete” and reach the end of its product life cycle. That’s why it’s important to understand what stage your product is in so you can make better marketing and business decisions.
Below, we’ll learn about the product life cycle inside and out. If you’re in a pinch, use the links below to jump straight to what you need:
What is the product life cycle?
Breaking down the product life cycle theory, what are the stages of the product life cycle, product life cycle examples, international product life cycle, when to use the product life cycle.
The product life cycle is the succession of stages that a product goes through during its existence, starting from development and ultimately ending in decline. Business owners and marketers use the product life cycle to make important decisions and strategies on advertising budgets, product prices, and packaging.
In the marketing industry, the typical depiction of the product life cycle only has four main stages — Introduction, Growth, Maturity, and Decline. At HubSpot, we agree that these are vital for a product, but the two stages “Development” and “Decline” aren’t nearly covered enough.
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Product Life cycle
Introduction of the product life cycle.
As shoppers, we purchase a large number of items consistently. Furthermore, much the same as us, these items have an existence cycle. More seasoned, since a long time ago settled items, in the end, turn out to be less well known, while interestingly, the interest for new, more current products more often than not increments quickly after they are propelled.
Since most organizations comprehend the diverse item life cycle stages, and that the items they offer all have a constrained life expectancy, the greater part of them will put intensely in new item improvement with a specific end goal to ensure that their organizations keep on growing.
Product Life Cycle Stages
The product life cycle has 4 unmistakably characterized stages, each with its qualities that mean diverse things for business that are endeavouring to deal with the life cycle of their specific products.
-This phase of the cycle could be the most costly for an organization propelling another product. The span of the market for the product is little, which implies deals are low, even though they will increment. Then again, the cost of things like innovative work, purchaser testing, and the promoting expected to dispatch the product can be high, particularly if it’s an aggressive area.
– The development arrange is normally portrayed by a solid development in deals and benefits, and because the organization can begin to profit by economies of scale in production, the net revenues, and also the general measure of benefit, will increment. This makes it feasible for organizations to put more cash in the limited time movement to boost the capability of this development arrange.
– During the development, the product is set up and the go for the maker is presently to keep up the piece of the pie they have developed. This is presumably the most focused time for most products and organizations need to put astutely in any advertising they attempt. They likewise need to think about any product alterations or upgrades to the production procedure which may give them an upper hand.
– Eventually, the market for a product will begin to a psychologist, and this is what’s known as the decay organize. This shrinkage could be because of the market getting to be soaked (i.e. every one of the clients who will purchase the product has just bought it), or because the shoppers are changing to an alternate sort of product. While this decrease might be inescapable, it might, in any case, be feasible for organizations to make some benefit by changing to more affordable production strategies and less expensive markets.
Case study of sony product life cycle
SONY products as an example of the product life cycle
The conventional product life cycle bend is separated into four key stages. Products initially experience the Introduction organize, before going into the Growth arrange. Next comes Maturity until in the long run, the product will enter the Decline organize. These cases show these phases for specific markets in more detail.
3D Televisions : 3D may have been around for a couple of decades, however simply after impressive speculation from telecasters and innovation organizations are 3D TVs accessible for the home, giving a decent case of a product that is in the Introduction Stage.
Blue Ray Players : With cutting edge innovation conveying the absolute best review involvement, Blue Ray gear is as of now appreciating the unfaltering increment in deals that is average of the Growth Stage.
DVD Players : Introduced various years prior, makers that make DVDs, and the gear expected to play them, have built up a solid piece of the overall industry. Notwithstanding, despite everything they need to manage the difficulties from different innovations that are normal for the Maturity Stage.
Video Recorders : While it is as yet conceivable to buy VCRs this is a product that is certainly in the Decline Stage, as it’s turned out to be less demanding and less expensive for shoppers to change to the next, more current configurations.
Marketing Strategy of SONY:
Like most other superstar brands, SONY too has indicated substantial spotlight on advertising and has substantiated itself more quick-witted than others around there. While computerized showcasing is at the focal point of this methodology, the brand has additionally utilized alternate channels for fruitful advertising and the advancement of its image and products. SONY has utilized an imaginative advancement blend to achieve its clients.
Three components are very particular about its promoting methodology. The principal component is a product. When you have your product blend right, you have little to fear from your rivals. Sony’s emphasis is on plan, quality and innovation around there. Aside from being innovatively effective, its products are superior to most as far as quality and plan as well. Sony has substantiated itself remarkable as far as product quality and plan. It’s evaluating and advancements methodology are the other two vital components in its promoting technique. An exceptional evaluating procedure compares to the top-notch picture of SONY and its products.
Sony’s consumption of publicizing and advancements is high. The substantial promoting spending plan likewise mirrors the overwhelming rivalry in the hardware business. At the point when the opposition in the business is as high, you have to demonstrate to some degree more profound spotlight on showcasing and advancement. SONY’s marking methodology to a substantial degree has assumed a solid part at helping it conquer the focused weight.
Another stage that has assumed a focal part of SONY’s promoting system is online networking. Online networking can be a noteworthy help if you can outline an innovative client encounter. SONY has utilized online networking for both client engagement and advancement of its products. Aside from a huge number of adherents and a few prominent Facebook and Twitter pages, there is considerably more than SONY is doing through online networking. It has additionally utilized Pinterest and Google in addition to showcasing and advancement.
SONY’s system has constantly centred around client agreeableness and more profound lucidity. The credit goes to SONY’s innovative execution that it has been so effective at drawing in its adherents through online networking channels.
Be that as it may, the story isn’t restricted to only the computerized channels because SONY is knowledgeable at utilizing the conventional channels as well. It utilizes conventional channels too adroitly. One can run over its advertisements on open-air areas like announcements and behind transports and on the dividers. The promotions of SONY’s top-notch TVs are effectively found on sparkling extensive announcements in the metropolitan territories.
While SONY has utilized an excellent valuing technique like Apple still it has its own particular vast fan section with high brand dedication. This top-notch evaluating system passes on an excellent brand picture and a top-notch client encounter. Generally, SONY’s advertising methodology is exceptional in many perspectives.
In conclusion, the product life cycle is a vital idea inside an association. With a specific end goal to influence a product to get by in the market as far as might be feasible, it is extremely fundamental for the advertisers to comprehend the product life cycle to give/outline viable showcasing systems for each period of PLC. A powerful administration of PLC will most likely expand its life and pick up development in the aggressive market. To know more about the product life cycle
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What is product lifecycle management (PLM)?
Product lifecycle management (plm) is the process of managing a product’s lifecycle from inception, through design and manufacturing, to sales, service, and eventually retirement..
As a technology, PLM software helps organizations to develop new products and bring them to market. The software makes it easy to track and share data along the product value chain, from initial design through manufacturing, supply chain management and operations, and asset maintenance.
In an age where innovation is key to business survival and success, PLM plays a critical role in helping manufacturers develop the next generation of products, at a lower cost, and with a faster time to market. While PLM can also be interpreted as a business strategy, three fundamentals impact the way teams work and the ability for organizations to grow and thrive:
- Universal, secure, managed access and use of product definition information
- Maintenance of the integrity of that product definition and related information throughout the life of the product
- Management and maintenance of the business processes used to create, manage, disseminate, share, and use the information
The five phases of product development
- Concept and design: The ideation phase, where a product’s requirements are defined based on factors including competitor analysis, gaps in the market, or customer needs.
- Develop: The detailed design of the product will be created, along with any necessary tool designs. This phase includes validation and analysis of the planned product, as well as prototype development and piloting in the field. This generates vital feedback on how the product is used and what further refinements are needed.
- Production and launch: Feedback from the pilot is used to adjust the design and other components to produce a market-ready version. The production of the new product is scaled – followed by launch and distribution to the market.
- Service and support: Following the launch of the new product, the period of time when service and support is offered.
- Retirement: At the end of the product’s lifecycle, its withdrawal from the market must be managed – along with any retrials or absorption into new concept ideas.
How does a PLM system work?
A PLM system gives designers and engineers access to the critical data they need in real time. The system streamlines project management by linking CAD (computer-aided design) data with a bill of materials and other enterprise data sources, such as integration with an ERP system, and manages this product data through all stages of the product development lifecycle.
PLM also prevents designers and engineers from operating in a disconnected vacuum, giving them insight into external sources of information like customer and analyst feedback on current products, performance data on products in the field, and visibility into the limitations of downstream processes like manufacturing.
A PLM system also benefits teams beyond design and engineering. It can provide ‘single source of truth’ visibility to business stakeholders and/or suppliers for easy delivery of feedback early in the product development process.
Evolution of product lifecycle management
In the 1980s, American Motors Corporation (AMC) was a small player in the automotive industry. The company lacked the big budgets of larger players in the market, which hampered its ability to compete effectively. AMC leadership had the idea of tracking products from inception to end-of-life in order to improve processes and compete more efficiently – the first iteration of product lifecycle management.
The data gathered was used to inform better decisions from ideation through to procurement and the production process. AMC grew its market share and the company was later bought by Chrysler and became the auto industry’s lowest-cost producer by the mid-1990s .
Today, PLM has been adopted across manufacturing to foster collaboration, boost innovation, and efficiently support growth through designing to customer demand and product individualization.
And in a time of digital transformation and accelerated change – Forbes predicts that due to COVID-19, manufacturing will experience five years of innovation in the next 18 months – PLM plays a critical role in helping companies get products to market faster.
of customers expect more customized or personalized products than they received three years ago
of customers expect the same quality products and services as they received three years ago, but more quickly
Five benefits of PLM
The following are five key reasons why companies choose to invest in PLM solutions.
- Improvements to development, engineering efficiency, and effectiveness: Results from the Industry Week survey found that silos are the biggest challenge to engineering team performance. PLM enables the bi-directional flow of real-time data to support better knowledge-sharing and collaboration.
- Elimination of errors during the engineering release process: It’s far simpler – and cheaper – to rectify product issues that are identified earlier on. PLM helps to reduce cost and offers the additional environmental benefit of reducing manufacturing waste .
- Reduced time to market: Offering a single source of truth with up-to-date information at every phase of the product lifecycle, PLM empowers project managers to control overlapping timelines and get products to market faster.
- Improved project delivery: A cross-enterprise, digital PLM solution supports advanced workflow management. In this use case, PLM allows a team to precisely calculate product costs and more effectively manage the handover to manufacturing new designs.
- Higher quality designs: PLM offers designers and engineers a deeper level of insight into product requirements. Ingesting data from many different internal and external sources, a PLM system with integrated machine learning can turn performance data and customer feedback into new feature suggestions.
Examples of product lifecycle management
PLM systems are widely used across manufacturing. Key industries include aerospace, automotive, and defense. These companies are using PLM in innovative ways:
- Endress+Hauser is a leader in products and services for industrial process measurement and automation. Thanks to a PLM solution they reduced manufacturing and assembly costs, through improved transparency across the product development process, to improve their competitive advantage.
- VACUUBRAND , an industrial vacuum equipment supplier, shortened product development times, and improved product and data quality using an integrated PLM solution in place of disparate legacy systems.
Overcoming PLM challenges
Currently, fewer than half of R&D executives say they have visibility into the end-to-end, design-to-delivery process. This highlights that, for many organizations, PLM has not yet reached its potential as a single source of product truth.
In addition, the growing adoption of Industry 4.0 practices within manufacturing has led to an exponential increase in the amount of product and customer data available, providing greater visibility across product lifecycles. Data sharing among PLM entities could streamline product lifecycle management, but only if the data is correctly captured, analyzed, and disseminated safely – bringing into focus the need for integrated AI, machine learning, and data encryption.
Finally, many PLM advocates struggle to communicate the relevance of the software beyond engineering. In all of the above cases, investing in a solution that integrates with existing enterprise systems – and offers built-in artificial intelligence – will increase the use and value that the wider organization can gain.
Future of PLM and technology
The demands of beating competitors to market, attracting top talent, and producing the highest quality product possible using sustainable practices will only continue to increase over time. PLM can help to meet these demands with shorter, more conscientious design and product engineering cycles, but only if organizations invest in the technology required to get there.
- More objects are coming online with the Internet of Things (IoT) and designers and engineers stand to gain far greater visibility into products in the field, as well as the ability to update products that are already in the hands of consumers. As McKinsey highlights , this enables manufacturers to continue creating new customer value throughout the product lifecycle.
- As sustainability continues to emerge as a topic of importance, businesses will look to modernize their product development processes through green product design, manufacturing, and logistics with the goal of achieving full supply chain sustainability .
- As with other types of enterprise software, PLM systems are increasingly being offered in the cloud as software as a service (SaaS) . This will make PLM more accessible to smaller companies and will continue to drive the collaboration that effective product development teams need while workforces become more distributed .
- Digital twins are virtual models of a product that are connected to their physical ‘twin’ via IoT and are managed within PLM systems. The concept is still new, but digital twins are predicted to drive significant cost savings for manufacturers in the years ahead. IDC states that , “By 2023, 65% of global manufacturers will have realized savings of 10% in operational expenses through process digital twins driven by IoT and machine learning.”
Individualized products at scale
Explore PLM solutions to support product design and development.
Product lifecycle refers to each stage a product goes through from initial concept to retirement. This includes ideation, design, prototyping, manufacturing, service, and end-of-life management.
A PLM software system is used in manufacturing to manage a product and its associated data through all stages of the product lifecycle. While primarily used by design and engineering teams working with CAD data, a PLM system can provide visibility into the product design process for all business stakeholders.
PDM only focuses on capturing and maintaining information on products through their development and useful life, whereas PLM can manage every aspect of the product through its lifecycle.
Product development software refers to solutions that help with the development of new products. Features might include product road maps, data analysis, a communication tool, task assignment, and bug tracking.
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PLM Case Studies by Industry
Industrial equipment manufacturers.
Industrial manufacturing companies develop, manufacture, and service some of the most complex and long-lasting products on earth: bringing unprecedented value to their customers by accelerating product development and managing a wealth of product data in PTC PLM. See industrial manufacturing customer stories below.
KHS Reduces Cost with Models
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Rosenbauer’s Approach to Product Variants
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Great Plain Manufacturing Updates Harvesting
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Medical Device Manufacturers
Top medical device companies around the world rely on PTC PLM to deliver a single source of truth for the product development data and processes that are essential to delivering dependable, high-quality, safe and compliant solutions to support patients and their families. Below, you’ll find stories about the medical device support we provide, straight from PTC PLM customers.
CVRx Manages Risk with Windchill
Using Windchill, CVRx is more productive while compressing development cycles, mitigating risk & streamlining reporting
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With Windchill, Novo Nordisk keeps abreast of product requirements and manages change and compliance more efficiently
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Fresenius selects Windchill Product Quality to Enable Closed-Loop Quality
Boston Scientific: Automating Lifecycle Processes
Panel discussion. "The main driver was one global platform that would enable our product lifecycle process cradle to grave….” - Tina Kunshier, Program Manager
Alcon: Working Smarter, Not Harder
Panel discussion. “Identify the areas that are still managed by paper. You’ll be surprised at how many swivel-seat procedures are still being used." - Mark Turner, Development IT
Roche: Balancing Rigor and Innovation
Panel discussion. “To have the traceability from the requirements, via the specification, to the design, to the product data… all helps in quality management.” - Claus-Peter Gartner, Head of Operations and Quality IT
Automotive and Transportation
Automotive companies around the world are faced with a number of industry-specific challenges expertly met by PTC PLM: sophisticated supply chains, the highest in quality and safety standards, and increasingly innovative design solutions.
China’s Grand River Group
China’s largest maker of motorcycles leverages PLM to respond quickly with new, high-quality products.
GKN: Intelligent Drive Systems
GKN Driveline reveals how the evolution of the market created a massive change for GKN to lead in intelligent drive systems.
KTM “Ready to Race” with PTC
KTM’s, a leading manufacturer of motorsports vehicles, mission is to produce motorcycles with exacting standards of excellence.
Piaggio Accelerates Innovation
With PTC PLM, Piaggio delivers innovative products faster
StreetScooter: It’s Electromobility
Through the crowdsourced design of 30 collaborating automotive suppliers was delivered in record time to the market.
Polaris strives to give a great end-to-end experience for its riders, from customized purchase options to enhanced safety features. To achieve this vision, Polaris adopted a step-by-step approach to digital transformation through PTC solutions.
Aerospace and Defense
PTC PLM solutions for aerospace and defense companies recognize and serve the breadth, depth, detail, and rigorous quality and compliance requirements of this unique industry. PTC PLM is recognized as the leading provider to aerospace and defense companies.
Airbus Delivers Next-Gen Helicopter
Airbus Helicopters leverages PTC partnership to deliver next-generation helicopter with our PLM system, Windchill.
BAE’s roadmap to Value With PLM
Driving adoption of PLM early in the process allowed BAE to do more with less, while maintaining quality.
EADS PLM Harmonization Program
Windchill-Based Modular Platform PHENIX CHANGE provides harmonization, flexibility and efficiency within the enterprise.
Lockheed Accelerates the Orion
To develop the unmanned Orion spacecraft, Lockheed Martin is relying on designing and developing in the digital domain to accelerate innovation.
Consumer Goods Manufacturers
Lifetime Products Enables Growth
Explore how Lifetime Products expedites time to market
iRobot Product Development
Explore how iRobot, a pioneer in the design and manufacturing of robotic technology, uses an engineering BOM to accelerate product development.
Whirlpool Creates Value
Explore how the company creates customer value through a single source of truth for every product, part and resource throughout the organization.
BRITAX Creates LifeSaving Designs
As manufacturers of strollers, infant carriers, and car seats, BRITAX protects children all over the world.
How to Select the Right PLM Solution in 30-minutes
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What Is the Product Life Cycle?
- How It Works
Product Life Cycle vs. BCG Matrix
Introduction and maturity: special considerations.
- Product Life Cycle FAQs
The Bottom Line
- Small Business
Product Life Cycle Explained: Stage and Examples
Ariel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street.
Investopedia / Xiaojie Liu
The term product life cycle refers to the length of time from when a product is introduced to consumers into the market until it's removed from the shelves. This concept is used by management and by marketing professionals as a factor in deciding when it is appropriate to increase advertising, reduce prices, expand to new markets, or redesign packaging. The process of strategizing ways to continuously support and maintain a product is called product life cycle management .
- A product life cycle is the amount of time a product goes from being introduced into the market until it's taken off the shelves.
- There are four stages in a product's life cycle—introduction, growth, maturity, and decline.
- A company often incurs higher marketing costs when introducing a product to the market but experiences higher sales as product adoption grows.
- Sales stabilize and peak when the product's adoption matures, though competition and obsolescence may cause its decline.
- The concept of product life cycle helps inform business decision-making, from pricing and promotion to expansion or cost-cutting.
Product Life Cycle
How the product life cycle works.
Products, like people, have life cycles. The life cycle of a product is broken into four stages—introduction, growth, maturity , and decline.
A product begins with an idea, and within the confines of modern business, it isn't likely to go further until it undergoes research and development (R&D) and is found to be feasible and potentially profitable. At that point, the product is produced, marketed, and rolled out. Some product life cycle models include product development as a stage, though at this point, the product has not yet been brought to customers.
As mentioned above, there are four generally accepted stages in the life cycle of a product. Here are details about each one.
The introduction phase is the first time customers are introduced to the new product. A company must generally includes a substantial investment in advertising and a marketing campaign focused on making consumers aware of the product and its benefits, especially if it is broadly unknown what the item will do.
During the introduction stage, there is often little-to-no competition for a product, as competitors may just be getting a first look at the new offering. However, companies still often experience negative financial results at this stage as sales tend to be lower, promotional pricing may be low to drive customer engagement, and the sales strategy is still being evaluated.
If the product is successful, it then moves to the growth stage. This is characterized by growing demand , an increase in production, and expansion in its availability. The amount of time spent in the introduction phase before a company's product experiences strong growth will vary from between industries and products.
During the growth phase, the product becomes more popular and recognizable. A company may still choose to invest heavily in advertising if the product faces heavy competition. However, marketing campaigns will likely be geared towards differentiating its product from others as opposed to introducing the goods to the market. A company may also refine its product by improving functionality based on customer feedback.
Financially, the growth period of the product life cycle results in increased sales and higher revenue. As competition begins to offer rival products, competition increases, potentially forcing the company to decrease prices and experience lower margins.
The maturity stage of the product life cycle is the most profitable stage, the time when the costs of producing and marketing decline. With the market saturated with the product, competition now higher than at other stages, and profit margins starting to shrink, some analysts refer to the maturity stage as when sales volume is "maxed out".
Depending on the good, a company may begin deciding how to innovate its product or introduce new ways to capture a larger market presence. This includes getting more feedback from customers, and researching their demographics and their needs.
During the maturity stage, competition is at the highest level. Rival companies have had enough time to introduce competing and improved products, and competition for customers is usually highest. Sales levels stabilize, and a company strives to have its product exist in this maturity stage for as long as possible.
A new product needs to be explained, while a mature product needs to be differentiated.
As the product takes on increased competition as other companies emulate its success, the product may lose market share and begin its decline. Product sales begin to drop due to market saturation and alternative products, and the company may choose to not pursue additional marketing efforts as customers may already have determined whether they are loyal to the company's products or not.
Should a product be entirely retired, the company will stop generating support for it and will entirely phase out marketing endeavors. Alternatively, the company may decide to revamp the product or introduce a next-generation, completely overhauled model. If the upgrade is substantial enough, the company may choose to re-enter the product life cycle by introducing the new version to the market.
The stage of a product's life cycle impacts the way in which it is marketed to consumers. A new product needs to be explained, while a mature product needs to be differentiated from its competitors.
Advantages of Using the Product Life Cycle
The product life cycle better allows marketers and business developers to better understand how each product or brand sits with a company's portfolio. This enables the company to internally shift resources to specific products based on those products' positioning within the product life cycle.
For example, a company may decide to reallocate market staff time to products entering the introduction or growth stages. Alternatively, it may need to invest more cost of labor in engineers or customer service technicians as the product matures.
The product life cycle naturally tends to have a positive impact on economic growth, as it promotes innovation and discourages supporting outdated products. As products move through the life cycle stages, companies that use the product life cycle can realize the need to make their products more effective, safer, efficient, faster, cheaper, or better suited to client needs.
Limitations of Using the Product Life Cycle
Despite its utility for planning and analysis, the product life cycle doesn't pertain to every industry and doesn't work consistently across all products. Consider popular beverage lines whose primary products have been in the maturity stage for decades, while spin-offs or variations of these drinks from the same company have failed.
The product life cycle also may be artificial in industries with legal or trademark restrictions. Consider the new patent term of 20 years from which the application for the patent was filed in the United States. Though a drug may be just entering their growth stage, it may be adversely impacted by competition when its patent ends regardless of which stage it is in.
Another unfortunate side effect of the product life cycle is prospective planned obsolescence. When a product enters the maturity stage, a company may be tempted to begin planning its replacement. This may be the case even if the existing product still holds many benefits for customers and still has a long shelf life. For producers who tend to introduce new products every few years, this may lead to product waste and inefficient use of product development resources.
Notification messages such as Microsoft's alert that Windows 8.1 will sunset on January 2023 is an example of decline. Due to obsolescence of the operating system, Microsoft is choosing to no longer support the product and instead focus resources on newer technologies.
A similar analytical tool to determine the market positioning of a product is the Boston Consulting Group (BCG) Matrix . This four-square table defines products based on their market growth and market share:
- "Stars" are products with high market growth and high market share.
- "Cash cows" are products with low market growth and high market share.
- "Question marks" are products with high market growth and low market share.
- "Dogs" are products with low market growth and low market share.
Although there is no direct relationship between the matrix and the product life cycle concept, both analyze a product's market growth and saturation. However, the BCG Matrix does not traditionally communicate the direction in which a product will move. For example, a product that has entered the maturity stage of the product life cycle will likely experience decline next; the BCG Matrix does not communicate this product flow in its visual depiction.
Companies that have a good handle on all four stages can increase profitability and maximize their returns . Those that aren't able to may experience an increase in their marketing and production costs, ultimately leading to the limited shelf life for their product(s).
Back in 1965, Theodore Levitt, a marketing professor, wrote in the Harvard Business Review that the innovator is the one with the most to lose because so many truly new products fail at the first phase of their life cycle—the introductory stage. The failure comes only after the investment of substantial money and time into research, development, and production. This fact prevents many companies from even trying anything really new. Instead, he said, they wait for someone else to succeed and then clone the success.
To cite an established and still-thriving industry, television program distribution has related products in all stages of the product life cycle. OLED TVs are in the mature phase, programming-on-demand is in the growth stage, DVDs are in decline, and the videocassette is extinct.
Many of the most successful products on earth are suspended in the mature stage for as long as possible, undergoing minor updates and redesigns to keep them differentiated. Examples include Apple computers and iPhones, Ford's best-selling trucks, and Starbucks' coffee—all of which undergo minor changes accompanied by marketing efforts—are designed to keep them feeling unique and special in the eyes of consumers.
Examples of Product Life Cycles
Many brands that were American icons have dwindled and died. Better management of product life cycles might have saved some of them—or perhaps their time had just come.
Oldsmobile began producing cars in 1897. After merging with General Motors in 1908, the company used the first V-8 engine in 1916. By 1935, the one millionth Oldsmobile had been built. In 1984, Oldsmobile sales peaked, selling more cars in that year than any other year. By 2000, General Motors announced it would phase out the automobile and, on April 29th, 2004, the last Oldsmobile was built.
In 1905, Frank Winfield Woolworth incorporated F.W. Woolworth Co., a general merchandise retail store. By 1929, Woolworth had about 2,250 outlet stores across the United States and Britain, Decades later, due to increased competition from other discount retailors, Woolworth closed the last of its variety stores in the United States in 1997 to increasingly focus on sporting goods.
On April 23, 1985, Coca-Cola announced a new formula for its popular beverage, referred to as "new Coke." Coca-Cola's market-share lead had been decreasing over the past 15 years, and the company decided to launch a new recipe in hopes of reinvigorating product interest. After its launch, Coca-Cola's phone line began receiving 1,500 calls per day, many of which were to complain about the change. Protest groups recruited 100,000 individuals to support their cause of bringing "old" Coke back.
A stunning 79 days after its launch, "new Coke's" full product life cycle was complete. Though the product didn't experience much growth or maturity, its introduction to the market was met with heavy protest. Less than three months after it announced its new recipe, Coca-Cola announced it would revert its product back to the original recipe.
What Are the Stages of the Product Life Cycle?
The product life cycle is defined as four distinct stages: product introduction, growth, maturity, and decline. The amount of time spent in each stage will vary from product to product, and different companies have different strategic approaches to transitioning from one phase to the next.
What Are Product Life Cycle Strategies?
Depending on the stage a product is in, a company may adopt different strategies along the product life cycle. For example, a company is more likely to incur heavy marketing and R&D costs in the introduction stage. As the product becomes more mature, companies may then turn to improving product quality, entering new segments, or increasing distribution channels. Companies also strategically approach divesting from product lines including the sale of divisions or discontinuation of goods.
What Is Product Life Cycle Management?
Product life cycle management is the act of overseeing a product's performance over the course of its life. Throughout the different stages of product life cycle, a company enacts strategies and changes based on how the market is receiving a good.
Why Is Product Life Cycle Important?
Product life cycle is important because it informs management of how its product is performing and what strategic approaches it may take. By being informed of which stage its product(s) are in, a company can change how it spends resources, which products to push, how to allocate staff time, and what innovations they want to research next.
Which Factors Impact a Product's Life Cycle?
Countless factors can affect how a product performs and where it lies within the product life cycle. In general, the product life cycle is heavily impacted by market adoption, ease of competitive entry, rate of industry innovation, and changes to consumer preferences. If it is easier for competitors to enter markets, consumers change their mind frequently about the goods they consume or the market becomes quickly saturated. Then, products are more likely to have shorter lives throughout a product life cycle.
Broadly speaking, almost every product sold undergoes the product life cycle. This cycle of market introduction, growth, maturity, and decline may vary from product to product—or industry to industry. However, this cycle informs a company of how to best utilize its resources, what the future outlook of their product is, and how to strategically plan for bringing new products to market.
Food and Drug Administration. " Frequently Asked Questions on Patents and Exclusivity ."
Microsoft. " Windows 8 and Windows 8.1 End of Support and Office ."
Harvard Business Review. " Exploit the Product Life Cycle ."
Oldsmobile Club of America. " History of Oldsmobile ."
Britannica. " Woolworth Co. "
The Coca-Cola Company. " The Story of One of the Most Memorable Marketing Blunders Ever ."
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Exploit the Product Life Cycle
- Theodore Levitt
To convert a tantalizing concept into a managerial instrument of competitive power…
Most alert and thoughtful senior marketing executives are by now familiar with the concept of the product life cycle. Even a handful of uniquely cosmopolitan and up-to-date corporate presidents have familiarized themselves with this tantalizing concept. Yet a recent survey I took of such executives found none who used the concept in any strategic way whatever, and pitifully few who used it in any kind of tactical way. It has remained—as have so many fascinating theories in economics, physics, and sex—a remarkably durable but almost totally unemployed and seemingly unemployable piece of professional baggage whose presence in the rhetoric of professional discussions adds a much coveted but apparently unattainable legitimacy to the idea that marketing management is somehow a profession. There is, furthermore, a persistent feeling that the life cycle concept adds luster and believability to the insistent claim in certain circles that marketing is close to being some sort of science. 1
The concept of the product life cycle is today at about the stage that the Copernican view of the universe was 300 years ago: a lot of people knew about it, but hardly anybody seemed to use it in any effective or productive way.
Now that so many people know and in some fashion understand the product life cycle, it seems time to put it to work. The object of this article is to suggest some ways of using the concept effectively and of turning the knowledge of its existence into a managerial instrument of competitive power.
Since the concept has been presented somewhat differently by different authors and for different audiences, it is useful to review it briefly here so that every reader has the same background for the discussion which follows later in this article.
The life story of most successful products is a history of their passing through certain recognizable stages. These are shown in Exhibit I and occur in the following order:
Stage 1. Market Development: This is when a new product is first brought to market, before there is a proved demand for it, and often before it has been fully proved out technically in all respects. Sales are low and creep along slowly.
Stage 2. Market Growth: Demand begins to accelerate and the size of the total market expands rapidly. It might also be called the “Takeoff Stage.”
Stage 3. Market Maturity: Demand levels off and grows, for the most part, only at the replacement and new family-formation rate.
Stage 4. Market Decline: The product begins to lose consumer appeal and sales drift downward, such as when buggy whips lost out with the advent of automobiles and when silk lost out to nylon.
See more HBR charts in Data & Visuals
Three operating questions will quickly occur to the alert executive:
- Given a proposed new product or service, how and to what extent can the shape and duration of each stage be predicted?
- Given an existing product, how can one determine what stage it is in?
- Given all this knowledge, how can it be effectively used?
A brief further elaboration of each stage will be useful before dealing with these questions in detail.
Bringing a new product to market is fraught with unknowns, uncertainties, and frequently unknowable risks. Generally, demand has to be “created” during the product’s initial market development stage . How long this takes depends on the product’s complexity, its degree of newness, its fit into consumer needs, and the presence of competitive substitutes of one form or another. A proved cancer cure would require virtually no market development; it would get immediate massive support. An alleged superior substitute for the lost-wax process of sculpture casting would take lots longer.
While it has been demonstrated time after time that properly customer-oriented new product development is one of the primary conditions of sales and profit growth, what have been demonstrated even more conclusively are the ravaging costs and frequent fatalities associated with launching new products. Nothing seems to take more time, cost more money, involve more pitfalls, cause more anguish, or break more careers than do sincere and well-conceived new product programs. The fact is, most new products don’t have any sort of classical life cycle curve at all. They have instead from the very outset an infinitely descending curve. The product not only doesn’t get off the ground; it goes quickly under ground—six feet under.
It is little wonder, therefore, that some disillusioned and badly burned companies have recently adopted a more conservative policy—what I call the “used apple policy.” Instead of aspiring to be the first company to see and seize an opportunity, they systematically avoid being first. They let others take the first bite of the supposedly juicy apple that tantalizes them. They let others do the pioneering. If the idea works, they quickly follow suit. They say, in effect, “The trouble with being a pioneer is that the pioneers get killed by the Indians.” Hence, they say (thoroughly mixing their metaphors), “We don’t have to get the first bite of the apple. The second one is good enough.” They are willing to eat off a used apple, but they try to be alert enough to make sure it is only slightly used—that they at least get the second big bite, not the tenth skimpy one.
The usual characteristic of a successful new product is a gradual rise in its sales curve during the market development stage. At some point in this rise a marked increase in consumer demand occurs and sales take off. The boom is on. This is the beginning of Stage 2—the market growth stage . At this point potential competitors who have been watching developments during Stage I jump into the fray. The first ones to get in are generally those with an exceptionally effective “used apple policy.” Some enter the market with carbon-copies of the originator’s product. Others make functional and design improvements. And at this point product and brand differentiation begin to develop.
The ensuing fight for the consumer’s patronage poses to the originating producer an entirely new set of problems. Instead of seeking ways of getting consumers to try the product, the originator now faces the more compelling problem of getting them to prefer his brand . This generally requires important changes in marketing strategies and methods. But the policies and tactics now adopted will be neither freely the sole choice of the originating producer, nor as experimental as they might have been during Stage I. The presence of competitors both dictates and limits what can easily be tried—such as, for example, testing what is the best price level or the best channel of distribution.
As the rate of consumer acceptance accelerates, it generally becomes increasingly easy to open new distribution channels and retail outlets. The consequent filling of distribution pipelines generally causes the entire industry’s factory sales to rise more rapidly than store sales. This creates an exaggerated impression of profit opportunity which, in turn, attracts more competitors. Some of these will begin to charge lower prices because of later advances in technology, production shortcuts, the need to take lower margins in order to get distribution, and the like. All this in time inescapably moves the industry to the threshold of a new stage of competition.
This new stage is the market maturity stage . The first sign of its advent is evidence of market saturation. This means that most consumer companies or households that are sales prospects will be owning or using the product. Sales now grow about on a par with population. No more distribution pipelines need be filled. Price competition now becomes intense. Competitive attempts to achieve and hold brand preference now involve making finer and finer differentiations in the product, in customer services, and in the promotional practices and claims made for the product.
Typically, the market maturity stage forces the producer to concentrate on holding his distribution outlets, retaining his shelf space, and, in the end, trying to secure even more intensive distribution. Whereas during the market development stage the originator depended heavily on the positive efforts of his retailers and distributors to help sell his product, retailers and distributors will now frequently have been reduced largely to being merchandise-displayers and order-takers. In the case of branded products in particular, the originator must now, more than ever, communicate directly with the consumer.
The market maturity stage typically calls for a new kind of emphasis on competing more effectively. The originator is increasingly forced to appeal to the consumer on the basis of price, marginal product differences, or both. Depending on the product, services and deals offered in connection with it are often the clearest and most effective forms of differentiation. Beyond these, there will be attempts to create and promote fine product distinctions through packaging and advertising, and to appeal to special market segments. The market maturity stage can be passed through rapidly, as in the case of most women’s fashion fads, or it can persist for generations with per capita consumption neither rising nor falling, as in the case of such staples as men’s shoes and industrial fasteners. Or maturity can persist, but in a state of gradual but steady per capita decline, as in the case of beer and steel.
When market maturity tapers off and consequently comes to an end, the product enters Stage 4— market decline . In all cases of maturity and decline the industry is transformed. Few companies are able to weather the competitive storm. As demand declines, the overcapacity that was already apparent during the period of maturity now becomes endemic. Some producers see the handwriting implacably on the wall but feel that with proper management and cunning they will be one of the survivors after the industry-wide deluge they so clearly foresee. To hasten their competitors’ eclipse directly, or to frighten them into early voluntary withdrawal from the industry, they initiate a variety of aggressively depressive tactics, propose mergers or buy-outs, and generally engage in activities that make life thanklessly burdensome for all firms, and make death the inevitable consequence for most of them. A few companies do indeed weather the storm, sustaining life through the constant descent that now clearly characterizes the industry. Production gets concentrated into fewer hands. Prices and margins get depressed. Consumers get bored. The only cases where there is any relief from this boredom and gradual euthanasia are where styling and fashion play some constantly revivifying role.
Knowing that the lives of successful products and services are generally characterized by something like the pattern illustrated in Exhibit I can become the basis for important life-giving policies and practices. One of the greatest values of the life cycle concept is for managers about to launch a new product. The first step for them is to try to foresee the profile of the proposed product’s cycle.
As with so many things in business, and perhaps uniquely in marketing, it is almost impossible to make universally useful suggestions regarding how to manage one’s affairs. It is certainly particularly difficult to provide widely useful advice on how to foresee or predict the slope and duration of a product’s life. Indeed, it is precisely because so little specific day-to-day guidance is possible in anything, and because no checklist has ever by itself been very useful to anybody for very long, that business management will probably never be a science—always an art—and will pay exceptional rewards to managers with rare talent, enormous energy, iron nerve, great capacity for assuming responsibility and bearing accountability.
But this does not mean that useful efforts cannot or should not be made to try to foresee the slope and duration of a new product’s life. Time spent in attempting this kind of foresight not only helps assure that a more rational approach is brought to product planning and merchandising; also, as will be shown later, it can help create valuable lead time for important strategic and tactical moves after the product is brought to market. Specifically, it can be a great help in developing an orderly series of competitive moves, in expanding or stretching out the life of a product, in maintaining a clean product line, and in purposely phasing out dying and costly old products. 2
As pointed out above, the length and slope of the market development stage depend on the product’s complexity, its degree of newness, its fit into customer needs, and the presence of competitive substitutes.
The more unique or distinctive the newness of the product, the longer it generally takes to get it successfully off the ground. The world does not automatically beat a path to the man with the better mousetrap. 3 The world has to be told, coddled, enticed, romanced, and even bribed (as with, for example, coupons, samples, free application aids, and the like). When the product’s newness is distinctive and the job it is designed to do is unique, the public will generally be less quick to perceive it as something it clearly needs or wants.
This makes life particularly difficult for the innovator. He will have more than the usual difficulties of identifying those characteristics of his product and those supporting communications themes or devices which imply value to the consumer. As a consequence, the more distinctive the newness, the greater the risk of failure resulting either from insufficient working capital to sustain a long and frustrating period of creating enough solvent customers to make the proposition pay, or from the inability to convince investors and bankers that they should put up more money.
In any particular situation the more people who will be involved in making a single purchasing decision for a new product, the more drawn out Stage I will be. Thus in the highly fragmented construction materials industry, for example, success takes an exceptionally long time to catch hold; and having once caught hold, it tends to hold tenaciously for a long time—often too long. On the other hand, fashion items clearly catch on fastest and last shortest. But because fashion is so powerful, recently some companies in what often seem the least fashion influenced of industries (machine tools, for example) have shortened the market development stage by introducing elements of design and packaging fashion to their products.
What factors tend to prolong the market development stage and therefore raise the risk of failure? The more complex the product, the more distinctive its newness, the less influenced by fashion, the greater the number of persons influencing a single buying decision, the more costly, and the greater the required shift in the customer’s usual way of doing things—these are the conditions most likely to slow things up and create problems.
…vs. Success Chances.
But problems also create opportunities to control the forces arrayed against new product success. For example, the newer the product, the more important it becomes for the customers to have a favorable first experience with it. Newness creates a certain special visibility for the product, with a certain number of people standing on the sidelines to see how the first customers get on with it. If their first experience is unfavorable in some crucial way, this may have repercussions far out of proportion to the actual extent of the underfulfillment of the customers’ expectations. But a favorable first experience or application will, for the same reason, get a lot of disproportionately favorable publicity.
The possibility of exaggerated disillusionment with a poor first experience can raise vital questions regarding the appropriate channels of distribution for a new product. On the one hand, getting the product successfully launched may require having—as in the case of, say, the early days of home washing machines—many retailers who can give consumers considerable help in the product’s correct utilization and thus help assure a favorable first experience for those buyers. On the other hand, channels that provide this kind of help (such as small neighborhood appliance stores in the case of washing machines) during the market development stage may not be the ones best able to merchandise the product most successfully later when help in creating and personally reassuring customers is less important than wide product distribution. To the extent that channel decisions during this first stage sacrifice some of the requirements of the market development stage to some of the requirements of later stages, the rate of the product’s acceptance by consumers at the outset may be delayed.
In entering the market development stage, pricing decisions are often particularly hard for the producer to make. Should he set an initially high price to recoup his investment quickly—i.e., “skim the cream”—or should he set a low price to discourage potential competition—i.e., “exclusion”? The answer depends on the innovator’s estimate of the probable length of the product’s life cycle, the degree of patent protection the product is likely to enjoy, the amount of capital needed to get the product off the ground, the elasticity of demand during the early life of the product, and many other factors. The decision that is finally made may affect not just the rate at which the product catches on at the beginning, but even the duration of its total life. Thus some products that are priced too low at the outset (particularly fashion goods, such as the chemise, or sack, a few years ago) may catch on so quickly that they become short-lived fads. A slower rate of consumer acceptance might often extend their life cycles and raise the total profits they yield.
The actual slope, or rate of the growth stage, depends on some of the same things as does success or failure in Stage I. But the extent to which patent exclusiveness can play a critical role is sometimes inexplicably forgotten. More frequently than one might offhand expect, holders of strong patent positions fail to recognize either the market-development virtue of making their patents available to competitors or the market-destroying possibilities of failing to control more effectively their competitors’ use of such products.
Generally speaking, the more producers there are of a new product, the more effort goes into developing a market for it. The net result is very likely to be more rapid and steeper growth of the total market. The originator’s market share may fall, but his total sales and profits may rise more rapidly. Certainly this has been the case in recent years of color television; RCA’s eagerness to make its tubes available to competitors reflects its recognition of the power of numbers over the power of monopoly.
On the other hand, the failure to set and enforce appropriate quality standards in the early days of polystyrene and polyethylene drinking glasses and cups produced such sloppy, inferior goods that it took years to recover the consumer’s confidence and revive the growth pattern.
But to try to see in advance what a product’s growth pattern might be is not very useful if one fails to distinguish between the industry pattern and the pattern of the single firm—for its particular brand. The industry’s cycle will almost certainly be different from the cycle of individual firms. Moreover, the life cycle of a given product may be different for different companies in the same industry at the same point in time, and it certainly affects different companies in the same industry differently.
The company with most at stake is the original producer—the company that launches an entirely new product. This company generally bears most of the costs, the tribulations, and certainly the risks of developing both the product and the market.
Once the innovator demonstrates during the market development stage that a solid demand exists, armies of imitators rush in to capitalize on and help create the boom that becomes the market growth, or takeoff, stage. As a result, while exceedingly rapid growth will now characterize the product’s total demand, for the originating company its growth stage paradoxically now becomes truncated. It has to share the boom with new competitors. Hence the potential rate of acceleration of its own takeoff is diminished and, indeed, may actually fail to last as long as the industry’s. This occurs not only because there are so many competitors, but, as we noted earlier, also because competitors often come in with product improvements and lower prices. While these developments generally help keep the market expanding, they greatly restrict the originating company’s rate of growth and the length of its takeoff stage.
All this can be illustrated by comparing the curve in Exhibit II with that in Exhibit I, which shows the life cycle for a product. During Stage I in Exhibit I there is generally only one company—the originator—even though the whole exhibit represents the entire industry. In Stage I the originator is the entire industry. But by Stage 2 he shares the industry with many competitors. Hence, while Exhibit I is an industry curve, its Stage I represents only a single company’s sales.
Exhibit II shows the life cycle of the originator’s brand—his own sales curve, not that of the industry. It can be seen that between Year 1 and Year 2 his sales are rising about as rapidly as the industry’s. But after Year 2, while industry sales in Exhibit I are still in vigorous expansion, the originator’s sales curve in Exhibit II has begun to slow its ascent. He is now sharing the boom with a great many competitors, some of whom are much better positioned now than he is.
In the process the originator may begin to encounter a serious squeeze on his profit margins. Exhibit III, which traces the profits per unit of the originator’s sales, illustrates this point. During the market development stage his per-unit profits are negative. Sales volume is too low at existing prices. However, during the market growth stage unit profits boom as output rises and unit production costs fall. Total profits rise enormously. It is the presence of such lush profits that both attracts and ultimately destroys competitors.
Consequently, while (1) industry sales may still be rising nicely (as at the Year 3 point in Exhibit I), and (2) while the originating company’s sales may at the same point of time have begun to slow down noticeably (as in Exhibit II), and (3) while at this point the originator’s total profits may still be rising because his volume of sales is huge and on a slight upward trend, his profits per unit will often have taken a drastic downward course. Indeed, they will often have done so long before the sales curve flattened. They will have topped out and begun to decline perhaps around the Year 2 point (as in Exhibit III). By the time the originator’s sales begin to flatten out (as at the Year 3 point in Exhibit II), unit profits may actually be approaching zero (as in Exhibit III).
At this point more competitors are in the industry, the rate of industry demand growth has slowed somewhat, and competitors are cutting prices. Some of them do this in order to get business, and others do it because their costs are lower owing to the fact that their equipment is more modern and productive.
The industry’s Stage 3—maturity—generally lasts as long as there are no important competitive substitutes (such as, for example, aluminum for steel in “tin” cans), no drastic shifts in influential value systems (such as the end of female modesty in the 1920’s and the consequent destruction of the market for veils), no major changes in dominant fashions (such as the hour-glass female form and the end of waist cinchers), no changes in the demand for primary products which use the product in question (such as the effect of the decline of new rail road expansion on the demand for railroad ties), and no changes either in the rate of obsolescence of the product or in the character or introductory rate of product modifications.
Maturity can last for a long time, or it can actually never be attained. Fashion goods and fad items sometimes surge to sudden heights, hesitate momentarily at an uneasy peak, and then quickly drop off into total obscurity.
The various characteristics of the stages described above will help one to recognize the stage a particular product occupies at any given time. But hindsight will always be more accurate than current sight. Perhaps the best way of seeing one’s current stage is to try to foresee the next stage and work backwards. This approach has several virtues:
- It forces one to look ahead, constantly to try to reforesee his future and competitive environment. This will have its own rewards. As Charles F. Kettering, perhaps the last of Detroit’s primitive inventors and probably the greatest of all its inventors, was fond of saying, “We should all be concerned about the future because that’s where we’ll have to spend the rest of our lives.” By looking at the future one can better assess the state of the present.
- Looking ahead gives more perspective to the present than looking at the present alone. Most people know more about the present than is good for them. It is neither healthy nor helpful to know the present too well, for our perception of the present is too often too heavily distorted by the urgent pressures of day-to-day events. To know where the present is in the continuum of competitive time and events, it often makes more sense to try to know what the future will bring, and when it will bring it, than to try to know what the present itself actually contains.
- Finally, the value of knowing what stage a product occupies at any given time resides only in the way that fact is used. But its use is always in the future. Hence a prediction of the future environment in which the information will be used is often more functional for the effective capitalization on knowledge about the present than knowledge about the present itself.
The life cycle concept can be effectively employed in the strategy of both existing and new products. For purposes of continuity and clarity, the remainder of this article will describe some of the uses of the concept from the early stages of new product planning through the later stages of keeping the product profitably alive. The chief discussion will focus on what I call a policy of “life extension” or “market stretching.” 4
To the extent that Exhibits II and III outline the classical patterns of successful new products, one of the constant aims of the originating producer should be to avoid the severe discipline imposed by an early profit squeeze in the market growth stage, and to avoid the wear and waste so typical of the market maturity stage. Hence the following proposition would seem reasonable: when a company develops a new product or service, it should try to plan at the very outset a series of actions to be employed at various subsequent stages in the product’s existence so that its sales and profit curves are constantly sustained rather than following their usual declining slope.
In other words, advance planning should be directed at extending, or stretching out, the life of the product. It is this idea of planning in advance of the actual launching of a new product to take specific actions later in its life cycle—actions designed to sustain its growth and profitability—which appears to have great potential as an instrument of long-term product strategy.
How this might work for a product can be illustrated by looking at the history of nylon. The way in which nylon’s booming sales life has been repeatedly and systematically extended and stretched can serve as a model for other products. What has happened in nylon may not have been purposely planned that way at the outset, but the results are quite as if they had been planned.
The first nylon end-uses were primarily military—parachutes, thread, rope. This was followed by nylon’s entry into the circular knit market and its consequent domination of the women’s hosiery business. Here it developed the kind of steadily rising growth and profit curves that every executive dreams about. After some years these curves began to flatten out. But before they flattened very noticeably, Du Pont had already developed measures designed to revitalize sales and profits. It did several things, each of which is demonstrated graphically in Exhibit IV. This exhibit and the explanation which follows take some liberties with the actual facts of the nylon situation in order to highlight the points I wish to make. But they take no liberties with the essential requisites of product strategy.
Point A of Exhibit IV shows the hypothetical point at which the nylon curve (dominated at this point by hosiery) flattened out. If nothing further had been done, the sales curve would have continued along the flattened pace indicated by the dotted line at Point A. This is also the hypothetical point at which the first systematic effort was made to extend the product’s life. Du Pont, in effect, took certain “actions” which pushed hosiery sales upward rather than continuing the path implied by the dotted line extension of the curve at Point A. At Point A action #1 pushed an otherwise flat curve upward.
At points B, C, and D still other new sales and profit expansion “actions” (#2, #3, #4, and so forth) were taken. What were these actions? Or, more usefully, what was their strategic content? What did they try to do? They involved strategies that tried to expand sales via four different routes:
- Promoting more frequent usage of the product among current users.
- Developing more varied usage of the product among current users.
- Creating new users for the product by expanding the market.
- Finding new uses for the basic material.
Frequent Usage. Du Pont studies had shown an increasing trend toward “bareleggedness” among women. This was coincident with the trend toward more casual living and a declining perception among teenagers of what might be called the “social necessity” of wearing stockings. In the light of those findings, one approach to propping up the flattening sales curves might have been to reiterate the social necessity of wearing stockings at all times. That would have been a sales-building action, though obviously difficult and exceedingly costly. But it could clearly have fulfilled the strategy of promoting more frequent usage among current users as a means of extending the product’s life.
Varied Usage. For Du Pont, this strategy took the form of an attempt to promote the “fashion smartness” of tinted hose and later of patterned and highly textured hosiery. The idea was to raise each woman’s inventory of hosiery by obsolescing the perception of hosiery as a fashion staple that came only in a narrow range of browns and pinks. Hosiery was to be converted from a “neutral” accessory to a central ingredient of fashion, with a “suitable” tint and pattern for each outer garment in the lady’s wardrobe.
This not only would raise sales by expanding women’s hosiery wardrobes and stores’ inventories, but would open the door for annual tint and pattern obsolescence much the same as there is an annual color obsolescence in outer garments. Beyond that, the use of color and pattern to focus attention on the leg would help arrest the decline of the leg as an element of sex appeal—a trend which some researchers had discerned and which, they claimed, damaged hosiery sales.
New Users. Creating new users for nylon hosiery might conceivably have taken the form of attempting to legitimize the necessity of wearing hosiery among early teenagers and subteenagers. Advertising, public relations, and merchandising of youthful social and style leaders would have been called for.
New Uses. For nylon, this tactic has had many triumphs—from varied types of hosiery, such as stretch stockings and stretch socks, to new uses, such as rugs, tires, bearings, and so forth. Indeed, if there had been no further product innovations designed to create new uses for nylon after the original military, miscellaneous, and circular knit uses, nylon consumption in 1962 would have reached a saturation level at approximately 50 million pounds annually.
Instead, in 1962 consumption exceeded 500 million pounds. Exhibit V demonstrates how the continuous development of new uses for the basic material constantly produced new waves of sales. The exhibit shows that in spite of the growth of the women’s stocking market, the cumulative result of the military, circular knit, and miscellaneous grouping would have been a flattened sales curve by 1958. (Nylon’s entry into the broadwoven market in 1944 substantially raised sales above what they would have been. Even so, the sales of broadwoven, circular knit, and military and miscellaneous groupings peaked in 1957.)
Had it not been for the addition of new uses for the same basic material—such as warp knits in 1945, tire cord in 1948, textured yarns in 1955, carpet yarns in 1959, and so forth—nylon would not have had the spectacularly rising consumption curve it has so clearly had. At various stages it would have exhausted its existing markets or been forced into decline by competing materials. The systematic search for new uses for the basic (and improved) material extended and stretched the product’s life.
Few companies seem to employ in any systematic or planned way the four product lifestretching steps described above. Yet the successful application of this kind of stretching strategy has characterized the history of such well-known products as General Foods Corporation’s “Jell-O” and Minnesota Mining & Manufacturing Co.’s “Scotch” tape. 5
Jell-O was a pioneer in the easy-to-prepare gelatin dessert field. The soundness of the product concept and the excellence of its early marketing activities gave it beautifully ascending sales and profit curves almost from the start. But after some years these curves predictably began to flatten out. Scotch tape was also a pioneer product in its field. Once perfected, the product gained rapid market acceptance because of a sound product concept and an aggressive sales organization. But, again, in time the sales and profit curves began to flatten out. Before they flattened out very much, however, 3M, like General Foods, had already developed measures to sustain the early pace of sales and profits.
Both of these companies extended their products’ lives by, in effect, doing all four of the things Du Pont did with nylon—creating more frequent usage among current users, more varied usage among current users, new users, and new uses for the basic “materials”:
- The General Foods approach to increasing the frequency of serving Jell-O among current users was, essentially, to increase the number of flavors. From Don Wilson’s famous “six delicious flavors,” Jell-O moved up to over a dozen. On the other hand, 3M helped raise sales among its current users by developing a variety of handy Scotch tape dispensers which made the product easier to use.
- Creation of more varied usage of Jell-O among current dessert users involved its promotion as a base for salads and the facilitation of this usage by the development of a variety of vegetable flavored Jell-O’s. Similarly, 3M developed a line of colored, patterned, waterproof, invisible, and write-on Scotch tapes which have enjoyed considerable success as sealing and decorating items for holiday and gift wrapping.
- Jell-O sought to create new users by pinpointing people who could not accept Jell-O as a popular dessert or salad product. Hence during the Metrecal boom Jell-O employed an advertising theme that successfully affixed to the product a fashion-oriented weight control appeal. Similarly, 3M introduced “Rocket” tape, a product much like Scotch tape but lower in price, and also developed a line of commercial cellophane tapes of various widths, lengths, and strengths. These actions broadened product use in commercial and industrial markets.
- Both Jell-O and 3M have sought out new uses for the basic material. It is known, for example, that women consumers use powdered gelatin dissolved in liquids as a means of strengthening their fingernails. Both men and women use it in the same way as a bone-building agent. Hence Jell-O introduced a “completely flavorless” Jell-O for just these purposes. 3M has also developed new uses for the basic material—from “doublecoated” tape (adhesive on both sides) which competes with ordinary liquid adhesives, to the reflecting tape which festoons countless automobile bumpers, to marker strips which compete with paint.
The existence of the kinds of product life cycles illustrated in Exhibits I and II and the unit profit cycle in Exhibit III suggests that there may be considerable value for people involved in new product work to begin planning for the extension of the lives of their products even before these products are formally launched. To plan for new life-extending infusions of effort (as in Exhibit IV) at this pre-introduction stage can be extremely useful in three profoundly important ways.
1. It generates an active rather than a reactive product policy.
It systematically structures a company’s long-term marketing and product development efforts in advance, rather than each effort or activity being merely a stop-gap response to the urgent pressures of repeated competitive thrusts and declining profits. The life-extension view of product policy enforces thinking and planning ahead—thinking in some systematic way about the moves likely to be made by potential competitors, about possible changes in consumer reactions to the product, and the required selling activities which best take advantage of these conditional events.
2. It lays out a long-term plan designed to infuse new life into the product at the right time, with the right degree of care, and with the right amount of effort.
Many activities designed to raise the sales and profits of existing products or materials are often undertaken without regard to their relationship to each other or to timing—the optimum point of consumer readiness for such activities or the point of optimum competitive effectiveness. Careful advance planning, long before the need for such activity arises, can help assure that the timing, the care, and the efforts are appropriate to the situation.
For example, it appears extremely doubtful that the boom in women’s hair coloring and hair tinting products would have been as spectacular if vigorous efforts to sell these products had preceded the boom in hair sprays and chemical hair fixers. The latter helped create a powerful consumer consciousness of hair fashions because they made it relatively easy to create and wear fashionable hair styles. Once it became easy for women to have fashionable hair styles, the resulting fashion consciousness helped open the door for hair colors and tints. It could not have happened the other way around, with colors and tints first creating fashion consciousness and thus raising the sales of sprays and fixers. Because understanding the reason for this precise order of events is essential for appreciating the importance of early pre-introduction life-extension planning, it is useful to go into a bit of detail. Consider:
For women, setting their hair has been a perennial problem for centuries. First, the length and treatment of their hair is one of the most obvious ways in which they distinguish themselves from men. Hence to be attractive in that distinction becomes crucial. Second, hair frames and highlights the face, much like an attractive wooden border frames and highlights a beautiful painting. Thus hair styling is an important element in accentuating the appearance of a woman’s facial features. Third, since the hair is long and soft, it is hard to hold in an attractive arrangement. It gets mussed in sleep, wind, damp weather, sporting activities, and so forth.
Therefore, the effective arrangement of a woman’s hair is understandably her first priority in hair care. An unkempt brunette would gain nothing from making herself into a blond. Indeed, in a country where blonds are in the minority, the switch from being an unkempt brunette to being an unkempt blond would simply draw attention to her sloppiness. But once the problem of arrangement became easily “solved” by sprays and fixers, colors and tints could become big business, especially among women whose hair was beginning to turn gray.
The same order of priorities applies in industrial products. For example, it seems quite inconceivable that many manufacturing plants would easily have accepted the replacement of the old single-spindle, constantly man-tended screw machine by a computerized tape-tended, multiple-spindle machine. The mechanical tending of the multiple-spindle machine was a necessary intermediate step, if for no other reason than that it required a lesser work-flow change, and certainly a lesser conceptual leap for the companies and the machine-tending workers involved.
For Jell-O, it is unlikely that vegetable flavors would have been very successful before the idea of gelatin as a salad base had been pretty well accepted. Similarly, the promotion of colored and patterned Scotch tape as a gift and decorative seal might not have been as successful if department stores had not, as the result of their drive to compete more effectively with mass merchandisers by offering more customer services, previously demonstrated to the consumer what could be done to wrap and decorate gifts.
3. Perhaps the most important benefit of engaging in advance, pre-introduction planning for sales-extending, market-stretching activities later in the product’s life is that this practice forces a company to adopt a wider view of the nature of the product it is dealing with.
Indeed, it may even force the adoption of a wider view of the company’s business. Take the case of Jell-O. What is its product? Over the years Jell-O has become the brand umbrella for a wide range of dessert products, including cornstarch-base puddings, pie fillings, and the new “Whip’n Chill,” a light dessert product similar to a Bavarian Creme or French Mousse. On the basis of these products, it might be said that the Jell-O Division of General Foods is in the “dessert technology” business.
In the case of tape, perhaps 3M has gone even further in this technological approach to its business. It has a particular expertise (technology) on which it has built a constantly expanding business. This expertise can be said to be that of bonding things (adhesives in the case of Scotch tape) to other things, particularly to thin materials. Hence we see 3M developing scores of profitable items, including electronic recording tape (bonding electron-sensitive materials to tape), and “Thermo-Fax” duplicating equipment and supplies (bonding heat reactive materials to paper).
For companies interested in continued growth and profits, successful new product strategy should be viewed as a planned totality that looks ahead over some years. For its own good, new product strategy should try to predict in some measure the likelihood, character, and timing of competitive and market events. While prediction is always hazardous and seldom very accurate, it is undoubtedly far better than not trying to predict at all. In fact, every product strategy and every business decision inescapably involves making a prediction about the future, about the market, and about competitors. To be more systematically aware of the predictions one is making so that one acts on them in an offensive rather than a defensive or reactive fashion—this is the real virtue of preplanning for market stretching and product life extension. The result will be a product strategy-that includes some sort of plan for a timed sequence of conditional moves .
Even before entering the market development stage, the originator should make a judgment regarding the probable length of the product’s normal life, taking into account the possibilities of expanding its uses and users. This judgment will also help determine many things—for example, whether to price the product on a skimming or a penetration basis, or what kind of relationship the company should develop with its resellers.
These considerations are important because at each stage in a product’s life cycle each management decision must consider the competitive requirements of the next stage. Thus a decision to establish a strong branding policy during the market growth stage might help to insulate the brand against strong price competition later; a decision to establish a policy of “protected” dealers in the market development stage might facilitate point-of-sale promotions during the market growth state, and so on. In short, having a clear idea of future product development possibilities and market development opportunities should reduce the likelihood of becoming locked into forms of merchandising that might possibly prove undesirable.
This kind of advance thinking about new product strategy helps management avoid other pitfalls. For instance, advertising campaigns that look successful from a short-term view may hurt in the next stage of the life cycle. Thus at the outset Metrecal advertising used a strong medical theme. Sales boomed until imitative competitors successfully emphasized fashionable slimness. Metrecal had projected itself as the dietary for the overweight consumer, an image that proved far less appealing than that of being the dietary for people who were fashion-smart. But Metrecal’s original appeal had been so strong and so well made that it was a formidable task later on to change people’s impressions about the product. Obviously, with more careful long-range planning at the outset, a product’s image can be more carefully positioned and advertising can have more clearly defined objectives.
Recognizing the importance of an orderly series of steps in the introduction of sales-building “actions” for new products should be a central ingredient of long-term product planning. A carefully preplanned program for market expansion, even before a new product is introduced, can have powerful virtues. The establishment of a rational plan for the future can also help to guide the direction and pace of the on-going technical research in support of the product. Although departures from such a plan will surely have to be made to accommodate unexpected events and revised judgments, the plan puts the company in a better position to make things happen rather than constantly having to react to things that are happening.
It is important that the originator does not delay this long-term planning until after the product’s introduction. How the product should be introduced and the many uses for which it might be promoted at the outset should be a function of a careful consideration of the optimum sequence of suggested product appeals and product uses. Consideration must focus not just on optimum things to do, but as importantly on their optimum sequence— for instance, what the order of use of various appeals should be and what the order of suggested product uses should be. If Jell-O’s first suggested use had been as a diet food, its chances of later making a big and easy impact in the gelatin dessert market undoubtedly would have been greatly diminished. Similarly, if nylon hosiery had been promoted at the outset as a functional daytime-wear hosiery, its ability to replace silk as the acceptable high-fashion hosiery would have been greatly diminished.
To illustrate the virtue of pre-introduction planning for a product’s later life, suppose a company has developed a nonpatentable new product—say, an ordinary kitchen salt shaker. Suppose that nobody now has any kind of shaker. One might say, before launching it, that (1) it has a potential market of “x” million household, institutional, and commercial consumers, (2) in two years market maturity will set in, and (3) in one year profit margins will fall because of the entry of competition. Hence one might lay out the following plan:
- End of first year: Expand market among current users.
- Ideas— new designs, such as sterling shaker for formal use, “masculine” shaker for barbecue use, antique shaker for “Early American” households, miniature shaker for each table place setting, moisture-proof design for beach picnics.
- End of second year: Expand market to new users.
- Ideas— designs for children, quaffer design for beer drinkers in bars, design for sadists to rub salt into open wounds.
- End of third year: Find new uses.
- Ideas— make identical product for use as a pepper shaker, as decorative garlic salt shaker, shaker for household scouring powder, shaker to sprinkle silicon dust on parts being machined in machine shops, and so forth.
This effort to prethink methods of reactivating a flattening sales curve far in advance of its becoming flat enables product planners to assign priorities to each task, and to plan future production expansion and capital and marketing requirements in a systematic fashion. It prevents one’s trying to do too many things at once, results in priorities being determined rationally instead of as accidental consequences of the timing of new ideas, and disciplines both the product development effort that is launched in support of a product’s growth and the marketing effort that is required for its continued success.
- For discussions of the scientific claims or potentials of marketing, see George Schwartz, Development of Marketing Theory (Cincinnati Ohio, South-Western Publishing Co., 1963); and Reavis Cox, Wroe Alderson, and Stanley J. Shapiro, editors, Theory in Marketing (Homewood, Illinois, Richard D. Irwin, Inc., Second Series, 1964).
- See Philip Kotler, “Phasing Out Weak Products,” HBR March–April 1965, p. 107.
- For perhaps the ultimate example of how the world does not beat such a path, see the example of the man who actually, and to his painful regret, made a “better” mousetrap, in John B. Matthews, Jr., R. D. Buzzell, Theodore Levitt, and Ronald E. Frank, Marketing:An Introductory Analysis (New York, McGraw-Hill Book Company, Inc., 1964), p. 4.
- For related ideas on discerning opportunities for product revivification, see Lee Adler, “A New Orientation for Plotting a Marketing Strategy,” Business Horizons, Winter 1964, p. 37.
- I am indebted to my colleague, Dr. Derek A. Newton, for these examples and other helpful suggestions.
- TL Theodore Levitt , a longtime professor of marketing at Harvard Business School in Boston, is now professor emeritus. His most recent books are Thinking About Management (1990) and The Marketing Imagination (1983), both from Free Press.
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- 1. PRODUCT LIFE CYCLE MANAGEMENT CASE STUDY OF NISSAN GROUP 2 Irham Satria Yudha Khaira Al-hafi Saleh Ardiansyah Septy Aprilliandary PRODUCT LIFECYCLE MANAGEMENT LECTURE INDUSTRIAL ENGINEERING DEPARTMENT UNIVERSITAS INDONESIA 2013
- 2. AGENDA Introduction Company profile > PLC Definition > Background > Roles & Importance of PLCM > Product Strategy > Product Family/Platform Analysis Conclusion
- 3. INTRODUCTION
- 4. Product Lifecycle • Product life cycle is a business analysis that attempts to identify a set of common stages in the life of commercial products. In other words the 'Product Life cycle' PLC is used to map the lifespan of the product such as the stages through which a product goes during its lifespan.
- 5. • Product Lifecycle Management (PLM) is the process of managing the entire lifecycle of a product from inception, through engineering design and manufacture, to service and disposal of manufactured products. • PLM integrates people, data, processes and business systems and provides a product information backbone for companies and their extended enterprise
- 6. Documented Benefits of Product Lifecycle Management • • • • • • • • • • • • • Reduced time to market Increase full price sales Improved product quality and reliability Reduced prototyping costs More accurate and timely request for quote generation Ability to quickly identify potential sales opportunities and revenue contributions Savings through the re-use of original data A framework for product optimization Reduced waste Savings through the complete integration of engineering workflows Ability to provide contract manufacturers with access to a centralized product record Seasonal fluctuation management* Improved forecasting to reduce material costs Maximize supply chain collaboration
- 7. Areas of PLM • Systems engineering (SE) • Product and portfolio (PPM) • Product design (CAx) • Manufacturing process management (MPM) • Product Data Management (PDM)
- 8. COMPANY PROFILE
- 9. Nissan Motor Company Ltd Established in Yokohama, Kanagawa in 1933, Nissan Motor Co., Ltd. currently manufactures vehicles in 20 countries and areas around the world, including Japan. Global unit sales in fiscal 2011 totaled 4.845 million vehicles. In addition to vehicles, Nissan also develops, manufactures and markets and marine equipment.
- 10. Company Profile
- 11. Nissan’s Brief History… Nissan History
- 12. Vision of Nissan… ….Mission of Nissan
- 13. About Nissan… Before 1981, people known Nissan branded their car as Datsun brand, but In 1981, After selling 20 million cars in 190 countries around the world, the Datsun brand is phased out, and the Nissan name is used as the company expands globally Nissan has a portfolio of two brands, NISSAN and INFINITI, both sold worldwide. NISSAN vehicles are marketed in all major market worldwide. INFINITI was launched as a luxury brand in North America in 1989. 7th Position in World’s Biggest Auto Companies 2013, After Volkswagen, Toyota, Daimler, Ford Motor, BMW Group, and General Motor – Forbes
- 14. Product Strategy : Nissan’s Orchard Concept
- 15. Nissan’s Core Values - Four Strategic Technology Fields • Nissan's orchard has four areas: the environment, safety, dynamic performance and life on board. • Nissan create original value in each of these four areas in order to provide their customers with “trusted driving pleasure”
- 16. Environmental Technologies • Nissan has set a target for 2050 of reducing new car CO2 emissions by 90%, compared to year 2000 levels. • Nissan is taking a multipronged approach to achieving this mid-term goal.
- 17. Environmental Technologies – Triple Layered Approach
- 18. Safety Technologies Nissan aims to halve the number of fatal and serious injuries from accidents involving Nissan vehicles in Japan by 2015 compared with 1995. Based on analysis of realworld accidents, Nissan has been working progressively to design and engineer safer vehicles with Safety Shield
- 19. Safety Technologies – Triple Layered Approach
- 20. Dynamic Performance : "Anyone, Anytime, Anywhere" Nissan seeks to make cars that will be appreciated for their Nissan qualities by all users in all situations
- 21. Dynamic Performance Each vehicle in Nissan's extensive lineup offers its own distinctive features. Dynamic Performance technology supports this with four root values.
- 22. Life on Board : "Amazing Value and Artisanship" The car provides unprecedented value at every stage getting into the vehicle, preparing to drive, actually driving and, finally, getting out.
- 23. Life On Board Delivering Three Kinds of Value Technological innovation focused on three aspects of the interior
- 24. Product Family Globally, Nissan Motor Company have 4 division. Every division have different product. 1. Nissan (Main Division) This division produce commercial car, from city car, SUV, sports car untill electric vehicle. 2. Infiniti Infiniti is brand from Nissan that produce luxury car and segmented for upper class. 3. Datsun In 2013 Nissan Relaunch Datsun brand for emerging market, which is India & Indonesia. 4. Nissan Marine Nissan Marine produce outboard motor for speed boat.
- 25. Product Family For Nissan (Main Division) 3. City Car Nissan March/Micra 4. Sedan Nissan Teana, altima , sentra, etc. 1. MPV (Multi Purpose Vehicle) Nissan Grand Livina, Serena, Elgrand etc 2. SUV (Sport Utility Vehicle) Nissan X-Trail, Murano, Juke, Rogue, etc.
- 26. Product Family For Nissan (Main Division) 5. Trucks & Commercial Car Nissan Frontier, Titan and NV Cargo 6. Electric Vehicle & Hybrid Nissan LEAF and Pathfinder Hybrid 7. Sports Car Nissan GT-R and 370 Z
- 27. Product Platform After Founded in 1999, the Renault-Nissan Alliance has become the longest-lasting cross-cultural combination among major carmakers. Nissan survive from the crisis in 1999 with help from Renault. Now the Alliance make a platform – sharing project for their car, Nissan Micra/March and Renault Pulse are the example. •Basic Product Platform Element 1. Component With platform – sharing project , for sure there will be component that will be common in both car Nissan & Renault. 2. Processes Production process for platform – sharing project obviusly has the same process, for the example is frame production. 3. Architecture Design for the car, such as frame & suspension will be the same.
- 28. Product Platform • Platform Classification Nissan used Modular (Functional) Platform for their product. Modular platforms allow creation of functionally different product variants. A good example of such a platform is Nissan Tiida & March, Nissan Frontier & Titan. • Deployment Strategies Nissan mainly used Horizontal Leveraging Strategy for their product deployment. The platform is shared across different brands but within the same class of market segment. Example Nissan Altima & Renault Laguna. For some product Nissan used the Vertival Leveraging Strategy, example Nissan Qashqai and Nissan Grand Livina.
- 29. Product Platform • Product Platform Application for Nissan
- 30. Product Platform
- 31. •On 1999 Nissan almost collapse, but after alliance with Renault, Nissan not just Survived but also climb up significantly. •Their R&D division develop ‘Common Module Family’ (CMF). CMF used by the new Alliance approach for common parts, a system expected to generate significant cost savings. A module is a set of parts and derivatives that can be applied to different car models and power trains. With a limited number of variations, the module will cover a large part of the Renault and Nissan product range.
- 32. ANALYSIS
- 33. ANALYSIS In the end of 1998, Nissan was in bad position financially Inability to establish a purchasing policy or a system of relations with suppliers Having accumulated debts totaling 23 billion euros Focusing on high quality and engineering innovation without focusing on the resulting cost Declining market share from 6.4% in 1990 to 4.9% in 1998
- 34. ANALYSIS Ultimate solution: A partner to not only help financially but also allow Nissan to help with the production system and purchasing policy Phase I: in 1999 where Renault took a 36.8% PLCM Strategy stake in Nissan for about €4.4 billion with the option for Nissan to take a stake in Renault at a later date. Phase II: On May 2002, the second phase of the alliance was initiated as Nissan took a 15% stake in Renault The making of a global alliance with Renault
- 35. PLCM STRATEGY IN NISSAN Nissan Revival Plan (NRP) Defined a set of messages that included specific timeframes for corporate improvement. Nissan formed a number of Cross Functional Teams (CFTs). Each team was comprised of a number of individuals throughout the organization, each with a different background. Nissan Value-Up Innovation of Product, Process and Program (V-3P) Designed to focus on design and delivery of more attractive vehicle models to the global automotive market. Nissan simply and clearly defines V-3P as follows: The activity of dramatically improving QCT metrics by creating and capturing Nissan’s Know-How about “KURUMA-ZUKURI” (i.e., vehicle design and manufacture best Consistently executing the development process from Styling Freeze to SOP in 10.5 months utilizing one physical prototype prior to formal production
- 36. RESULTS Visualizing product and process information Production & plant engineering Performance analysis Standardized design
- 37. RESULTS Nissan’s product lifecycle is in mature phase
- 38. NISSAN & KONDRATIEFF WAVES Starting point of Nissan The incoming wave: environment technology Nissan is ready to enter the 6th Kondratieff wave
- 39. The Nissan Leaf is an all-electric, mid-sized hatchback that seats five adults The Leaf is fitted with a zero emission power train; unlike gas electric hybrids, the Leaf does not contain an internal combustion engine or tailpipe (Nissan 2009). NISSAN Leaf EV Nissan Introduced the Leaf in August 2009. Nissan positioned the Leaf as a holistic car – “100% Electric, 100 Mile Range, 100% Torque”
- 40. CONCLUSION By merging an alliance with Renault in 1999, Nissan not only encountered its almost bankruptcy well, but also improved significantly in area of production system, design, and R & D. Programs such as NRP, CFT, V-3P are successful in giving great impact to Nissan by reducing cost and increasing sales volume which also affect to higher profit. Currently, Nissan is in mature phase seen from its stable market share globally. Nissan is also ready to face the 6th Kondratieff Waves which lies in environmental technology, nano/biotechnology, and healthcare by developing Electric Vehicle (EV) called Nissan Leaf. Nissan Leaf is amazingly popular seen from its sales graphic. For further development, Nissan needs to expand its successful program such as V-3P to its supply chain network. Specifically, Nissan can start to apply the same method to supplier community which involve directly to Nissan.
- 41. REFERENCES • Budiarto, Teguh.1993.Dasar Pemasaran.Jakarta: Gunadarma • CIM Data, Inc., Nissan Motor Corporation “Product Lifecycle Management Case Study”, April 2008 • Park, Jason & Hattem, Isaac, Renault/Nissan: The Making of a Global Alliance • http://cessee.com/2011/06/30/karakteristik-dantahap-tahap-dalam-siklus-hidup-produk.html • www.nissan-global.com
- 42. THANK YOU
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Product Life Cycle Case Study Solution & Analysis
- Harvard Case Studies
Harvard Business Case Studies Solutions – Assignment Help
In most courses studied at Harvard Business schools, students are provided with a case study. Major HBR cases concerns on a whole industry, a whole organization or some part of organization; profitable or non-profitable organizations. Student’s role is to analyze the case and diagnose the situation, identify the problem and then give appropriate recommendations and steps to be taken.
To make a detailed case analysis, student should follow these steps:
STEP 1: Reading Up Harvard Case Study Method Guide:
Case study method guide is provided to students which determine the aspects of problem needed to be considered while analyzing a case study. It is very important to have a thorough reading and understanding of guidelines provided. However, poor guide reading will lead to misunderstanding of case and failure of analyses. It is recommended to read guidelines before and after reading the case to understand what is asked and how the questions are to be answered. Therefore, in-depth understanding f case guidelines is very important.
Harvard Case Study Solutions
STEP 2: Reading The Product Life Cycle Harvard Case Study:
To have a complete understanding of the case, one should focus on case reading. It is said that case should be read two times. Initially, fast reading without taking notes and underlines should be done. Initial reading is to get a rough idea of what information is provided for the analyses. Then, a very careful reading should be done at second time reading of the case. This time, highlighting the important point and mark the necessary information provided in the case. In addition, the quantitative data in case, and its relations with other quantitative or qualitative variables should be given more importance. Also, manipulating different data and combining with other information available will give a new insight. However, all of the information provided is not reliable and relevant.
When having a fast reading, following points should be noted:
- Nature of organization
- Nature if industry in which organization operates.
- External environment that is effecting organization
- Problems being faced by management
- Identification of communication strategies.
- Any relevant strategy that can be added.
- Control and out-of-control situations.
When reading the case for second time, following points should be considered:
- Decisions needed to be made and the responsible Person to make decision.
- Objectives of the organization and key players in this case.
- The compatibility of objectives. if not, their reconciliations and necessary redefinition.
- Sources and constraints of organization from meeting its objectives.
After reading the case and guidelines thoroughly, reader should go forward and start the analyses of the case.
STEP 3: Doing The Case Analysis Of Product Life Cycle:
To make an appropriate case analyses, firstly, reader should mark the important problems that are happening in the organization. There may be multiple problems that can be faced by any organization. Secondly, after identifying problems in the company, identify the most concerned and important problem that needed to be focused.
Firstly, the introduction is written. After having a clear idea of what is defined in the case, we deliver it to the reader. It is better to start the introduction from any historical or social context. The challenging diagnosis for Product Life Cycle and the management of information is needed to be provided. However, introduction should not be longer than 6-7 lines in a paragraph. As the most important objective is to convey the most important message for to the reader.
After introduction, problem statement is defined. In the problem statement, the company’s most important problem and constraints to solve these problems should be define clearly. However, the problem should be concisely define in no more than a paragraph. After defining the problems and constraints, analysis of the case study is begin.
STEP 4: SWOT Analysis of the Product Life Cycle HBR Case Solution:
SWOT analysis helps the business to identify its strengths and weaknesses, as well as understanding of opportunity that can be availed and the threat that the company is facing. SWOT for Product Life Cycle is a powerful tool of analysis as it provide a thought to uncover and exploit the opportunities that can be used to increase and enhance company’s operations. In addition, it also identifies the weaknesses of the organization that will help to be eliminated and manage the threats that would catch the attention of the management.
This strategy helps the company to make any strategy that would differentiate the company from competitors, so that the organization can compete successfully in the industry. The strengths and weaknesses are obtained from internal organization. Whereas, the opportunities and threats are generally related from external environment of organization. Moreover, it is also called Internal-External Analysis.
In the strengths, management should identify the following points exists in the organization:
- Advantages of the organization
- Activities of the company better than competitors.
- Unique resources and low cost resources company have.
- Activities and resources market sees as the company’s strength.
- Unique selling proposition of the company.
- Improvement that could be done.
- Activities that can be avoided for Product Life Cycle.
- Activities that can be determined as your weakness in the market.
- Factors that can reduce the sales.
- Competitor’s activities that can be seen as your weakness.
- Good opportunities that can be spotted.
- Interesting trends of industry.
- Change in technology and market strategies
- Government policy changes that is related to the company’s field
- Changes in social patterns and lifestyles.
- Local events.
Following points can be identified as a threat to company:
- Company’s facing obstacles.
- Activities of competitors.
- Product and services quality standards
- Threat from changing technologies
- Financial/cash flow problems
- Weakness that threaten the business.
Following points should be considered when applying SWOT to the analysis:
- Precise and verifiable phrases should be sued.
- Prioritize the points under each head, so that management can identify which step has to be taken first.
- Apply the analyses at proposed level. Clear yourself first that on what basis you have to apply SWOT matrix.
- Make sure that points identified should carry itself with strategy formulation process.
- Use particular terms (like USP, Core Competencies Analyses etc.) to get a comprehensive picture of analyses.
STEP 5: PESTEL/ PEST Analysis of Product Life Cycle Case Solution:
Pest analyses is a widely used tool to analyze the Political, Economic, Socio-cultural, Technological, Environmental and legal situations which can provide great and new opportunities to the company as well as these factors can also threat the company, to be dangerous in future.
Pest analysis is very important and informative. It is used for the purpose of identifying business opportunities and advance threat warning. Moreover, it also helps to the extent to which change is useful for the company and also guide the direction for the change. In addition, it also helps to avoid activities and actions that will be harmful for the company in future, including projects and strategies.
To analyze the business objective and its opportunities and threats, following steps should be followed:
- Brainstorm and assumption the changes that should be made to organization. Answer the necessary questions that are related to specific needs of organization
- Analyze the opportunities that would be happen due to the change.
- Analyze the threats and issues that would be caused due to change.
- Perform cost benefit analyses and take the appropriate action.
- Next political elections and changes that will happen in the country due to these elections
- Strong and powerful political person, his point of view on business policies and their effect on the organization.
- Strength of property rights and law rules. And its ratio with corruption and organized crimes. Changes in these situation and its effects.
- Change in Legislation and taxation effects on the company
- Trend of regulations and deregulations. Effects of change in business regulations
- Timescale of legislative change.
- Other political factors likely to change for Product Life Cycle.
- Position and current economy trend i.e. growing, stagnant or declining.
- Exchange rates fluctuations and its relation with company.
- Change in Level of customer’s disposable income and its effect.
- Fluctuation in unemployment rate and its effect on hiring of skilled employees
- Access to credit and loans. And its effects on company
- Effect of globalization on economic environment
- Considerations on other economic factors
- Change in population growth rate and age factors, and its impacts on organization.
- Effect on organization due to Change in attitudes and generational shifts.
- Standards of health, education and social mobility levels. Its changes and effects on company.
- Employment patterns, job market trend and attitude towards work according to different age groups.
case study solutions
- Social attitudes and social trends, change in socio culture an dits effects.
- Religious believers and life styles and its effects on organization
- Other socio culture factors and its impacts.
- Any new technology that company is using
- Any new technology in market that could affect the work, organization or industry
- Access of competitors to the new technologies and its impact on their product development/better services.
- Research areas of government and education institutes in which the company can make any efforts
- Changes in infra-structure and its effects on work flow
- Existing technology that can facilitate the company
- Other technological factors and their impacts on company and industry
These headings and analyses would help the company to consider these factors and make a “big picture” of company’s characteristics. This will help the manager to take the decision and drawing conclusion about the forces that would create a big impact on company and its resources.
STEP 6: Porter’s Five Forces/ Strategic Analysis Of The Product Life Cycle Case Study:
To analyze the structure of a company and its corporate strategy, Porter’s five forces model is used. In this model, five forces have been identified which play an important part in shaping the market and industry. These forces are used to measure competition intensity and profitability of an industry and market.
porter’s five forces model
These forces refers to micro environment and the company ability to serve its customers and make a profit. These five forces includes three forces from horizontal competition and two forces from vertical competition. The five forces are discussed below:
- THREAT OF NEW ENTRANTS:
- as the industry have high profits, many new entrants will try to enter into the market. However, the new entrants will eventually cause decrease in overall industry profits. Therefore, it is necessary to block the new entrants in the industry. following factors is describing the level of threat to new entrants:
- Barriers to entry that includes copy rights and patents.
- High capital requirement
- Government restricted policies
- Switching cost
- Access to suppliers and distributions
- Customer loyalty to established brands.
- THREAT OF SUBSTITUTES:
- this describes the threat to company. If the goods and services are not up to the standard, consumers can use substitutes and alternatives that do not need any extra effort and do not make a major difference. For example, using Aquafina in substitution of tap water, Pepsi in alternative of Coca Cola. The potential factors that made customer shift to substitutes are as follows:
- Price performance of substitute
- Switching costs of buyer
- Products substitute available in the market
- Reduction of quality
- Close substitution are available
- DEGREE OF INDUSTRY RIVALRY:
- the lesser money and resources are required to enter into any industry, the higher there will be new competitors and be an effective competitor. It will also weaken the company’s position. Following are the potential factors that will influence the company’s competition:
- Competitive advantage
- Continuous innovation
- Sustainable position in competitive advantage
- Level of advertising
- Competitive strategy
- BARGAINING POWER OF BUYERS:
- it deals with the ability of customers to take down the prices. It mainly consists the importance of a customer and the level of cost if a customer will switch from one product to another. The buyer power is high if there are too many alternatives available. And the buyer power is low if there are lesser options of alternatives and switching. Following factors will influence the buying power of customers:
- Bargaining leverage
- Switching cost of a buyer
- Buyer price sensitivity
- Competitive advantage of company’s product
- BARGAINING POWER OF SUPPLIERS:
- this refers to the supplier’s ability of increasing and decreasing prices. If there are few alternatives o supplier available, this will threat the company and it would have to purchase its raw material in supplier’s terms. However, if there are many suppliers alternative, suppliers have low bargaining power and company do not have to face high switching cost. The potential factors that effects bargaining power of suppliers are the following:
- Input differentiation
- Impact of cost on differentiation
- Strength of distribution centers
- Input substitute’s availability.
STEP 7: VRIO Analysis of Product Life Cycle:
Vrio analysis for Product Life Cycle case study identified the four main attributes which helps the organization to gain a competitive advantages. The author of this theory suggests that firm must be valuable, rare, imperfectly imitable and perfectly non sustainable. Therefore there must be some resources and capabilities in an organization that can facilitate the competitive advantage to company. The four components of VRIO analysis are described below: VALUABLE: the company must have some resources or strategies that can exploit opportunities and defend the company from major threats. If the company holds some value then answer is yes. Resources are also valuable if they provide customer satisfaction and increase customer value. This value may create by increasing differentiation in existing product or decrease its price. Is these conditions are not met, company may lead to competitive disadvantage. Therefore, it is necessary to continually review the Product Life Cycle company’s activities and resources values. RARE: the resources of the Product Life Cycle company that are not used by any other company are known as rare. Rare and valuable resources grant much competitive advantages to the firm. However, when more than one few companies uses the same resources and provide competitive parity are also known as rare resources. Even, the competitive parity is not desired position, but the company should not lose its valuable resources, even they are common. COSTLY TO IMITATE: the resources are costly to imitate, if other organizations cannot imitate it. However, imitation is done in two ways. One is duplicating that is direct imitation and the other one is substituting that is indirect imitation. Any firm who has valuable and rare resources, and these resources are costly to imitate, have achieved their competitive advantage. However, resources should also be perfectly non sustainable. The reasons that resource imitation is costly are historical conditions, casual ambiguity and social complexity. ORGANIZED TO CAPTURE VALUE: resources, itself, cannot provide advantages to organization until it is organized and exploit to do so. A firm (like Product Life Cycle) must organize its management systems, processes, policies and strategies to fully utilize the resource’s potential to be valuable, rare and costly to imitate.
STEP 8: Generating Alternatives For Product Life Cycle Case Solution:
After completing the analyses of the company, its opportunities and threats, it is important to generate a solution of the problem and the alternatives a company can apply in order to solve its problems. To generate the alternative of problem, following things must to be kept in mind:
- Realistic solution should be identified that can be operated in the company, with all its constraints and opportunities.
- as the problem and its solution cannot occur at the same time, it should be described as mutually exclusive
- it is not possible for a company to not to take any action, therefore, the alternative of doing nothing is not viable.
- Student should provide more than one decent solution. Providing two undesirable alternatives to make the other one attractive is not acceptable.
Once the alternatives have been generated, student should evaluate the options and select the appropriate and viable solution for the company.
STEP 9: Selection Of Alternatives For Product Life Cycle Case Solution:
It is very important to select the alternatives and then evaluate the best one as the company have limited choices and constraints. Therefore to select the best alternative, there are many factors that is needed to be kept in mind. The criteria’s on which business decisions are to be selected areas under:
- Improve profitability
- Increase sales, market shares, return on investments
- Customer satisfaction
- Brand image
- Corporate mission, vision and strategy
- Resources and capabilities
Alternatives should be measures that which alternative will perform better than other one and the valid reasons. In addition, alternatives should be related to the problem statements and issues described in the case study.
STEP 10: Evaluation Of Alternatives For Product Life Cycle Case Solution:
If the selected alternative is fulfilling the above criteria, the decision should be taken straightforwardly. Best alternative should be selected must be the best when evaluating it on the decision criteria. Another method used to evaluate the alternatives are the list of pros and cons of each alternative and one who has more pros than cons and can be workable under organizational constraints.
STEP 11: Recommendations For Product Life Cycle Case Study (Solution):
There should be only one recommendation to enhance the company’s operations and its growth or solving its problems. The decision that is being taken should be justified and viable for solving the problems.
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Agile Software Development Life Cycle: Case Study
Learn more about our agile software development life cycle from our Mitsubishi case study.
Any software development project, either big or small, requires a great deal of planning and steps that divide the entire development process into several smaller tasks that can be assigned to specific people, completed, measured, and evaluated. Agile Software Development Life Cycle (SDLC), is the process for doing exactly that – planning, developing, testing, and deploying information systems. The benefit of agile SDLC is that project managers can omit, split, or mix certain steps depending on the project’s scope while maintaining the efficiency of the development process and the integrity of the development life cycle.
Today, we are going to examine a software development life cycle case study from one of Intersog’s previous projects to show how agility plays a crucial role in the successful delivery of the final product. Several years back, we worked with Mitsubishi Motors helping one of the world’s leading automotive manufacturers to develop a new supply chain management system. With the large scope of the project, its complex features, and many stakeholders relying on the outcomes of the project, we had to employ an agile approach to ensure a secure software development life cycle.
Mitsubishi Motors involves many stakeholders and suppliers around the world, which makes its supply chain rather complex and data-heavy. That is why timely improvements are crucial for the proper functioning of this huge system and a corporation as a whole. Over the years of functioning, the old supply chain has been accumulating some noticeable frictions that resulted in the efficiency bottlenecks, and Intersog offered came ups with just the right set of solutions to make sufficient solutions that would help Mitsubishi ensure a coherent line of communication and cooperation with all the involved suppliers.
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Previously, Mitsubishi used an outdated supply chain management system that involved a large number of spreadsheets that required a lot of manual input. Considering a large number of stakeholders, the problem of synchronization has been a pressing one as well – different stakeholders would input the data at different speeds and at different times of day, which created a degree of confusion among suppliers. Though the system has been sufficient for a long time, the time has come to eliminate all the redundancies and streamline data input.
The legacy system has been partially automated and ran on the IBM AS400 server, which allows for impressive flexibility, but it no longer sufficed for Mitsubishi’s growing needs. The main requirement, thus, was to create a robust online supply chain solution that would encompass the entire logistics process starting with auto parts and steel suppliers and ending with subcontractors and car dealerships around the world. That being said, Mitsubishi did not want to completely change the system, they opted for overhaul, and we came up with the idea of an integrated web application that was meant to function in conjunction with a DB2 base that was already used on the IBM AS400 server.
IT Architecture and Agile SDLC
Mitsubishi employs a series of guidelines and rules on how to build, modify, and acquire new IT resources, which is why Intersog had to be truly agile to adapt to the client’s long-established IT architecture. Adapting to the requirements of the client, and especially to the strict regulations of the IT architecture of large corporations like Mitsubishi requires knowledge, flexibility, and strong industry expertise. Each software development company has its own architecture standards and frameworks for building new systems but many face difficulties when working with the existing systems and modifying them to the new requirements.
Intersog has no such problems. We approached Mitsubishi’s case with strong industry expertise and flexibility to account for all the client’s needs and specifications of the existing system. Obviously, following the client’s architecture regulations requires a profound understanding of said regulations, which is why information gathering is an integral phase of the software development life cycle.
The requirements gathering phase can take anywhere from just a couple of days to several weeks. Working with complex and multi-layered legacy systems like the one used by Mitsubishi requires serious analysis and information gathering. In the case of Mitsubishi, our dedicated team had to gain a clear understanding of how the legacy system functions, create new software specifications, map out the development process, gather and create all the necessary documentation, track all the issues related to the functioning of the legacy system, outline the necessary solutions, and allocate all the resources to achieve the project’s goals in the most efficient manner.
Working on the Mitsubishi project, our team has been gathering all the required information for up to 4 weeks. This included a profound examination of the legacy system, mapping out all of its flaws and specifications, bridging the gaps between the current state of the system and the requirements of the client, and outlining the development process.
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The design stage includes all the integral decisions regarding the software architecture, its makeover, the tech frameworks that would be used in the system’s rework. During this stage, developers discuss the coding guidelines, the tools, practices, and runtimes that will help the team meet the client’s requirements. Working with large corporations like Mitsubishi, a custom software development team has to work closely with the company’s own developers to better understand the specifics of the architecture and create a design that reflects all the requirements.
After all the requirements are gathered, we initiated the design stage based on all of the client’s specifications and came up with a number of solutions that matched Mitsubishi’s specs:
- Convenient data model meant to optimize data duplication;
- Permission system that differentiated the users by their access levels;
- Appealing user interface mockup to improve the comfortability of user-system interaction;
- Integration with the legacy RPG system;
- Notifications for the partners to keep them up with the important activities.
This set of essential solutions has been discussed and approved in the course of the design stage that lasted for 2 months. During this stage, Intersog and Mitsubishi development teams worked closely to come up with the solutions that matched the client’s requirements to the tee. Proper functioning of the supply chain is vital for the entire corporation, which is why it was critical to do everything flawlessly. 2 months might seem like quite a timeline, but for this case study on software development life cycle, it was not that long considering how complex Mitsubishi’s legacy system was.
After approving the solution design, the team can move to develop those solutions. That’s the core of the entire project, a stage at which the teams meet the goals and achieve the outcomes set during previous stages. The success of the development stage depends heavily on how good a job the teams did during the design stage – if everything was designed with laser precision, the team can expect few if any, surprises during the development stage.
What happens during the development stage is the teams coding their way towards the final product based on decisions that have been made earlier. With Mitsubishi, we followed the guidelines we came up with earlier and implemented a set of essential solutions:
- We built a convenient data model that minimizes the risk of human error by reducing redundant and repetitive data entry and duplication.
- Improved Mitsubishi’s security system to differentiate the users by their level of access and give them the respective level of control over the data.
- Added the notifications for the users so that they could react to the relevant changes faster.
- Designed an appealing and comfortable user interface using the AJAX framework to make the user-system interaction more comfortable and time-efficient.
- Deployed the platform running on the IBM AS400 server with the integration of DB2 databases.
- Integrated the existing RPG software into the new system.
- Migrated the existing spreadsheets and all the essential data into the new system.
All of these solutions took us 6 months to implement, which is rather fast for a project of such scale. Such a time-efficiency was possible only thanks to the huge amount of work we’ve done throughout the research and design stages. The lesson to learn from these software development life cycle phases for the example case study is that the speed of development would depend heavily on how well you prepare.
Depending on the scale of the project, you might be looking at different timelines for the development stage. Small scale projects can be finished in a matter of weeks while some of the most complicated solutions might take more than a year to finish. In the case of the Mitsubishi project, it was essential for the client to get things done faster. Rushing things up is never a good idea, but you can always cut your development timeline by doing all the preparation work properly and having a clear understanding of what needs to be done and in which order.
Quality assurance is as vital for your project’s success as any other stage; this is where you test your code, assess the quality of solutions, and make sure everything runs smoothly and according to plan. Testing helps you identify all the bugs and defects in your code and eliminate those in a timely manner. Here at Intersog, we prefer testing our software on a regular basis throughout the development process. This approach helps us to identify the issues on the go and fix them before they snowball into serious problems.
That’s it, quality assurance is a set of procedures aimed at eliminating bugs and optimizing the functioning of the software solutions. Here at Intersog, we run both manual and automated tests so that we can be truly sure of the quality of solutions we develop for our clients. With Mitsubishi, we ran tests throughout the development process and after the development stage was over. It took us an additional month to test all the solutions we’ve developed, after which we were ready for the implementation stage.
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Integration and Support
Following the testing, and once we are sure all the solutions work flawlessly, the development team gets to the implementation stage. Also known as the integration stage, this is where we integrate the new solution into the client’s pre-existing ecosystem. Basically, you are putting new gears into a complex mechanism that has been functioning for many years, and it is essential to make sure all of those gears fit perfectly.
With such a complex system as the one employed by Mitsubishi and a vast amount of accumulated data, our developers had to be incredibly precise not to lose anything. We are talking about surgical precision because Mitsubishi’s suppliers amassed thousands upon thousands of spreadsheets full of critical data on supplies, material and product deliveries, accounting data, and more. All of that had to be carefully integrated with the new automated solution.
After 2 months, the solutions have been fully integrated with Mitsubishi’s existing ecosystem. Intersog usually backs the clients up by offering support and maintenance services to ensure flawless functioning of the system over time, but this time, our client was fully capable of maintaining the new system on their own. As said, Mitsubishi has its own development team that is able to take care of the system maintenance, so that our cooperation was finished after the integration stage.
Final Thoughts and Outtakes
A software development life cycle depends on many factors that are unique for each company. In the case of Mitsubishi, we’ve managed to get things done in just under a year, which is rather fast for a project of such an immense scale. Different projects have different life cycles, and it depends on the scale, the client’s ability to explain their needs, and the development team’s ability to understand those needs, gather all the necessary information, design the appropriate set of solutions, develop said solutions, ensure their quality, and implement them fast.
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Product Life Cycle in Marketing: Stages & Examples of PLC Model
Product Life Cycle – a term you must have heard or studied before but are still unsure what it means and how it applies to a product or a service.
Many business owners and marketing professionals have their own understanding of how a Product Life Cycle works, but somehow, they still fail to consider it while strategizing.
However, you cannot use the same marketing strategy for a new product that you are about to launch and the product that has been there in the market for years now. It is important to devise unique marketing strategies for every stage of the product lifecycle.
So, here in this article today, we will be understanding the product life cycle, its various stages, and what marketing strategies should be used in every stage with some real-life examples.
Table of Contents
What Is Product Life Cycle in Marketing?
Product Life Cycle is the journey of a product from its launch to its end of life or disappears from the market. This product life cycle has five stages:
The marketing team aligns its efforts and strategies to highlight the changing characteristics of the product in each stage. Looking at the product life cycle through a marketing perspective helps identify how and what should be communicated at each stage.
5 Stages of Product Life Cycle with Examples
Let’s begin to understand the five stages of product life cycle, and what marketing strategies a business should adopt to survive and transition from one stage to another.
- Development: This is the very first and the most sensitive stage in the product’s life cycle. It includes everything from ideation to research, product development, lab tests to designing the final product. In this stage, you need to evaluate everything related to your product, its consumers, market scope, competitors, etc.
In this stage, you cannot expect any sales, but your marketing can create some buzz through social media networks, billboards, and more. Such strategies can help generate curiosity and encourage consumer engagement.
For example, if you are planning to launch a soap, in the development stage you need to focus on market research to identify your competitors, consumer expectations, market gap that your product can fill, etc.
So, now when your product is ready to be launched you can transition to the next stage of product life cycle.
- Introduction: This is the stage when your product is launched for the first time on the market. In this stage, marketers need to focus on creating maximum awareness about the product, introduce it to potential buyers, and convince them to at least consider the product while buying.
The aim of marketing at this stage is to build enough awareness that consumers should at least recognize the product.
The marketing campaign in the previous development stage has helped you in identifying consumer expectations. Now you have designed your product, keeping in mind people’s expectations. The advertisements will tell what this new soap offers, the various problems it solves, and how it is different from others in the market.
- Growth: In this period your communication is designed to target your competitor’s market. You want to acquire their customers and become a more “preferred” brand. The marketing campaign at this stage needs to focus on maximizing market share.
Here the marketing campaign will utilize the user experience to market the soap. You’ll need deeper consumer and competitor analysis to establish that your product is best in the market, and those who are using your competitor’s product should switch to yours.
- Maturity: This stage represents the highest level of product adoption and profitability. In this stage, your new customers are the ones who have switched from your competitors. Marketing efforts in this stage need to be focused on maximizing profit while defending the market share.
There may be more competitors entering the market with new features, so you need to work towards creating brand loyalty and recognition.
Marketing communication should focus on sustaining the brand by establishing brand identity. In this stage, the brand should become bigger than the product itself.
Your advertisements should also be directed towards introducing a new and advanced version of the soap with new packaging and design to give a new and improved look and feel.
- Decline: In this stage, the sales and profits start to shrink. In this stage there is not much scope for marketing, you should focus on reducing the spending and focus on milking the brand that you have created.
After a stage, you need to decide to harvest the product or withdraw the product from the market. You can utilize the loyalty that already exists and then after a point decide to withdraw the product. If you don’t take this decision on time, you might waste your valuable resources and efforts.
How Does Product Lifecycle Work?
Like people, products too have life cycles. It begins with an idea and then eventually manifests into a product which is then strategically launched in the market. When a product is launched, its demand increases, thus, increasing its popularity.
This results in newer products pushing the older ones out of the market, and they reach the later stages of product lifecycle i.e., maturity and eventually decline. This happens because the cost of production increases and the demand of the product decreases because of which the sales decreases.
At this stage, the business needs to take the smart decision of reinventing the product or withdrawing the product from the market to save its resources.
How to Use the Product Life Cycle Model in Marketing?
Now to understand how this product life cycle works in marketing, we’ll go through a case study that many of us have been a part of.
Nestle – Maggi Product Life Cycle Case Study
Introductory Stage in the Product Life Cycle of Maggi: When Maggi entered the Indian market in 1982, it did spend a lot on aggressive marketing. The instant noodle market was an unexplored area, so the positioning was not difficult because there were no competitors.
It segmented itself based on age and urban area while targeting kids, youth, and office goers who were looking for something healthy and instant. They branded it with the tagline, ‘Taste Bhi, Health Bhi’ and a 2-minute noodle.
The marketing at this stage was focused on creating product awareness along with doing several product modifications as per the Indian taste. With lots of ups and downs, Maggi survived the introductory stage with targeted marketing.
Growth Stage in the Product Life Cycle of Maggi: Around 1985, consumers started to accept Maggi and the sales increased. Until 1990, Maggi was still a monopoly after which Top Ramen entered the market which did affect Maggi’s market share by little.
To increase its market share, Maggi launched a new flavor in 1997, but it was not accepted warmly by the Indian audience. In 1999 it re-launched its original flavor, and it was back in the game with increased sales and profits.
During this period, they marketed new product variations under the brand like ketchup, pasta, soup, oats but never shifted their focus from the original product.
Maturity Stage in the Product Life Cycle of Maggi: During this stage, when the sales and profits were soaring high, Maggi faced neck-to-neck competition with Top Ramen. To capture a larger segment of the market, it played on the pricing strategy by introducing a 5 rupees packet of Maggi which increased the distribution.
It helped in taking over the competitor’s market and acquiring the maximum market share. This strategy helped Maggi reach every household irrespective of any demographic.
Decline Stage in the Product Life Cycle of Maggi: In 2015, due to high lead content, Maggi was banned, and everyone’s favorite noodle was taken off the shelf and it was believed that Maggi has entered the decline stage.
But Maggi bounced back. With effective PR and marketing, Maggi proved itself to be safe for human consumption and brought itself back by branding it as safe for consumption.
It invested in research, internal employee engagement, social media campaigns, and exclusively re-launched itself with Snapdeal.
Before returning locally, Maggi offered its loyal customers to pre-order from Snapdeal, and in no time the demand increased. Maggi branded itself as ‘Your Maggi is safe, has always been’ and thus, escaped death.
What are the Best Product Lifecycle Marketing Strategies?
Based on your product and its USPs, different strategies can be adopted in different stages of product lifecycle. Let’s discuss what different strategies you can choose at each stage:
Marketing Strategies in Introductory Stage: While aiming to create product awareness and establishing a product identity, your marketing strategies should focus on reaching out to the right customers. The following approach can be adopted:
- Rapid Skimming, launching a product at high price with aggressive promotions
- Slow Skimming, launching a product at high price with slow promotions
- Rapid Penetration, launching a product at low price with aggressive promotions
- Slow Penetration, launching a product at low price with slow promotions
In this stage, you can often play with pricing and positioning strategies to create demand.
Marketing Strategies in Growth Stage: The strategies in this stage focus on increasing profits and expanding the market. The following marketing strategies can be used here:
- Upgrading the product with new features
- Expanding in new market segments
- Strategically pricing the product, low or high
- Increasing distribution channels
- Shifting marketing communication from product features to customer preference
Marketing Strategies in Maturity Stage: In this stage, you enjoy increased sales, and the marketing strategies are all about retaining the brand. The following marketing strategies can be used here:
- Acquiring competitor’s users
- Converting non-users into customers
- Launching an advanced version of the product
- Making the brand more valuable than products
- Enter new market segments
Marketing Strategies in Decline Stage: This is the stage when you should know when to stop or withdraw from the market to save your resources. The following marketing strategies can be used here:
- Reduce marketing expenditure
- Reduce distribution channels
- Lower prices to increase sales
- Reinvent the product
- Harvest the product before discontinuing it
The basic product life cycle applies to all products and services. The right marketing strategies in each stage can help you derive maximum profits and sales and position your product.
These strategies can help you in stretching a particular phase in the product life cycle, and survive for several years in the maturity stage.
A product’s demand is destined to decline, but by adopting technology and changing trends, you can reinvent and repurpose your product to survive in the market.
Five stages of customer lifecycle are Discovery, Education, Purchase, Post-Purchase Engagement and Advocacy.
The best product life cycle marketing strategies can be rapid or slow skimming and penetration, where you can strategically price the product to create demand.
Customer lifecycle marketing is a process to create communication strategy to support prospects and customers in their buyer journey.
Various stages in a product life cycle require different marketing strategies to achieve the desired objectives. For example, in the introductory stage, product awareness is required, and in the maturity stage, brand loyalty is required.
The main objective of product life cycle management is to identify potential sales opportunities in each stage and establish brand identity and loyalty.
The types of product life cycle are development, introduction, growth, maturity and decline.
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Product Development Life Cycle: 4 Stages, 7 Company Examples
Managing introduction, growth, maturity, and decline, what is product development life cycle management.
Product development life cycle management refers to the stages of a product, from the time a team develops and launches it, to the time it declines and is retired from the marketplace. It is fundamentally part of your product development strategy .
Just as human beings pass through predictable stages of birth, childhood, adolescence, maturity, and an inevitable decline, products and services pass through similar phases. Product marketers and product managers may change their strategies to maximize outcomes at each of these stages. Strategies vary over the source of the life cycle stages.
Generally, products pass through four stages:
- Introduction Stage
- Decline Stage
During the introduction phase, time to market and innovation might be the focus; later stages might focus on maximizing revenue and profits.
New Product Development vs Existing Products
The diagram above shows the product life cycle divided into two components: 1) a product development stage where new products are created and 2) a stage of managing existing products in the marketplace. The new product development process stages involve the product design and product launch. The portion of the product life cycle (growth, maturity and decline) is concerned with how to manage products that are already in the marketplace.
Each of these two components — product development and managing existing products — has its own techniques, methodologies and metrics or KPIs.
Since product development involves considerable effort and a large investment, it is often treated apart from the remainder of the product life cycle. But developing new products cannot be divorced from the totality of that life cycle. Developing a new product is just the beginning of a long journey. Note that product development life cycles apply just as well to agile product methodologies .
The early stages of this process include idea generation, concept testing of the product idea with stakeholders and customers, concept development, and other front end activities typically performed by product management & the marketing team. In parallel you may wish to perform market research related to the product concept where you might examine competitive advantage and do more detailed business analysis. You might also take the most innovative ideas to a focus group (or social media groups) to collect feedback from these stakeholders before heavy investment.
Stages of the Product Life Cycle
Introduction stage (development stage).
This is the stage where teams realize new products. We may also refer to this phase as the product development stage. Generally, products follow an orderly development stage that identifies customer needs, brainstorms product ideas, checks feasibility, designs the product, test markets new features, establishes product-market fit and pricing, validates the strategy, and launches the new product.
Product managers and the product development team members work together in this first stage of the product life cycle to conceive, design and launch successful products with product features that clearly differentiate the product from its competitors. This workflow often includes project management in addition to product management (or product owners).
In this stage Product Marketing Managers oversee the new product as it slowly gains brand awareness and market acceptance. If a product is successful it will have competition. The product owner must adjust marketing strategy, marketing campaigns, or distribution channels to meet competitive threats and retain market share.
In the maturity stage, sales growth levels off. Yet, this stage is often the most profitable since companies often find ways to increase efficiencies in manufacturing or distribution, reducing production costs. Incremental improvements may increase the functionality of the product, making it an even better fit for its target audience.
Sometimes product managers adjust pricing downwards to compete more effectively in their target markets. Since the existing product is now known, marketing strategies may focus more on product differentiation than on brand awareness.
Inevitably, a product reaches a saturation point after which demand decreases. This is especially the case in areas where technology is rapidly changing. For example, the iPod was an innovative and successful product in its heyday, but demand decreased as the iPhone took over the functionality of earlier devices. This decline does not mean that the iPod failed as a product. It inevitably experienced a decline stage as the iPhone grew.
During the decline stage, product managers might seek ways to reach new markets and find new potential customers to squeeze the last juice from the fruit. In healthy companies, the product development cycle is an ongoing process where there is continuous ideation and validation of new product concepts. Thus new offerings are ready to take the place of products in the decline stage.
After a product or service has been retired, several things can occur. For some products, there is simply a death, with no afterlife. The product is discontinued, sometimes replaced by a new product, sometimes not.
Another scenario is that a product officially past its prime, and scheduled for retirement may be cannibalized and turned into other products. Developers might spin off part of the product, such as bits of features or technology to incorporate them into new offerings. The product as developers had known it, comes to the end of its product life cycle, but it lives on, in some sense, in the form of other products.
In a third scenario, some products may be resurrected after a period of dormancy. Sometimes a fad or fashion might have led to the premature demise of the product, and when that trend passes, the product makes a comeback. Sometimes, an older product may be repurposed and resurrected after an untimely death. The customer base might find a new use for an old product, leading to its resurrection.
Also, there are some factors that may impede the “natural” flow of the product development life cycle. Startling new technology might enter the market and disrupt existing offerings, creating the need to rethink an in-market product that is still in the prime of life.
A related factor is stiffer competition from new entrants and copycats. New product success breeds competitors, and the need to compete might mean fundamental changes to a product that speeds it artificially through its natural life cycle.
Societal trends, such as the current concerns about global climate change, may also have an effect on a product life cycle. Changes in the political situation in the world, such as wars and economic sanctions can also affect new products and interrupt their natural cycle.
Product Managers vs. Product Marketing
Both product management and product marketing deal with the life cycle of new products. Product Management and Product Marketing are distinct functions that are often confused. The essential distinction is between in-bound marketing and out-bound marketing. In-bound marketing is about hearing the voice of the customer and then translating customer needs into features. Out-bound marketing is about bringing products to customers and maximizing their effectiveness in the marketplace.
Product Managers are in-bound marketers. They help a dev team ensure that its product/market fit is maximized and that it leverages brand position and follows the product roadmap. They ensure that the resulting product release optimizes margins and pricing. It is not a part-time role, and in Silicon Valley it is often the second most important role after the CEO.
Product Marketing Managers manage the lifecycle of existing products, products that are shipping, and that are giving value to paying customers. Their domain is out-bound marketing – bringing the product to life and working with sales, customer success, and support. Also, this is rarely a part time position. In mature markets, this role is second in importance to the general manager (these are P&G’s brand managers).
Unfortunately, these roles are too often indistinct. Companies do not distinguish in-bound from out-bound marketing and this leads to a lack of clear roles and responsibilities. Usually, the victim of this confusion is the development team which does not get adequate and timely guidance on product requirements and user stories – causing delays and definitions to drift.
The urgency of product marketing needs often drowns out the more strategic needs of the product team. The key is to understand the product life cycle: developing and introducing new products is a distinct activity from managing in-market offerings. We help organizations via Product Management Consulting to help balance near term with strategic goals to ensure product teams stay focused.
Managing the Product Portfolio & New Product Development
Companies that survive past the startup phase develop a portfolio of products each at various stages of the product development life cycle. There are four commonly used frameworks for managing these product portfolios. These frameworks help managers choose the appropriate level of investment based on market and product characteristics and manage earlier stage products as they enter the next stage in the life cycle.
The infographic contains 7 examples, forming a founding for a case study approach to understand product development life cycle management. The examples are Apple, Amazon, Google, Ikea, Netflix, Coca-Cola, and Kellogg.
Ansoff Matrix maps a product axis against a market axis. It places new vs. existing products against new vs. existing markets. This approach creates four quadrants representing everything from conservative market penetration (existing products, existing markets) to diversification (new products in new markets).
GE/McKinsey’s Portfolio Analysis Matrix looks at the strength of an industry’s attractiveness and maps it against the relative strength of the business unit. It guides investment on the product portfolio by balancing internal and external factors.
Innovation Ambition Matrix is a simple plot with axes for markets and products. It is used to gauge investments at the new product development phase of the product life cycle.
BCG Growth Share Matrix maps growth rate against relative market share. It guides investment in new products and in marketing existing products by identifying high growth/high share opportunities (Stars) and avoiding low growth and low share (Dogs). The remaining quadrants are “Question Marks” (Low Share, but High Growth) and “Cows” Low Growth but high share.
Tools for Product Development Life Cycle Management
Software developers have created numerous applications for Product Lifecycle Management (PLM) that enable agile decision-making. However, practitioners have created certain basic tools available to anyone with a spreadsheet or a graphics package. The tools below can help any organization improve product development life cycle management.
A Platform Derivative Chart
A Platform Derivative Chart depicts a set of related products over time. It is a variation on a Product Roadmap that highlights relationships between derivatives. You may find it the most useful type of roadmap because the horizontal and vertical axes are labeled, the products are precisely mapped, and the positioning is clearly described.
The Platform Derivative Chart is a technology/design-driven diagram of related products with some underlying common design components. The Product Roadmap shows the portfolio of products under development which may or may not have common technologies, while the Platform Derivative Chart shows the life cycle of the platform and the family of derivatives indicating the relationships between them.
These relationships can include cost, performance, quality, or feature density. For example, in the computer business, the Platform Derivative Chart might show a 15” laptop family where the product platform is the base product and the variants appear at various price points with different feature sets, such as amount of memory, hard disk size, CPU speed, and graphics capability.
It is possible for a laptop division to integrate all products on one chart showing where the different platforms exist in the family regarding price points and feature sets. In addition, it is possible to display competitors on the chart to communicate the relative performance of the product against them.
The head of Product Management often creates this chart, and your head of the business unit reviews and approves it. There should be a clear line of sight between the business unit’s strategic plan, the Platform Derivative Chart, and the product pipeline. Internal “customers” for the chart may include Engineering, Sales, Operations, Customer Service, and related functions. In many organizations, this is the tangible conversion of product strategy into real products.
Product Portfolio Investment Map
A Product Portfolio Investment Map is a snapshot of product portfolio management that shows the relative emphasis on various classes of new product development projects. Typically, these investments are grouped together according to the amount of risk each project assumes. For example, a company might organize its projects as follows:
- Core products
- Adjacent Products
- Transformational Products
A core product is one that introduces a modification to an existing product. It is sold to existing customers and leverages existing product technologies. Adjacent products are conceptually and functionally the same as existing products, but they serve a market that is new to the company; or they may consist of a substantial modification to a product, expanding the market the company has already entered. A transformational product innovates in both products and markets simultaneously and accordingly has the highest risk – but also the highest potential return.
These are only some of the tools available to help companies visualize their portfolios and manage the product development life cycle. (More templates for product development life cycle management are available here .)
A product roadmap is a graphical representation of a set of related products over time, typically two product cycles or 24-36 months. Roadmaps have at most a monthly granularity, but often display a quarterly time frame. The vertical axis is strategically the most important as it displays the products, how they relate to each other, and how they might relate to the competition in ways that matter. Although one of the most common vertical axes is cost, it can also be speed or the key-feature parameter.
Product Roadmaps provide a visual explanation of a company’s strategy. The optimal Product Roadmap also inspires innovation because it reveals your product’s strongest differentiators to ensure you hit your business goals. Product roadmaps can also improve execution because they help to formulate platform and derivative strategies, and how they unfold over time.
Done right, product roadmaps serve as an organizing principle for decisions around technology requirements, resource allocation, and product positioning. They help align engineering, marketing, sales, support, and the C-suite toward common product development goals.
Product Life Cycle Management Software
Product Life Cycle Management (PLM) software manages all of the data and processes that relate to products from ideation to decline. After products are launched it has become essential to have a system to manage the data related to them including parts numbers, SKUs, requirements, design and manufacturing specs, supply chain data, change orders, and quality documentation.
The earliest PLM software systems were designed to manage the large drawings produced by Computer Aided Design (CAD) systems. These early PLM solutions were focused mainly on the product development side. But as PLM software developed, it became a vital tool for managing the Growth, Maturity and Decline phases of the process. Increasingly sophisticated PLM systems integrated data essential to in-market products from functions such as sales, manufacturing, quality, and regulatory compliance, as products matured in the marketplace.
Today’s PLM tools continue to break down the silos between the various aspects of managing in-market products, including integrating work that happens all over the world. Today’s tools are oriented toward managing the key relationships, mainly with suppliers and customers. While the earliest PLM tools were focused on streamlining internal processes, 21st century tools are increasingly customer-centric. They enable business transformations in ever-changing markets.
Tips for Product Development Life Cycle Management
Tip #1: Have a means of visualizing your complete product portfolio.
Whether it is the product portfolio investment map described above or some other means, companies need to be able to see their portfolio at a glance. This will enable companies to see where products stand relative to their maturity, their market segment, and the product development life cycle.
Tip #2: Develop a minimum viable product (MVP) and then iterate: products and marketing strategies will continue to develop after product launch.
Many companies have discovered that products do not have to have perfect functionality right out of the gate. The life cycle of products is long. First develop prototypes that work, refine them, launch these refinements, and then you can continue to improve them as the life cycle unfolds. Either the products themselves or their related marketing strategies will shift over the life cycle of the product.
Tip #3: Clarify the roles of those involved in new product development vs. those managing existing products.
In too many companies the role of Product Managers, those responsible for in-bound marketing and Product Marketing Managers, those responsible for in-market products, become muddled. Since new product development is one-half of the battle (at least!), separate the roles of in-bound and out-bound marketing and clearly define them.
Tip #4: During the maturity stage, look to carefully differentiate your products.
As products mature, they face increased competition. This is the stage where product differentiation is key. Be aware of the key differentiation points before your product reaches this stage. And then move from a brand awareness strategy to one that differentiates offerings from others in the marketplace.
Tip #5: Look to leverage adjacent markets, especially as products approach the decline stage.
Products decline as existing markets become saturated, or as these markets are disrupted by new technologies. Leveraging adjacent markets is a way of extending the life of an existing product. Think how to take existing products and leverage them in adjacent markets. For example, a game developer might open an entirely new market by creating a game-like app that HR managers use to test and screen candidates. Think this through before the product enters the decline stage.
How Does the Product Life Cycle Affect Development of the MacBook?
Here's what the Product Life Cycle is, and how it influences Apple's development of its MacBook line.
Watching each iteration of devices like the iPhone or MacBook Pro is fascinating. How different features form, how their prices are calculated, and how companies like Apple take feedback from their clients is a complex and ever-changing process.
The term "Product Life Cycle" can be used as a framework to help users understand not only how these iterations form, but why. This model takes market forces, user interest, and technological advancement into account, logically balancing them all.
Mac computers are especially influenced by this life cycle. Hence, they are an interesting case study. Let's look at the Product Life Cycle as it pertains to Apple's MacBook range to learn more.
What Is the Product Life Cycle?
The Product Life Cycle is effectively the amount of time between a product being introduced to the market—even as a preview or teaser—and that same product being discontinued. There are four key stages: introduction , growth , maturity , and decline . There's no set time for products to enter, stay in, or leave each of these stages.
Introduction is typically focused on consumer awareness through advertising and marketing, making them aware of the new product and its advantages. Growth follows if the product is a success, with this stage characterized by demand and increased production.
Maturity , as the most sales-heavy stage, is where the cost of production and marketing fall, meaning that more units can come out. Finally, decline occurs when competitors step into the market, technological advancements make a product obsolete, or consumers lose interest.
One of the most important factors to consider is that newer, more sales-worthy, or more advanced products will push older ones out of the maturity stage and into decline quickly. Apple's machine-like efficiency means that this cycle repeats rapidly, especially with devices like the MacBook Pro that are core offerings.
What Does the Product Life Cycle Mean for Mac Devices?
Mac products have an average life cycle of around 3.5 years, with new models being released every 1.5 years or so, according to model release dates. As mentioned above, this is due to Apple's awareness of what the market and its futures will look like, and is contingent on sales and individual device uptake.
As you may have noticed, few distinct Mac models have come onto the market since the line's launch in 2006. While Macs have a relatively short average life cycle time, there are several influencing factors that can explain why the reality of these devices is quite different. This average life cycle probably takes into account models like the original MacBook that are now completely discontinued. It also likely factors in desktop devices like the iMac, which we've avoided here to keep the scope reasonable.
One reason that only a few new Mac models have come onto the market is so these products don't have to compete with each other internally. You can take the 12 primary generations of iPhone (as well as the Mini, Pro, Pro Max, XS, XR, X, Plus, and regular offshoots) as a great example of intermingling and competition between models.
Another reason is that, especially for the MacBook Pro, sales volumes have stayed consistent. This means that the device has had an extended maturity phase. That's bolstered by the fact that the Pro model has been accepted so well that it is now seen as a "go-to" laptop.
Along the same lines, this also means that advertising costs are minimal. Apple has also been smart to redesign models like the MacBook Pro , without having to reset and send out a completely new generation of devices.
Basically, market forces and user demand both affect Apple's products heavily. While it isn't explicitly discussed, the Product Life Cycle shows us how these changes can influence progression. The graph above displays this nicely.
What Will Happen With MacBooks in the Future?
Effectively, the Product Life Cycle underlines Apple's need to be a constant innovator and provider of products at an exceptional standard. Its MacBook range has, in a lot of ways, already proven itself. Thus, the company's hasn't really had to iterate rapidly, fend off competition, or change strategy.
Read more: Is There a Right Time to Buy a New Mac, iPhone, or iPad?
Compared to devices like the iPhone, which will change rapidly by nature of the tech inside and its role as a small computer, Macs have firmly grounded themselves as robust, innovative, and functional devices. This not a reason to say that Apple has stopped thinking about how to optimize its devices, nor a perfect prediction of future consumer needs and wants.
Speaking retrospectively, the safest conclusion to come to is that the Mac laptop range is not as much at the whim of the Product Life Cycle, compared to something like the iPhone. It's subject to the ebbs and flows of the market, technological developments, and the will of its consumers, but far less than other pieces of tech available.
Apple's MacBook devices are an interesting case study to use with this framework in mind. Their pattern of development is still influenced or even explained by the Product Life Cycle, but nowhere near as strenuously as other products. It can help us to gain somewhat more of an insight into how products like these grow or decline, but cannot be used as a one-size-fits-all explanation as to why.
For more, you should understand planned obsolescence and how this can influence product release decisions.
The Product Life Cycle Shows Why MacBooks Iterate
While the various elements of the cycle help give us more of a complete picture, the truth is that the forces driving technological advancement are often hidden, unexpected, or come about rapidly. Sometimes, we cannot keep track of all the ups and down.
This is why many people see Apple, and Mac products, as innovative. Unlike the average person, they better keep track of the state of the tech world.
Functionality-based life cycle assessment framework: An information and communication technologies (ICT) product case study
Life cycle assessment (LCA) has been widely applied to assessing the environmental impacts of information and communication technologies (ICT) products throughout their lifetime. Building upon LCA methodology, this study proposes a user-oriented, functionality-based LCA (FLCA) framework that evaluates the environmental impact of multifunctional ICT products such as smartphones. Incorporating the quality function deployment and LCA literature, we develop an approach that highlights the linkages among user behavior, product functionalities, and product environmental footprints. We use matrix algebra to outline a computational method and a streamlined process to operationalize such analysis. FLCA analyzes the impact of materials in the context of how they are used. To illustrate the concept with a simple example, our first case study calculates the manufacturing GHG emissions of a well-known multifunctional product, a Swiss Army knife. In the second case study, we estimate the functionality-based GHG emissions of a hypothetical smartphone. We consider various scopes of impact, including at the levels of device, infrastructure, and supply chains. Extending from LCA methods, FLCA moves away from a general understanding of functionality to a more granular perspective to accommodate the complexity in modern ICT products. Our study advances a user-oriented perspective to understand product sustainability impacts. Additionally, it offers a method to provide empirical evidence of the “hidden” impacts of industrial products during consumption, enabling more precise linkage of the production-consumption relationship through LCA toward better design to uncover and address users' needs.
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Product Life Cycle
The stages that a product moves through the marketplace
What is the Product Life Cycle?
The Product Life Cycle (PLC) defines the stages that a product moves through in the marketplace as it enters, becomes established, and exits the marketplace. In other words, the product life cycle describes the stages that a product is likely to experience. It is a useful tool for managers to help them analyze and develop strategies for their products as they enter and exit each stage.
Stages in the Product Life Cycle
The four stages in the product life cycle are:
1. Introduction Stage
When a product first launches, sales will typically be low and grow slowly. In this stage, company profit is small (if any) as the product is new and untested. The introduction stage requires significant marketing efforts, as customers may be unwilling or unlikely to test the product. There are no benefits from economies of scale, as production capacity is not maximized.
The underlying goal in the introduction stage is to gain widespread product recognition and stimulate trials of the product by consumers. Marketing efforts should be focused on the customer base of innovators – those most likely to buy a new product. There are two price-setting strategies in the introduction stage:
- Price skimming : Charging an initially high price and gradually reducing (“skimming”) the price as the market grows.
- Price penetration : Establishing a low price to quickly enter the marketplace and capture market share, before increasing prices relative to market growth.
2. Growth Stage
If the product continues to thrive and meet market needs, the product will enter the growth stage. In the growth stage, sales revenue usually grows exponentially from the take-off point. Economies of scale are realized as sales revenues increase faster than costs and production reaches capacity.
Competition in the growth stage is often fierce, as competitors introduce similar products. In the growth stage, the market grows, competition intensifies, sales rise, and the number of customers increases. Price undercutting in the growth stage tends to be rare, as companies in this stage can increase their sales by attracting new customers to their product offerings.
3. Maturity Stage
Eventually, the market grows to capacity, and sales growth of the product declines. In this stage, price undercutting and increased promotional efforts are common as companies try to capture customers from competitors. Due to fierce competition, weaker competitors will eventually exit the marketplace – the shake-out. The strongest players in the market remain to saturate and dominate the stable market.
The biggest challenge in the maturity stage is trying to maintain profitability and prevent sales from declining. Retaining customer brand loyalty is key in the maturity stage. In addition, to re-innovate itself, companies typically employ strategies such as market development, product development, or marketing innovation to ensure that the product remains successful and stays in the maturity stage.
4. Decline Stage
In the decline stage, sales of the product start to fall and profitability decreases. This is primarily due to the market entry of other innovative or substitute products that satisfy customer needs better than the current product. There are several strategies that can be employed in the decline stage, for example:
- Reduce marketing efforts and attempt to maximize the life of the product for as long as possible (called milking or harvesting).
- Slowly reducing distribution channels and pulling the product from underperforming geographic areas. Such a strategy allows the company to pull the product out and attempt to introduce a replacement product.
- Selling the product to a niche operator or subcontractor. This allows the company to dispose of a low-profit product while retaining loyal customers.
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Case Study Solutions
Product Life Cycle
Subjects Covered Competition Marketing strategy Strategic planning
by E. Raymond Corey, Noel Capon
11 pages. Publication Date: Oct 01, 1978. Prod. #: 579072-PDF-ENG
Product Life Cycle Harvard Case Study Solution and HBR and HBS Case Analysis
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Product Life Cycle
What Is Product Life Cycle?
Product life cycle refers to the duration starting from the time of a product’s introduction in the market until it becomes unavailable to consumers for purchase. Businesses utilize this management tool to make crucial decisions and formulate strategies related to product prices, packaging, and advertising budgets.
This cycle consists of 4 stages — introduction, growth, maturity, and decline. Managing product life cycle efficiently helps businesses to provide customers with what they want and when they want. Moreover, it helps entrepreneurs or business owners determine the right time to introduce a new product to replace the previous one.
Table of contents
Product life cycles explained, #1 – introduction, #2 – growth, #3 – maturity, #4 – decline, frequently asked questions (faqs), recommended articles, key takeaways.
- Product life cycle is the length of time from when a product first enters the market until it is no longer there on the shelves.
- The four product life cycles stages are introduction, growth, maturity, and decline.
- Managing product life cycle by formulating an effective strategy is crucial for businesses to maintain market share and provide the customer with the right product at the right time.
- A product generates the highest profit in the third (maturity) stage.
Product life cycle definition is the process a product goes through after a business introduces it into the market until it becomes unavailable. Its four stages guide entrepreneurs in formulating strategies to utilize these stages to the fullest, ensuring the product succeeds in the market.
American economist Theodore Levitt developed this concept in 1965. As per him, replacing a product with a better one that fulfills new requirements of consumers is inevitable. Hence, the theory’s basic argument is that a product will eventually leave the market irrespective of how popular it is among consumers.
This cycle involves four stages. The first phase starts when a business introduces its product to consumers. In this stage, a company aims to make consumers aware of the product. During the second stage, the product continues to garner popularity. The marketing costs decrease when the product becomes well-known in the third stage. Finally, as the product moves on to the last phase, its demand declines.
There are four product life cycles stages. Let us look at them in detail.
Once companies introduce a product into the market, it will not generate revenue until the consumers know about it. Hence, businesses publicize their products through advertising, press releases, social media posts, etc.
Since they have to spread awareness among consumers quickly, the advertising costs are typically high. Moreover, there are additional expenses at the time of a product launch, for example, distribution and packaging. Thus, in the first stage, the cost of introducing the product is usually more than the income earned.
In the second stage, the product garners more popularity. As product awareness spreads rapidly among consumers, sales increases exponentially. Thus, a business can maximize production capability, reaping the benefits of economies of scale . Moreover, companies can open multiple distribution channels and add different features to its offering.
During the growth stage, a company may face tough competition if other businesses introduce a similar product in the market. This might lead to price competition. Moreover, companies might incur higher marketing expenses to maintain the product’s demand among consumers.
The sales increase rate is lower than that of the growth stage. As a result, companies may cut their prices and increase their marketing activities to compete with other players in the market.
Entrepreneurs learn from the mistakes they made in the first two stages in this phase and take measures to improve efficiency. The advertisements aim at product differentiation from competitors’ offerings rather than spread awareness. A product’s profitability is the highest in the maturity stage as the cost of manufacturing the product decreases while sales continue to rise.
The main objective of a company in the last product life cycle stage is to keep the market share consistent when cheaper alternatives enter the market.
In the final stage, the product’s sales start to decrease along with its profitability . This is mainly because of the introduction of various new products that fulfill the consumers’ requirements better than it.
If a product is on the verge of becoming obsolete, the company can take the following measures:
- They can remove it from the market.
- The management team can lower the marketing expenses or reduce the production cost to maximize the product life for as long as possible.
Let us look at some product life cycles examples to understand the concept better.
There are various examples at every stage of this concept in the home entertainment industry. For instance, videocassettes are no longer there in the market, and smart TVs are in the maturity stage.
Suppose company ABC launches a mobile phone and updates it annually to ensure its market share increases or remains consistent. In this way, ABC makes the product feel new to consumers and delays the transition to the decline stage. This shows ABC is efficient in managing the life cycle.
In July 2022, Unilever introduced a new laundry capsule. The company claims it to be the most sustainable one yet. This product’s specialized formula comprises biodegradable active ingredients and can deliver top-notch performance in cold and short cycles, reducing its carbon footprint by 16% .
The reduced emission across the product’s life cycle will spearhead the efforts put in to decarbonize the global laundry industry.
The information required to make decisions regarding any product depends on the life cycle stage. Hence, an account of a business must be aware of the ongoing stage to prepare information and interpret the same.
Yes, the concept applies to the healthcare industry as well.
In the last few years, the amount of time a product takes to reach the decline stage has increased significantly. The duration varies for different products and depends on the industry as well. That said, on average, products are reaching the decline stage faster. The smartphone space is an ideal example in this regard. Companies are launching new models yearly in all budget segments to compete in the market.
This refers to the accumulation of costs related to a product over its life cycle, i.e., introduction to abandonment.
This has been a guide to What is Product Life Cycles. Here, we explain different product life cycle stages along with examples. You may learn more from the following articles –
- Business Strategy
- Competitive Market
- Product Portfolio
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Product Life Cycle - Case Study Example
- Subject: Management
- Type: Case Study
- Level: Undergraduate
- Pages: 11 (2750 words)
- Downloads: 5
- Author: mherman
Extract of sample "Product Life Cycle"
The researcher states that raw material extraction to final disposal, product lifecycle creates an impact in the environment during this process. In a product lifecycle maximization of the product must necessarily consider the entire production-consumption chain. In an organization which is totally product oriented, each part has to play a specific role in relation to the overall goal of maximizing the products. Product Chain is congenital to quality management. But the full life cycle of a product goes beyond the immediate suppliers and consumers.
For environmental management, the product lifecycle perspective can for mostly be implemented in alliance to the environmental reviews. It not only takes into account the direct environmental effects but also the effects caused by action elsewhere, due to the raw materials bought or due to the products sold. The phrase implies that proper knowledge of the technique used in the process of production would enable the business to care for the environment. The technique to convert the raw materials into the final products is very crucial to the environmental management and social responsibility of a production house.
For instance, oil or fuel is a crucial input. The rise in the prices of oil is a major threat to all the companies whose main focus is to find an alternative source of energy to run their business. The emphasis that the companies are giving is to find out an alternative source of energy at a reduced price. The introduction of ‘ethanol’, ‘biomass’, ‘fuel cells’, ‘wind’, ‘solar’, ‘nuclear’ are the various sources of energy that the companies are focusing on in terms of choosing an option from them.
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Coca-Cola Company: Product Life Cycle
Introduction, background to the study.
The US beverages industry has witnessed rampant growth over the past decades (Spelman Research, 2003, p. 2). This is evident in the large number of domestic and foreign investors who have ventured into the industry. The core operations of the industry entail the production and marketing of diverse non-alcoholic beverages, mineral water, and carbonated beverages. Due to the industry’s profitability potential, the degree of rivalry amongst competing firms has increased.
According to Adam & Armstrong (2005, p. 60), increment in competition amongst rival firms tends to reduce the industry’s level of profitability. This arises from the fact that firms compete to attain significant market share compared to their competitors.
One of the firms operating in this industry is Coca Cola Company. Over the years, the firm has managed to develop a relatively high competitive advantage compared to its competitors. The firm’s management team has appreciated the importance of conducting market trend analysis. This enables the firm to develop effective operational strategies. Through consumer market research, the firm has appreciated the need to meet customers’ needs satisfactorily.
This results from the realization of the fact that consumers change their consumption behavior over time. According to PRLog (2008, para. 1), consumers have become health conscious in their consumption patterns. The report asserts that increment in consumer health awareness has culminated from information explosion regarding beverages and soft drinks. This has been translated into an increment in demand for a soft drink amongst the consumers. In addition, changes within the competitive environment have played a significant role in the operation of the firm. Some of Coca-Cola’s key competitors include PepsiCo and Cadbury Schweppes (Spelman Research, 2003, p. 4).
According to Spelman Research (2003, p. 6), Coca-Cola Company managed to attain a significant market share of 30% in the US industry compared to that of PepsiCo and Cadbury Schweppes which were 27% and 11% respectively. Nestlé’s market share was 3% while other small firms’ market share was 29%. Considering the changes within the external environment, firms need to incorporate effective operational strategies. To attain this, the firm has integrated the concept of product diversity. The firm has been attaining this through continuous product development. This contributes towards the firm meeting consumers’ demands.
This report is aimed at analyzing the product life cycle with specific reference to Coca-Cola Company.
Definition of the product life cycle is given and the four stages of the product life cycle are identified and analyzed. These include introduction, growth, maturity, and decline. In addition, the report gives an analysis of the impact of these stages on the firms marketing strategies. These relate to the product, promotion, pricing, and distribution. Finally, a conclusion and recommendations are given.
Product Life Cycle
According to 12 Manage (2010, para. 7), the Product Life Cycle (PLC) is defined as the stages that a given product undergoes in its development. For a firm to succeed in an environment characterized by intense competition, it is paramount for the firm to incorporate effective entrepreneurial strategies. One of the key strategies that a firm’s management team can integrate relate to invention and innovation.
The resultant effect is that the firm can attain a high competitive strategy relative to its competitors. In its operation, Coca-Cola Company has effectively incorporated the concept of product innovation. As a result, the firm has introduced several segments. These include carbonates, fruit juices, bottled water, functional drinks, and Ready-To-Drink (RTD) tea and coffee. These products are traded under different brand names (Spelman Research, 2003, p.7). For these products to succeed in the market, it is paramount for the firm’s management team to consider the concept of PLC.PLC has 4 stages which include;
Growth stage, maturity stage, decline stage.
The concept of PLC is based on the same concept of the biological life cycle. Over the years, PLC has become very important in the operation of firms. This is because firms are increasingly incorporating product development to attain their profit maximization objective. As result, the firm’s management teams are being committed to ensuring that this objective is attained within the PLC. This makes it clear that the firm’s management teams must incorporate the concept of PLC in the process of formulating and implementing diverse marketing strategies.
Upon successful development of a product, the product has to be introduced in its specific target market. This contributes towards the target customers accessing the product. This is the firm’s first step towards ensuring that there is sufficient market awareness regarding the product. Significant cost is incurred at the introduction phase. For instance, the successful introduction of a product in the market is determined by the effectiveness with which the firm has tested the market.
In addition, the cost of introducing the product into the market will also be increased by the need to create market awareness through promotion. At this stage, the firm’s ratio of promotion expenditure to sales is very high. The cost involved at this stage is also increased by the need to secure an effective distribution channel (Free presentation slides, 2008, para. 7).
To compete with firms producing a variety of functional products, Coca Cola Company introduced Bubble Buzz which is a tea product. The need to develop the new product was instigated by a change in consumer demands for the soft drink. According to Afsha, Chin-Yun, Audrey, and Nicolas (2006, p. 6), there is a shift in consumer consumption patterns. Currently, consumers do not prefer carbonated drinks. The product was specifically designed to meet the physiological, nutritional, and hydrating demands of the customers. According to Marketing Teacher (2010, para. 5), the need for the firm to attain instant profit is not a key consideration in this phase. As a result, the introduction stage is characterized by relatively low market size and slight growth.
At this stage, the product has already penetrated the market. As a result, the firm’s level of profit is increased due to a high rate of sales growth. In addition, firms attain economies of scale at this phase enabling them to develop their competitive advantage about pricing. The intensity of competition also increases at this stage. This arises from the fact that a large number of potential investors are attracted to venture into the industry. As a result, it becomes vital for firms to incorporate strategies aimed at building the brand. One of the strategies relates to market communication strategies.
This is attained through an increment in the firm’s commitment to its promotion campaign enabling the product to survive in the market. In addition, the firm’s market share at this stage starts to stabilize. In marketing its Bubble Buzz product within the RTD tea segment, the Coca-Cola Company has witnessed a relatively high level of market share. By 2003, the segment was the fastest growing. According to Spelman Research (2003, p. 3), the market for RTD tea has witnessed an annual growth of 6%. This growth has been sustained for the last 5 years.
The maturity stage is universal in all the products. At this stage, the degree of rivalry amongst competing firms is very high. This results from the fact that all firms are fighting to retain their market share. In addition, firms receive the highest level of profits at this stage. However, growth in sales is at a low rate until they stabilize.
At this stage, the market for the product shrinks leading to a reduction in the level of profit within the industry. The shrink may result from a shift in consumer tastes and preferences or the introduction of other products which are more innovative.
Impact of PLC on marketing strategies
At this phase, product awareness is vital. Thus, the company must strategize on how to market its product/service. This can only be attained through the incorporation of a promotion strategy. Depending on the target market, the firm has to determine the best promotion method at the introduction phase. However, a firm needs to consider Integrated Marketing Communication (IMC) at this phase.
According to Adam& Armstrong (2005, p. 65), IMC entails diverse methods of creating market awareness. This will ensure that information awareness is effectively created within the target market. In introducing Bubble Buzz in the market, the Coca-Cola Company utilized diverse promotion methods. These included advertising, public relation, sales promotion, and incorporation of emerging information communication technologies. This enabled the product to be widely recognized in the domestic and international markets.
According to Marketing Teacher ( 2010, para. 4), there is a low probability of a firm making a profit about new products being introduced in the market during their introduction stage. At this stage, the firm’s management team should formulate effective monitoring strategies. These strategies should be aimed at ensuring that the product penetrates the market and start to grow. In addition, monitoring the products at this phase will safeguard against the products from being withdrawn.
Because consumers are price-sensitive, it is paramount that the management teams formulate an effective pricing strategy. In their purchasing patterns, price is one of the variables that consumers consider. This makes it important for firms to decide on the best pricing strategy to utilize in this stage. Because the product is new to the market at this phase, a penetration pricing strategy should be incorporated.
The strategy entails setting the price of the product at a relatively low price compared to its competitors. As a result, the price set will appeal to the consumers making them consider purchasing the product. The ultimate result is that a firm can penetrate the market and attain a large market share. However, a penetration pricing strategy should be used when the market size of the product is large and the intensity of competition is high (Free presentation slides, 2008, para. 9). For Coca-Cola Company to effectively penetrate its target market for Bubble Buzz, penetration pricing was used.
Considering the intensity of competition at the growth stage, it is paramount for firms to consider attaining price competitiveness. At this stage, the firm has already attained economies of scale. This will make it possible for the firm to set the price of its products at a low point.
The maturity stage has an impact on the firm’s pricing strategy. This arises from the intensity of competition characterizing this stage. This makes the maturity stage to be characterized by a price war.
At the decline stage, most of the firms cut the price of their products to attract and retain customers. However, consumers are attracted to more innovative products. In extreme situations, the product may be withdrawn.
Product and Expansion strategy
For a firm to be competitive, continuous product innovation should be undertaken (Adam & Armstrong, 2005, p. 66). At this juncture, the market is by now saturated. This is because a large number of similar products are introduced in the market by competing firms. At this stage, the firm needs to integrate product differentiation. This will enable the firm’s products to be unique.
The maturity stage has an impact on the firms financing and marketing activities. Due to the intensity of competition, the firm has to be keen on the marketing strategy adopted. This is because there is a high probability of the competitor adopting the same strategy. The effect is that the strategy will not be effective. To attain a competitive edge during the growth phase; firms have to consider strategies aimed at attaining a high market share through expansion.
Some of the strategies that firms consider integrating relate to the formation of joint ventures, takeovers, and formation of alliances (Marketing Teacher, 2010, para. 8). This enables firms to enable the firm to position themselves in the market. The above expansion strategy culminates in an improvement in the firm’s production efficiency. To implement these strategies, a significant amount of finance is required. This makes it vital for the firm to make an optimal financing decision. In addition, finances are paramount at this stage since it enables the firm to conduct product development more effectively. This can be achieved through the incorporation of product innovation leading to an improvement in the quality of products.
In the decline juncture, the organization must look for alternative markets for its products where they can offer them at a lower price. In addition, the firm should reduce the amount incurred in its production cost.
For a firm to be successful in the long term, it should consider developing effective operational strategies. One of the strategies that should be incorporated relates to product innovation. Upon introducing the product in the market, the firms’ management team needs to consider its life cycle. Most products have 4 stages. Each stage has different characteristics about the market. By considering these stages, a firm can able to formulate and implement effective marketing strategies.
This is because these stages have an impact on the strategies relating to the product, price, promotion, and distribution. According to the stage of the product, a firm can be able to adjust its marketing strategies. The ultimate effect is that the firm can develop a high competitive advantage.
Coca-Cola Company should consider the following in marketing its products.
- Conduct continuous evaluation of the products PLC.
- Adjust its marketing strategies according to the various stages of its products.
Adam, K. & Armstrong, D., 2005, Principles of marketing. Australia: Pearson Education.
Afsha, B., Chin-Yun, C., Audrey,L. & Nicolas, R. 2006. Example of a marketing plan: bubble buzz. New York: University of New York. Web.
Free Presentation Slides. 2008. Introduction phase of product life cycle concept. New York: Amazon Kindle Review. Web.
Marketing Teacher. 2010. The product life cycle. New York: Marketing Teacher Limited. Web.
PRLog. 2008. Soft drink production in the US . Washington: Bharatbook. Web.
Spelman Research. 2003. US soft drink market. New York: Independent Investment Research. Web.
12 Manage. 2010. Analyzing industry maturity stages: explanation of product life cycle of Levitt. London; The Executive Fast Track. Web.
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