Marketing mix: product - life cycle (Stage 1 - introduction or launch (In…
Marketing mix: product - life cycle
Stage 1 - introduction or launch
In the introduction stage of the life cycle of a product, emphasis is placed on marketing and promotion in order to make the public aware of the product and to create a desire to buy it.
At this point sales would be slow at the beginning for all goods but would increase rapidly for low cost such as detergents if the marketing activity had been successful
At this stage it wouldn't be a profit making position as sales would not yet be great enough to cover the cost in research and development.
The most appropriate pricing policy would be either skimming or penetration depending on the product.
Stage 2 - growth
At this stage sales grow rapidly as most people would have become aware of the product, many would have tried it and it would be starting to achieve a degree of customer loyalty.
At the growth stage sometimes prices can be reduced, especially if other producers start to provide competition by putting similar products on the market.
If the product is in the growth stage, less advertising would be needed because sales are growing.
Stage 4 - saturation
The saturation stage is the highest point in the life of a product. Although competition is intense, there are unlikely to be any new competitors at this stage.
Sales have been pushed as far as possible and new customers cannot be found. Some may be attracted to the product because of decreased prices or extra advertising. The business might decide to engage in sales promotion.
At this stage the weakest products in the market will drop out of the market which may prolong the saturation stage for other products.
Stage 3 - maturity
At the maturity stage, sales levels would be maintained but not increasing and the product would have an established place in the market. However, the competition becomes very intense at this stage and it is more difficult to increase the volume of the product's sales any further.
In attempt to increase sales the product will be advertised intensively once again.
Profits at this stage is at their highest.
Stage 5 - Decline
This is the final stage in the life of a product. Sales have fallen to such an extent that they are not covering the manufacturing cost and the product is therefore unprofitable.
The business would try to extend this stage as long as possible but at least until the remaining stock has been sold.
Further advertising or price reductions would not be successful and would be offered only if large inventories remained.