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Product Lifecycle



Historicalevolution

1.Theproductlifecycledefinedbymarketingis:introduction,growth,maturity,anddecline.Thiscannolongersummarizetheentireprocessoftheproductlifecycle.Justlikethelifecycleofapersonwillneverbetheprocessfrombirthtodeath.Wedefinethesefourstagesas:productmarketlifecycle.

2.WiththeriseofPLMsoftware,theproductlifecyclebeginstoincluderequirementscollection,conceptdetermination,productdesign,productlaunchandproductmarketlifecyclemanagement.Justlikethehumanlifecycle,theparent’spreparationandpregnancyprocessandtheprocessofchildbirthalsodefinethehumanlifecycle.

3.Manyexcellentcompaniesinmoderntimesfeelthattheabovetwolifecyclescannotfullysummarizetheproductlifecycle.Basedontheconceptofproductmanagement,theproductlifecycleissummarizedas:productstrategy,productmarket,productdemand,productplanning,productdevelopment,productlaunch,productdelistinglifecyclemanagement7parts.

Principle

(1)Productlifecyclestages

Atypicalproductlifecyclecangenerallybedividedintofourstages,namelyEntryperiod,growthperiod,saturationperiodanddeclineperiod

1.Entryperiod.Whenanewproductisputonthemarket,itenterstheinvestmentperiod.Atthistime,customersstilldon’tunderstandtheproduct,andonlyafewcustomerspursuingnoveltymaybuyit,andthesalesvolumeisverylow.Inordertoexpandsales,alotofpromotionalexpensesarerequiredtopromotetheproducts.Atthisstage,duetotechnicalreasons,theproductscannotbeproducedinlargequantities,sothecostishigh,andthesalesgrowthisslow.Notonlycanthecompanynotgetprofits,butitmaylosemoney.Theproductalsoneedstobefurtherimproved.

2.Growthperiod.Atthistime,customersarealreadyfamiliarwiththeproduct,alargenumberofnewcustomersstarttobuy,andthemarketisgraduallyexpanding.Theproductsaremass-produced,theproductioncostisrelativelyreduced,thecompany'ssalesarerisingrapidly,andtheprofitsarealsogrowingrapidly.Competitorsseeprofitabilityandwillenterthemarketoneafteranothertoparticipateinthecompetition,sothatthesupplyofsimilarproductswillincrease,andthepricewilldecreaseaccordingly.Thegrowthrateofcorporateprofitswillgraduallyslowdown,andfinallythehighestpointoflifecycleprofitwillbereached.

3.Saturationperiod.Themarketdemandtendstobesaturated,therearefewpotentialcustomers,andthesalesincreaseslowlyuntilitturnsdown,whichindicatesthattheproducthasenteredamatureperiod.Atthisstage,competitionhasgraduallyintensified,productpriceshavefallen,promotionalexpenseshaveincreased,andcorporateprofitshavefallen.

4.Declineperiod.Withthedevelopmentofscienceandtechnology,theappearanceofnewproductsornewsubstituteswillchangetheconsumer'sconsumptionhabitsandswitchtootherproducts,whichwillcausethesalesandprofitsoftheoriginalproductstodeclinerapidly.Asaresult,theproducthasenteredaperiodofdecline.

(2)Productcategory,form,andbrandlifecycle

Productcategoryreferstoallproductswiththesamefunctionandpurpose.Productformreferstodifferentproductsofthesamecategorythathavedifferentauxiliaryfunctions,uses,orphysicalsales.Theproductbrandreferstoaspecificproductproducedandsoldbyanenterprise.Forexample,Baishabrandfiltercigarettes,cigarettesindicatetheproductcategory;filtercigarettesareatypeofcigarette,thatis,productform;Baishabrandfiltercigarettesspecificallyrefertoaspecificproductandaproductbrandinfiltercigarettes.Thelifecycleofaproductcategoryislongerthantheproductformandproductbrand,andthematurityperiodinthelifecycleofsomeproductcategoriesmaycontinueindefinitely.Theproductformgenerallyshowstheabove-mentionedtypicallifecycleprocess,thatis,startingfromtheintroductionperiod,passingthroughthegrowthperiod,thematurityperiod,andfinallythedeclineperiod.Asforthelifecycleofbrandedproducts,itisgenerallyirregular,anditisaffectedbythemarketenvironment,corporatemarketingdecisions,andbrandawareness.Abrandwithahighreputationhasalonglifecycle,andviceversa.Forexample,internationallyrenownedbrandslike"Coca-Cola"haveremainedsopopularforahundredyears.

Briefdescriptionofthecycle

Theconceptofproductlifecycle(productlifecycle),referredtoasPLC,istocomparethesaleshistoryofaproducttothelifecycleofaperson.Stagesofgrowth,maturity,aging,anddeath.Asfarastheproductisconcerned,itmeansgoingthroughastageofdevelopment,introduction,growth,maturity,anddecline.

(1)Productdevelopmentperiod

Theperiodfromtheideaof​​developingtheproducttothesuccessfulmanufacturingoftheproduct.Duringthisperiod,thesalesoftheproductwaszero,andthecompany'sinvestmentcontinuedtoincrease.

(2)Introducingperiod

Newproductsarenewlylaunchedandsalesareslow.Becausethecostofintroducingproductsistoohigh,theinitialprofitisusuallylowornegative,butatthistimetherearenoorveryfewcompetitors.

(3)Growthperiod

Afteraperiodoftime,theproducthasbecomequitewell-known,withrapidsalesgrowthandasignificantincreaseinprofits.However,duetotherapidgrowthofthemarketandprofits,itiseasytoattractmorecompetitors.

(4)Maturityperiod

Atthistime,themarketgrowthtrendisslowingdownorsaturated,theproducthasbeenacceptedbymostpotentialbuyers,andprofitsgraduallydeclineafterreachingthepeak.Atthistime,themarketisfiercelycompetitive,andthecompanyneedstoinvestalotofmarketingexpensesinordertomaintainitsproductposition.

(5)Recessionperiod

Duringthisperiod,productsalesdeclinedsignificantly,andprofitsfellsharply.Withthesurvivalofthefittest,therearemoreandmoremarketcompetitors.

Cyclecurve

Characteristicsofthelifecyclecurve:Duringtheproductdevelopmentperiod,theproductsalesarezero,andthecompany'sinvestmentcontinuestoincrease;duringtheintroductionperiod,salesareslow,andinitialprofitsareusuallylowOranegativenumber;duringthegrowthperiod,salesincreaserapidly,andprofitsalsoincreasesignificantly;duringthematureperiod,profitsgraduallydeclineafterreachingthepeak;duringtherecessionperiod,productsalesdeclinesignificantly,andprofitsalsodropsignificantly.

Scopeofapplication:Thecurveissuitableforthedescriptionofthelifecycleofgeneralproducts;itisnotsuitableforthedescriptionofthelifecycleofstyle,fashion,hotandscallopproducts.

Marketingstrategy

Thefourstagesofatypicalproductlifecyclepresentdifferentmarketcharacteristics,andthecompany’smarketingstrategyisformulatedandimplementedbasedonthecharacteristicsofeachstage.

Marketingstrategyduringtheintroductionperiod

Thecharacteristicsoftheintroductionperiodarelowproductsales,highpromotionexpenses,highmanufacturingcosts,andloworevennegativesalesprofits.Accordingtothecharacteristicsofthisstage,companiesshouldstrivetoachieve:theproductsputintothemarketshouldbetargeted;thetimeofenteringthemarketshouldbeappropriate;trytodirectsalesforcetothemostlikelybuyers,sothatthemarketcanaccepttheproductassoonaspossible.Shortentheintroductionperiodandenterthegrowthperiodfaster.

Duringtheproductintroductionperiod,thefourbasicelementsofproduct,distribution,price,andpromotioncangenerallybecombinedintoavarietyofdifferentmarketingstrategies.Consideringonlythepricelevelandthepromotioncostlevel,therearethefollowingfourstrategies:

1.Quickfatskimmingstrategy.

Newproductsarelaunchedathighpricesandhighpromotionalexpenses.Theimplementationofahighpricestrategycanmaximizetheprofitperunitofsalesandrecovertheinvestmentassoonaspossible;thehighpromotioncostcanquicklyestablishpopularityandoccupythemarket.Toimplementthisstrategy,thefollowingconditionsmustbemet:theproducthasalargedemandpotential;thetargetcustomerhasastrongdesirefornewproductsandiseagertobuynewproducts;theenterprisefacesthethreatofpotentialcompetitorsandneedstoestablishabrandimageassoonaspossible.Generallyspeaking,intheproductintroductionstage,aslongasthenewproducthasaclearadvantageoverthealternativeproduct,themarketwillnotcareaboutitspricesomuch.

2.Slowfatskimmingstrategy.

Introducenewproductswithhighpricesandlowpromotionalexpenses,withthegoalofobtainingmoreprofitsatthelowestpossibleexpense.Theconditionsforimplementingthisstrategyare:themarketissmall;theproducthasacertainreputation;thetargetcustomersarewillingtopayhighprices;thethreatofpotentialcompetitionisnotbig.

3.Rapidpenetrationstrategy.

Introducenewproductsatlowpricesandhighpromotionalcosts.Thepurposeistopreemptively,enterthemarketasquicklyaspossible,andobtainthelargestpossiblemarketshare.Then,withtheexpansionofsalesandoutput,unitcostsarereducedandeconomiesofscaleareachieved.Theconditionsforimplementingthisstrategyare:themarketcapacityoftheproductisquitelarge;potentialconsumersdonotunderstandtheproductandareverysensitivetoprice;thepotentialcompetitionisfierce;theunitmanufacturingcostoftheproductcanberapidlyreducedwiththeexpansionofproductionscaleandsalesvolume.

4.Slowpenetrationstrategy.

Introducenewproductsatlowpricesandlowpromotionalcosts.Lowpricescanexpandsales,andlowpromotionalexpensescanreducemarketingcostsandincreaseprofits.Theapplicableconditionsofthisstrategyare:themarketislarge;theproductiswell-knowninthemarket;themarketisveryprice-sensitive;therearesomepotentialcompetitors,butthethreatisnotbig.

Growthperiodmarketingstrategy

Afterthenewproducthaspassedthemarketintroductionperiod,consumersarealreadyfamiliarwiththeproduct,consumptionhabitshavealsobeenformed,andsalesvolumehasgrownrapidly.ThisnewproductItenteredthegrowthperiod.Afterenteringthegrowthperiod,oldcustomersrepeatedpurchasesandbroughtinnewcustomers,salesvolumesurged,corporateprofitsincreasedrapidly,andprofitsreachedapeakatthisstage.Withtheincreaseinsalesvolume,thescaleofproductionisgraduallyexpanding,thecostofproductsisgraduallyreduced,andnewcompetitorswillenterthecompetition.Ascompetitionintensified,newproductfeaturesbegantoappear,productmarketsbegantobesegmented,anddistributionchannelsincreased.Inordertomaintainthecontinuedgrowthofthemarket,companiesneedtomaintainorslightlyincreasepromotionalexpenses,butduetotheincreaseinsales,theaveragepromotionalexpenseshavedeclined.Inviewofthecharacteristicsofthegrowthperiod,inordertomaintainitsmarketgrowthrateandextendthetimetomaximizeprofits,companiescanadoptthefollowingstrategies:1.Improveproductquality.Suchasaddingnewfunctions,changingproductstyles,developingnewmodels,anddevelopingnewuses.Improvingtheproductcanimprovethecompetitivenessoftheproduct,meetthewiderneedsofcustomers,andattractmorecustomers.

2.Lookingfornewmarketsegments.

Throughmarketsegmentation,findnewunsatisfiedmarketsegments,organizeproductionaccordingtotheirneeds,andquicklyenterthisnewmarket.

3.Changethefocusofadvertising.

Changethefocusofadvertisingfromintroducingproductstobuildingproductimage,establishproductbrandnames,maintainoldcustomers,andattractnewcustomers.

4.Reducepricesinduecourse.

Attherighttime,apricereductionstrategycanbeadoptedtostimulatethoseconsumerswhoaremoreprice-sensitivetopurchasemotivationandtakepurchaseactions.

Matureperiodmarketingstrategy

Afterenteringthematurityperiod,thesalesvolumeoftheproductgrowsslowly,reachesthepeakgradually,andthenslowlydeclines;thesalesprofitoftheproductalsorisesfromthehighestinthegrowthperiodThepointbeginstodrop;marketcompetitionisveryfierce,andsimilarproductsofvariousbrandsandstylescontinuetoappear.

Forproductsinthematurityperiod,aproactivestrategyshouldbeadoptedtoextendthematurityperiodorrecycletheproductlifecycle.Tothisend,thefollowingthreestrategiescanbeadopted:

1.Marketadjustment.Thisstrategyisnottoadjusttheproductitself,buttodiscovernewusesoftheproduct,seeknewusers,orchangesalesmethods,etc.,sothatproductsalescanbeexpanded.

2.Productadjustment.Thisstrategyistomeetthedifferentneedsofcustomersthroughtheadjustmentoftheproductitselfandattractcustomerswithdifferentneeds.Anylevelofadjustmentoftheoverallproductconceptcanberegardedasare-launchoftheproduct.

3.Marketingmixadjustment.Thatis,throughcomprehensiveadjustmentstothefourmarketingmixfactorsofproducts,pricing,channels,andpromotions,tostimulatethereboundinsales.Commonlyusedmethodsincludeloweringprices,increasingpromotionlevels,expandingdistributionchannels,andimprovingservicequality.

Marketingstrategyintherecessionperiod

Themaincharacteristicsoftherecessionperiodare:productsalesdeclinesharply;theprofitthatthecompanyobtainsfromthisproductisveryloworevenzero;alotofcompetitionConsumerswithdrawfromthemarket;consumers’consumptionhabitshavechanged,etc.Facedwithproductsinarecessionperiod,companiesneedtoconductseriousresearchandanalysistodecidewhatstrategiestoadoptandwhentowithdrawfromthemarket.Thereareusuallythefollowingstrategiestochoosefrom:

1.Continuestrategy.Continuetousethepaststrategy,stillusethesamedistributionchannels,pricingandpromotionmethodsinaccordancewiththeoriginalmarketsegment,untilthisproductiscompletelywithdrawnfromthemarket.

2.Centralizedstrategy.Concentratecorporatecapabilitiesandresourcesonthemostfavorablemarketsegmentsanddistributionchannelstoobtainprofitsfromthem.Thiswillhelpshortenthetimeforproductstowithdrawfromthemarket,whileatthesametimecreatingmoreprofitsforthecompany.

3.Shrinkagestrategy.Abandonthehopelesscustomergroups,greatlyreducethelevelofpromotion,andminimizethepromotionexpensesinordertoincreaseprofits.Thismayleadtoacceleratedproductdeclineinthemarket,butitcanalsomakeprofitsfromcustomerswhoareloyaltothisproduct.

4.Giveupstrategy.Forproductsthataredecliningrapidly,weshouldactdecisivelyandgiveupbusiness.Itcantaketheformofcompleteabandonment,suchastransferringtheproductcompletelyorstoppingproductionimmediately;itcanalsoadoptthemethodofgradualabandonment,sothattheresourcesoccupiedbyitcanbegraduallytransferredtootherproducts.

ThebackgroundofproductlifecycletheoryTheproductlifecycletheorywasfirstproposedbyProfessorFeinongofHarvardUniversityinhisarticle"InternationalInvestmentandInternationalTradeintheProductCycle"in1966.Feinongbelievesthatproductlifereferstothemarketinglifeinthemarket.Likehumanlife,productshavetogothroughthecycleofformation,growth,maturity,anddecline,andthetimeandprocessofthiscycleincountrieswithdifferenttechnicallevels.Itisnotthesame.Thereisabiggapandtimedifferencebetweenthem.Itisthistimedifferencethatismanifestedasthetechnologicalgapofdifferentcountries.Itreflectsthedifferenceinthecompetitivepositionofthesameproductinthemarketofdifferentcountries,andthusdeterminesInordertofacilitatethedistinctionbetweeninternationaltradeandinternationalinvestment,Feinongdividedthesecountriesintoinnovativecountries(usuallythemostdevelopedcountries),generallydevelopedcountries,anddevelopingcountries.

Fenongalsodividestheproductlifecycleintothreestages,thenewproductstage,thematureproductstageandthestandardizedproductstage.Feinongbelievesthatinthenewproductstage,theinnovatingcountryusesitsmonopolytechnologicaladvantagestodevelopnewproducts.Becausetheproducthasnotbeenfullyformed,thetechnologyisnotperfect,andtherearefewercompetitors,lesscompetitioninthemarket,andfeweralternativeproducts.Theaddedvalueoftheproductishigh,andthedomesticmarketcanmeetitsrequirementsforhighprofits.Veryfewproductsareexportedtoothercountries,andmostoftheproductsaresoldinthecountry.Atthestageofmatureproducts,duetothebreakingoftechnologicalmonopolyandmarketoligopolyofinnovativecountries,morecompetitors,fiercemarketcompetition,morealternativeproducts,andloweraddedvalueofproducts,enterprisesarepayingmoreandmoreattentiontothedeclineofproductcosts.Costsarebeginningtobeinanincreasinglyfavorableposition,andthemarketsofinnovativecountriesanddevelopedcountriesarebeginningtobecomesaturated.Inordertoreducecosts,improveeconomicefficiency,andrestraindomesticandforeigncompetitors,companieshaveinvestedindevelopingcountriestobuildfactoriesandgraduallyabandondomesticproduction..Inthestageofstandardizedproducts,theproductiontechnology,scaleofproductionandtheproductitselfarefullymature.Atthistime,therequirementsfortheskillsoftheproducerarenothigh.Theoriginalmonopolytechnologyadvantageofthenewproductcompanyhasdisappeared,andthecostandpricefactorshavebecomethedecisivefactors.Atthistime,developingcountriesalreadyhaveobviouscostfactoradvantages.Inordertofurtherreduceproductioncosts,innovatingcountriesandgenerallydevelopedcountrieshavebeguntoinvestinlargenumbersoffactoriesindevelopingcountries,andthenselltheirproductstoothercountriesandthird-countrymarkets.Accordingtotheintroduction,theproductlifecycletheoryexistsasoneofthedirectinvestmenttheoryofinternationaltradetheory.Itreflectsthedirectinvestmentprocessofinternationalenterprisesfromthemostdevelopedcountriestothegeneraldevelopedcountriesandthentothedevelopingcountries.

Advantagesanddisadvantages

Advantages

Theadvantagesofproductlifecycletheoryare:

Productlifecycle(PLC)providesasetofapplicableMarketingplanningperspectives.Itdividestheproductintodifferentstrategicperiods,andmarketerscanadoptdifferentmarketingmixstrategiesaccordingtothedifferentcharacteristicsofeachstage.Inaddition,theproductlifecycleonlyconsidersthetwovariablesofsalesandtime,whichissimpleandeasytounderstand.

Disadvantages

Thedisadvantagesare:

a.Itisnoteasytoidentifythestartingandendingpointsofeachstageoftheproductlifecycle.

b.NotallproductlifecyclecurvesarestandardS-shaped,andtherearemanyspecialproductlifecyclecurves.

c.Itisimpossibletodeterminewhethertheproductlifecyclecurveissuitableforasingleproductprojectleveloraproductcollectionlevel.

d.Thecurveonlyconsiderstherelationshipbetweensalesandtime,anddoesnotinvolveothervariablesthataffectsalessuchascostandprice.

e.Itiseasytocause"marketingmyopia",believingthattheproducthasreachedaperiodofdecline,andprematurelyweedoutgoodproductsthatstillhavemarketvaluefromtheproductline.

f.Productdeclinedoesnotmeanthatitcannotberegenerated.Ifappropriateimprovementstrategiesareadopted,thecompanymaycreateanewproductlifecycle.

Specialproduct

Specialproductlifecycleincludesfourspecialtypes:styleproductlifecycle,fashionproductlifecycle,hotproductlifecycle,andscallop-shapedproductlifecycle,TheirproductlifecyclecurveisnottheusualS-shaped.

Style

isabasicbutprominentwayofexpressioninhumanlife.Onceastyleisproduced,itmaylastforseveralgenerations,presentingarecyclingpatternbasedonpeople'sinterestinit,sometimespopular,andsometimesnotpopular.

Fashion

referstoastylethatisacceptedandwelcomedbyeveryoneinacertainfield.Thecharacteristicofthelifecycleofafashionableproductisthatfewpeopleacceptitwhenitfirstgoesonthemarket(calledtheuniquestage),butthenumberofacceptanceslowlygrowsovertime(theimitationstage),andfinallyitiswidelyaccepted(alargenumberofpopularstages),andfinallyslowRecession(recessionphase),consumersbegintoturntheirattentiontoanotherfashionthatappealstothemmore.

Fad(fad)

isatrendyfashionthatquicklyattractspublicattention,commonlyknownasfashion.Thelifecycleofboomingproductstendstogrowrapidlyanddeclinerapidly,mainlybecauseitonlymeetshumancuriosityorneedsforawhile,andattractsonlyasmallnumberofpeopleseekingexcitementandinnovation,andusuallycannotmeetmoreintenseneeds.

Scallop(scallop)

Thescallopproductlifecyclemainlyreferstothecontinuousextensionandextensionoftheproductlifecycle,whichisoftenduetoproductinnovationornewusesfoundfromtimetotime.

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