Product Life-Cycle Analysis
Product life-cycle analysis is the process of assessing the type of life cycle which is applicable to the product, the point in the life cycle where the product is, and the reasons why it is in this position. For existing company products, the analysis provides a basis for forecasts of future sales and for deciding on recycling actions. But the analysis of the stage in the life cycle which products already marketed by other companies have reached helps in decisions on whether to develop and launch new or substitute products.
The analysis of the company's own products covers:
? trends in sales volume;
? trends in profit;
? trends in market share – rate of market penetration;
? economic trends (which may explain a growth or decline in sales);
? the pattern of sales – who buys, where they buy, to what extent they are first-time or repeat buyers;
? consumer opinions about the product derived from consumer surveys, media comment or test-marketing; and
? the features of the product compared with what is available elsewhere or is becoming available.
The analysis of competitive products also measures sales volume, market share and the pattern of sales. In addition, it assesses the reasons why the products are more or less competitive: price, advertising, promotion, sales, distribution and servicing effectiveness, product features which are uniquely attractive or increase the perceived value of the product.
The main benefit of product life-cycle analysis is that it forces the company to recognize what is happening to its product in the marketplace over time. Forecasts can be made of future trends and the likely impact of competition. The strengths and weaknesses of the company's product are identified so that the former can be exploited and the latter overcome. Life-cycle analysis is a continuous process which enables the company to review its marketing mix on the basis of a better understanding of the performance of its product.
As a result of the analysis the following are actions that can be taken to ensure that a favourable trend continues or to arrest a decline by recycling.
? Increase advertising and promotional expenditure to accelerate growth.
? Adjust prices to increase penetration.
? Adjust promotional message and sales approaches in response to analysis of consumer reactions.
? Improve product features in response to initial consumer reaction.
? Improve quality.
? Modify product characteristics.
? Extend market into new segments.
? Develop new distribution channels.
? Reduce prices to attract the next layer of price-sensitive buyers.
? Find new market segments and customers.
? Reposition brand to appeal to a larger or faster-growing segment.
? Encourage increased usage among existing customers.
? Modify product characteristics – new features, style improvements.
? Modify marketing mix, eg cut prices, advertise or promote more aggressively, move into higher-volume market channels.
? Maintain brand in the hope that competitors will withdraw their products.
? Harvest brand, ie maximize profits by reducing costs but keeping up sales pressure.
? Terminate and withdraw the product.