Lecture Notes: Understanding the Product Life Cycle

Introduction to Portable Music History

• Discussion on outdated technology:
  • Cassette players
  • 8-track tape players
  • 8-track tapes: MP3s or Spotify of the past; popular from late 1960s to 1980s
  • Replaced by cassette tapes and then CDs
• Importance: Understand the product life cycle through portable music examples

Clarification: Product Life Cycle (PLC) Theory

• Industry Product Life Cycle vs. Product Life Cycle:
  • PLC theory applies to the product category at an industry level
  • Individual products can enter at different stages
• Example: Introduction of a new soft drink in an established market
  • Strategy depends on the stage of the industry PLC

Key Aspects of the Product Life Cycle (PLC)

• Measurement: Comparison of product category sales over time
  • Vertical axis: Growth in dollars
  • Horizontal axis: Time

Stages of the Product Life Cycle

1. Introduction Stage

• Characteristics:
  • One version of the product unique to the company
  • High pricing (skimming pricing) for investment recovery
  • Limited distribution, often through specialty stores
  • Promotions focus on educating consumers

2. Growth Stage

• Characteristics:
  • Sharp rise in sales; product gaining popularity
  • Increase in competition
  • Product modifications and different versions available
  • Competitive pricing strategies; differentiation plays a key role
  • Expanded distribution networks
  • Promotions emphasize product features and comparisons

3. Maturity Stage

• Characteristics:
  • Highest level of competition; many versions available
  • Product modifications for differentiation
  • Highly competitive pricing (value pricing)
  • Extended distribution everywhere
  • Comparison-oriented promotions emphasizing product benefits

4. Decline Stage

• Characteristics:
  • Market moving on, product becomes obsolete
  • Limited versions available; minimal competition
  • Pricing: Either clearance or high for niche buyers
  • Limited distribution
  • Minimal to no promotions

Strategic Importance of Understanding PLC

• Consider industry life cycle stage before introducing a new product
• Example: Soft drink industry in maturity stage
  • Pricing strategy must align with industry standards to remain competitive

Reflection

• Analyze and categorize products you’ve recently purchased based on their life cycle stage