Product Life Cycle

PRODUCT LIFE CYCLE

the Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

In theory it's the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilises and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn.

1.Products have limited life

2. Product sales passes through different stages, each posing a different challenge and opportunity.

3.Profits rise and fall at different stages of life cycle.

4.Products require different strategies in different life cycles.

The product life cycles: 

Introduction.

The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution.Its a period of slow growth and almost negligible profit.

Growth.

Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand.this is a period of rapid growth and substantial profit. 

Maturity.

Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use greater variety of media. With respect to Whirlpool, i think it is in this particular bracket since it has already carved a niche for itself and is steady.

Decline.

At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

There are also some variations in the original bell shaped curve depending on the market share. These are:

1. Growth Slump Maturity Pattern:

•       sales grow and then fall to petrified level
•       example:small kitchen appliances

2. Cycle-Recycle Pattern

•       sales grow and then decrease
•       company gives another promotion push for another smaller growth.
•       example: Pharmaceuticals

3. Scalloped Pattern

•       sales pass through a series of Plcs due to discovery of new uses/characteristics
•       example: Nylon

MARKET-LEADER STRATEGIES

Market leadership is not simple for a firm. Other firms continually challenge its strength or tryto take advantage of its weakness. The leader firm might become weaker against new entrantsand rival firms. The leader can use one or a combination of three strategies.

Expand the total market strategy

The market leader firms can normally gain the maximum when the total marketexpands. The focus of the total market depends on where the product is in its life cycle.

Defending market share strategy

When the leader tries to expand the total market size, it must also continuously defend itscurrent business against enemy attacks. The leader firm must keep its cost down, and itsprices must be consistent with the value that consumer see in the product.

Expanding the market share strategy

Market leader can improve their profitability through increasing their market shares. Market leaders are successfully at expanding their market shares like HLL, Procter and gamble etc.

MARKET CHALLENGER STRATEGIES:

Defining the strategic objective. A market challenger must first define its strategic objectivewhich is usually defined as an increase in market share. In essence, the challenger can choose to attack on any one of the   types of firms.

It can attack the market leader. This is a high risk but potentially high pay-off strategy that makes sense if the leader is not serving the market well. It can attack firms of its own size that are not doing the job and are under financed. It can attack small local and regional firms that are not doing the job and are underfinanced.

 Frontal attack

 Flank attack.

 Encirclement attack

 Bypass attack.

 Guerilla attack

MARKET FOLLOWER STRATEGIES:

A market follower must be careful about how closely it follows a leader and challengers. Too close an attack could result in a strong counter offensive by the leader. The three useful broad strategies are

 Following closely

 Following at a distance

 Following selectively

MARKET NICHERS STRATEGIES:

Successfully market niches own their success to using one of these strategies to gain solid market presence. Market niches must develop specific tactics to implement their strategic choice to enable them to become market specialist. 

Whirlpool is the only manufacturer of appliances that brings an "across the board" focus to energy and water conservation, from design to manufacturing and distribution to end-of-product lifecycle. The company focuses its efforts on four key areas:

Manufacturing

• Discontinued the use of volatile organic compound (VOC) paints and eliminated emissions from their solvents
• Lessened power plant emissions through low-energy lighting and high- efficiency equipment
• Participated in the U.S. Environmental Protection Agency's (EPA) voluntary emissions reductions program

Product distribution

• Partnered with SmartWay Transport®, a collaboration between the EPA and the freight industry to increase energy efficiency while reducing carbon dioxide by 33 to 66 million metric tons and up to 200,000 tons of nitrogen oxide per year by 2012
• Installed electric truck lifts with fewer net emissions

Design and development

• Focused on creating even more resource-saving appliances as studies show that 93 percent of life-cycle greenhouse gas emissions (GHG) come from in-home use
• Developed more than 550 ENERGY STAR^® qualified appliances in the United States, plus numerous ENERGY STAR qualified appliances in Canada, PROCEL appliances in Brazil and A class appliances in Europe

End-of-life management

• Eighty-five to 90 percent of materials (steel and other metals, some plastics) used in Whirlpool products can be recycled
• Pioneered efforts to safely dispose of ozone-depleting refrigerants
• Reused plastic foam that was previously sent to landfills; it's now ground up and made into plastic furniture, food containers, playground equipment and other consumer products