Product Life-Cycle Analysis. Key Actions to make products more competitive and well positioned in the market.

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.

Action
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.

Introduction stage
? 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.

Growth stage
? 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.

Maturity stage
? 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.

Decline stage
? 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.

Product Life-Cycle Analysis. Key Actions to make products more competitive and well positioned in the market.

The Product Life-Cycle Concept. Improve Product Performance by understanding its Product Life-cycle analysis.

The Product Life-Cycle Concept

The product life cycle is the sales pattern of growth and decline of a product over a period of time. This period may be the whole life of the product from its launch until it is withdrawn because it is no longer profitable or because it has been replaced.
Product life-cycle analysis is the process of describing and forecasting the pattern of sales for a product for a period of time or the whole of its life.

The typical cycle
Stage 1: Introduction. This is the period immediately following the launch when, if all goes according to plan, sales will grow slowly but steadily as the product is progressively introduced to the market. Profits are probably non-existent during this stage because of the costs of introducing the product; promotional costs are high in proportion to sales, and costs per unit of output are high because of low volume.

Stage 2: Growth. This is the period when market penetration increases rapidly. If the new product is successful, the rate of sales growth gains momentum as consumer/user demand expands following increased knowledge and acceptance of the product because of advertising, sales promotion and field sales effort.
This growth in customer awareness and satisfaction is exploited progressively during this period by segmentation and differentiation and by expanding into new markets. Profits increase steadily during this period.

Stage 3: Maturity. When this stage is reached, the basic product concept has gained considerable consumer acceptance. However, although the demand for it may continue to rise slightly, the rate of increase has diminished considerably and may eventually 'plateau out' or even decline. The reduced rate of growth is partly caused by increased competition from other companies either entering the market with new versions of the product or attacking the market share achieved by the product through more aggressive advertising, promotion, selling or pricing policies. The slowdown in sales growth may also be caused by the market becoming saturated for the product as it exists. During this stage profits stabilize or decline because of increased marketing outlays to defend the product against competition.

Stage 4: Decline. The sales of most product forms and brands eventually dip because of consumer shifts in tastes, increased competition, technological advances and the availability of substitute products. The market may be saturated and, unless action is taken, sales and profits will decline to zero or petrify at a low level. Purchases will tend to be of the replacement type, but brand loyalties will progressively diminish if nothing is done about it.

The Product Life-Cycle Concept. Improve Product Performance by understanding its Product Life-cycle analysis.