The concept of the product life cycle, the main stages and their characteristics. Types of life cycle

The life cycle of a product is the time a product exists on the market, that is, the time period from the beginning to the end of its release and sale in its original form.

Product life cycle

Introduction

In marketing, a PRODUCT is understood as a complex of tangible and intangible properties, including technical parameters, dimensions, weight, structure, color, packaging, price, prestige of the manufacturer and seller, and other properties that customers need to satisfy their needs and requirements. There are several product classifications:

1. As intended

stock exchange (energy, food, metals);

consumer demand (consumer goods);

industrial purposes (buildings, structures, equipment, tools).

2. By terms of use

short-term use (consumed immediately or a small number of times, for example, food, perfumes, cosmetics, small haberdashery);

durable goods (furniture, household appliances, cars, machines, etc.).

3. By nature of consumption and degree of processing

semi-finished products;

intermediate products (components);

finished goods.

4. By purpose and purpose

everyday needs (newspapers, cigarettes, groceries

selective demand (cars, video cameras, furs, etc.);

prestigious (Mercedes car, Parker pen, Roller watch);

luxury goods (crystal, carpets, jewelry, paintings).

5. According to the manufacturing method

standard (serial production, high degree of unification);

unique.

6.According to purchasing habit

goods purchased frequently and without much thought (food, perfumes, detergents);

impulse purchase goods (sweets, flowers);

emergency goods (medicines, umbrellas, bags);

pre-selected goods (furniture, clothing, audio and video equipment);

goods of passive demand (insurance, textbooks, funeral supplies).

household (food, housing, services, recreation);

business (technical, intellectual, financial);

social (education, healthcare, security, development).

There are 3 product levels:

Product quality There are 4 groups of product qualities:

Physical (technical parameters, taste, weight, strength, shape, color, smell);

Aesthetic (style, class, beauty, grace);

Symbolic (status, prestige);

Additional (installation, commissioning, repair, right to exchange, liquidity).

In the process of developing a new product, a manufacturer needs to answer the following questions:

Who will be the main consumer of this product?

What is the capacity of this market?

Through what distribution channels will the product be sold?

Will seasonality affect sales?

Will the new product strengthen the company's reputation?

How will competitors react?

What will be the life cycle of this product (forecast)?

The process of consumer perception of a new product consists of 5 stages:

Awareness (general surface knowledge)

Interest (consumer search for additional information)

Evaluation (deciding whether to try a product or not)

Sample (minimum possible purchase volume)

Verdict (the final decision regarding further consumption of the product).

Product life cycle

The life cycle of a product is the time a product exists on the market, that is, the time period from the beginning to the end of its release and sale in its original form.

Product life cycle theory is a concept that describes product sales, profits and marketing strategy from the moment a product is developed until it is withdrawn from the market.

As a rule, the product life cycle includes 4 stages (stages):

Introduction (marketing)

Maturity

1. Development stage

Characteristics of the stage

The birth of an idea for a new product (service), marketing research (forecasting demand for a product), applied research (testing the concept of a new product for technical feasibility), design, market testing (test marketing). The company's goal is to test the concept of a new product for commercial feasibility.

Marketing tasks at the stage

Comprehensive marketing market research

Potential demand analysis

Sales volume planning

Assessment of the company's production and technological capabilities

Predicting consumer reaction to a product

Priority of marketing concept elements at the stage

Quality

Preferred types of consumers

The consumer capabilities are being determined using marketing research, the target market segment is being selected, segmented, and the base segment is being determined.

2. Implementation stage

2.1. Characteristics of the stage:

The stage is characterized by the arrival of the product on sale, the buyer becoming familiar with the product, and the buyer becoming accustomed to it. It is characterized by low sales volume and high costs, and little competition. A monopoly position of a product on the market is possible, but the product is not technically developed and technologically polished. The pricing policy is not stable and depends on the type of product. A skimming strategy and a gradual market introduction strategy can be used. In some cases, when introducing a new product to the market, it is possible to sell a new product at a price below its cost. The company's goal is to create a market for a new product. 2.2. Marketing tasks at this stage:

maximum attraction of buyers' attention to the new product,

use of monopolistic advantage,

collecting information about customers' assessment of a new product.

At this stage, it is necessary to inform potential consumers about a new product unknown to them, encourage them to try the product, and ensure distribution of this product through a trade and intermediary network. 2.3. Priority of elements of the marketing concept at the stage: - 1) Advertising

2) Quality

2.4. Preferred types of consumers:

The main consumers are “innovators”. As a rule, these are young people who are the first to try a new product at risk, if not for their lives, then for their reputation (originals, dudes, dudes). They account for about 2-3% of final consumers.

3. Growth stage

3.1.Characteristics of the stage:

The stage is characterized by a significant increase in demand for a product and a corresponding increase in the production of this product. At this stage, there may be an excess of demand over supply, an increase in profits and stabilization of prices and advertising costs. The market is growing rapidly, however, there is an unstable and volatile nature of demand. Possible response from competitors. The company's goal is to develop the market, seize leading positions, and maximize sales growth. 3.2.Marketing tasks at the stage:

gaining market positions,

development of basic solutions,

strengthening customer loyalty through advertising,

increasing the duration of the sustainable growth stage.

To maximize the period of intensive sales growth and rapid market growth, the following approaches are usually used:

improve the quality of the new product by giving it additional properties,

penetrate new market segments,

use new distribution channels,

reduce prices in a timely manner to attract additional consumers.

3.3.Priority of elements of the marketing concept at the stage:

3) Quality

3.4. Preferred types of consumers:

The main consumers are “adepts” - trendsetters, opinion leaders in their social sphere. Their recognition makes the product famous and fashionable. They make up 10-15% of the number of end consumers. In addition, consumers include the "progressives" or "early majority" (eg, students) who provide mass sales during the growth stage. They make up from 25 to 35% of the number of end consumers

4. Maturity stage

4.1. Characteristics of the stage:

The stage is characterized by market stabilization. There is a slowdown in sales growth rates. Per capita consumption is falling. Groups of regular customers are being formed, flexible prices are being observed, and warranty and service are being expanded. The company's goal is to consolidate its gained market share. 4.2.Marketing tasks at the stage:

search for new markets,

optimization of distribution channels,

introduction of a set of measures to stimulate sales (discounts, competitions among consumers, sales on a premium basis),

improvement of sales and service conditions,

development of product modifications.

The following are used as marketing tools at this stage: Market modification is aimed at increasing the consumption of an existing product. It includes:

search for new users and new market segments,

finding ways to stimulate more intensive consumption of goods by existing customers,

it is possible to reposition a product so that it is attractive to a larger or faster growing market segment.

Product modification consists of modifying product characteristics such as quality level, properties or appearance in order to attract new users and intensify consumption. The following strategies are used:

A quality improvement strategy aims to improve the functional characteristics of a product, including durability, reliability, speed, and taste. This strategy is effective if

a) quality can be improved,

b) buyers believe the claim about quality improvement,

c) a sufficiently large number of buyers want improved quality.

A feature enhancement strategy aims to give a product new properties that make it more versatile, safer, and more convenient.

the strategy of improving the external design is aimed at increasing the attractiveness of the product.

4.3.Priority of elements of the marketing concept at the stage:

4.4. Preferred types of consumers:

The main consumers are the “skeptics” or the “late majority”. They provide mass sales at the saturation stage (accounting for about 30-40% of the number of final consumers).

Decline stage

5.1.Characteristics of the stage:

The stage is characterized by a steady decrease in demand, a shrinking market, and buyers lose interest in the product. There is excess production capacity, and substitute goods appear. There is a decrease in prices and a reduction in production of goods.

The company's goal is to regain lost positions in the market and restore sales.

5.2.Marketing tasks at the stage:

At this stage, the effectiveness of marketing activities sharply decreases, the expenditure of funds is not appropriate and does not provide a return. Possible reasons for the decline:

new advances in technology (obsolescence),

changing consumer tastes,

increased competition.

Exit routes:

price reduction,

giving the product market novelty,

searching for new areas of product use and new markets,

removal of old goods from production (an abrupt exit from the market is possible),

reduction of the marketing program,

transition to the release and promotion of a new promising product.

5.3. Priority of elements of the marketing concept at the stage:

4) Quality

5.4. Preferred types of consumers:

The main consumers are “conservatives” - staunch opponents of the new (accounting for 15 to 20% of the number of final consumers), as well as older people and people with low incomes.

Main characteristics of the product life cycle

Classification of types of product life cycle 1. Traditional life cycle

2. “Boom” is a very popular product, stable sales for a large number of years (for example, Coca-Cola)

3. “Passion” – quick rise, quick sales (fashionable seasonal goods).

4. “Long-term hobby” – quick rise, quick decline, but there is a stable residual sale

5. “Seasonal goods” – sales dynamics have a pronounced seasonal nature

7. “Product improvement” – periodic improvement of a product aimed at increasing its performance characteristics, which contributes to the resumption of a period of growth after some stabilization of sales.

8. “Failure” – lack of success in the market, the product is a loser

A marketer needs to choose the optimal moment to enter the market with a new product or to introduce an existing product to a new market. At the same time, one product can be in different markets at different stages of its life cycle. The duration of the stages may also vary in different markets. All this must be taken into account when compiling a company’s product portfolio. It is desirable that a company with a wide range of products simultaneously have products that are in the stages of introduction, growth and maturity. In this case, income from the sale of goods at the maturity stage contributes to the effective introduction of new products, and goods at the growth stage can provide additional funds for updating, developing modifications, and introducing discounts on the price of goods at the maturity stage. It is necessary to formulate a product portfolio in such a way as to constantly introduce new products and at the same time maintain a balance of products at different stages of the life cycle.

Boston Consulting Group Matrix

This matrix is ​​an important tool for conducting assortment analysis, assessing the market prospects of goods, developing an effective sales policy, and forming an optimal product portfolio for the company.

“Stars” are the most promising, developing type of product, strive to increase their share in the company’s product portfolio, and are at the growth stage. The expansion of production of this product is due to profits from its sales. (Growth stage.)

"Cash cows" are goods at the maturity stage; sales growth is insignificant; the product has the maximum share in the company's product portfolio. It is the main source of income (of the company). Proceeds from the sale of this product can be used to finance the production and development of other products. (Maturity stage.)

“Problem children” (“Wild cats”, “Question marks”) are products that have a very low market share with a relatively high rate of sales growth. May be at the implementation stage or at the beginning of the growth stage, requiring material costs; It is difficult to determine their market prospects (they may become “stars” or “dogs”). Requires additional research and funding.

“Dogs” - unsuccessful products - have a relatively small market share (with a tendency to decline) and are characterized by a low rate of sales growth or lack of growth as such. Such a product has no prospects and must be withdrawn from the market. (The decline stage or type of life cycle is failure.)

With a successful life cycle, products turn from “problem children” into “stars”, and subsequently into “cash cows”. If unsuccessful, “difficult children” turn into “dogs.”

“stars” should be protected and developed;

"cash cows" require strict control of capital investments and the transfer of excess financial revenue to the control of senior management;

“difficult children” are subject to special study in order to establish their prospects for becoming “stars” and the financial, technological and time resources required for this;

It is necessary to get rid of “dogs” whenever possible, unless there are compelling reasons for keeping them in the company’s assortment.

When conducting research aimed at improving the efficiency of the product life cycle, it is necessary to clarify the following questions:

1. At the implementation stage:

How informed are buyers about the product?

What are the pros and cons of purchasing this product from the buyer's point of view?

What determines the further distribution of this product?

How to encourage consumers to make repeat purchases?

2. During the growth stage:

Where is the limit of market saturation?

What are the characteristics of product consumption (seasonality, cost)?

What factors promote and what hinder expansion?

What consumer groups can be further attracted?

3. At the maturity stage:

What is the percentage of customers who make repeat purchases?

How can you expand your product range?

What incentive system should be used (sales promotion methods)?

What is the competitiveness of the product?

What factors facilitate and what hinder the purchase of a product?

What modifications of the product are the most promising and can attract the buyer?

4. During the recession stage:

What types of consumers and when do they refuse to consume a product?

Where is the possible level of stabilization of demand for a product?

What are the incentives for additional purchases?

Are there opportunities to improve the product?

Current trends in changing product life cycles (innovative aspect)

Practice shows that changing the life cycles of goods is subject to the requirements of the following laws:

The law of increasing needs according to which each satisfied need forms the basis for the emergence of new, higher needs and at the same time creates the prerequisites for their satisfaction. Thus, the law of increasing needs leads to the need to develop goods with higher consumer properties (speed, comfort, safety, etc.). In addition, sales volumes of these goods in physical and monetary terms are increasing.

The law of accelerating the pace of social development In accordance with this law, all processes occurring in society and leading to the final result tend to accelerate.

Sequence of product life cycles

Based on these laws, it follows that:

sales volumes and their maximums will be higher in physical and value terms for truly new products (genuine innovation);

the life cycles of goods and their individual stages (stages) will be steadily shortening, which necessitates more dynamic and capital-intensive efforts by the company when new products enter the market, stabilize production and remove obsolete products from production and sales.

These circumstances complicate the forecasting activities of marketing services. The continuous sequence of changes in the life cycles of goods determines a number of fundamentally important circumstances

Firstly, the development of new goods (new generations of goods) to replace old goods must take place in the depths of the still relative prosperity of old goods. Therefore, the development of new products for the future, to replace existing products, should have the nature of a law for any company

Secondly, the new product must not only have higher consumer properties, but also must be designed for a more mass buyer. To do this, it is necessary to think through issues related to the creation of product modifications intended for buyers with different incomes, needs, tastes, etc. In addition, you should make sure that the costs of the new product are not too high.

Bibliography

To prepare this work, materials were used from the site http://www.marketing.spb.ru/

Introduction

A product, once on the market, lives its own special product life, called in marketing the product life cycle.

The concept of the product life cycle was first introduced by Theodore Levitt in 1965. The meaning of this concept comes down to the fact that each product is produced and lives on the market for a certain time, that is, it has its own life cycle. Depending on the level of demand for products, their quality, and market characteristics, the life cycle of a particular type of product may vary in length over time. It can last from several days to several decades.

Marketing task: to lengthen the life cycle of a product on the market. An accurate determination of the “age” of a product and appropriate marketing behavior can help an enterprise solve this problem.

The life cycle of a product is one of the key concepts that characterize a product in the dynamics of its life on the market. This is the period of time from the conception of a product until the end of its demand in the market and discontinuation of production.

The relevance of this course work is due to the growing role of marketing in human life, namely:

Real orientation of the development of the Russian economy along the path of regulated market relations;

Increasing interest in marketing as a means of livelihood and development of market entities;

A massive change in the course of the reforms carried out in the country in the mentality of consumers and the formation in their minds of a new market lifestyle, an integral component of which is marketing.

The purpose of the course work is to identify the main stages of the product life cycle and determine marketing policies at these stages.

Setting this goal led to the need to solve the following problems:

Determining the essence of the product, its life cycle;

Characteristics of the stages of the product life cycle;

Characteristics of marketing activities at various stages;

This test consists of an introduction, three chapters, a conclusion, and a list of references.

Concept and stages of the product life cycle

Levitt marketing life

A product is the initial link in marketing, which is created according to an emerging need.

The product life cycle (PLC) is a sequence of stages in the existence of goods on the market, starting from the inception of an idea and ending with discontinuation of production.

The product life cycle consists of the following stages:

1) development;

2) implementation;

4) maturity;

Product development stage.

At this stage, the product concept is transformed into a real product; fundamental research works are being developed; applied and development work is carried out; pilot serial production is underway. A significant factor is planning the operation and maintenance of the product, as well as its subsequent disposal.

At the product development stage, the enterprise incurs large material, physical and financial costs and, as a result, lack of profit.

Implementation stage.

The company supplies only a limited number of assortment items, since the market is not ready to accept various modifications of goods. Potential buyers are not yet sufficiently familiar with the new product, its properties and advantages, compared to similar competitors' products.

At this stage, the company attaches great importance to the policy of promoting goods on the market, paying special attention to those groups of buyers who are ready to make purchases.

A pattern emerges: if a product really satisfies the needs of customers, then there is a need for it and its sale is ensured.

To ensure growth in product sales, the company improves its quality and expands the number of product assortment items and improves the distribution system. At the same time, the price of the goods, as a rule, remains quite high.

At the implementation stage, the enterprise incurs losses or receives insignificant profits, this is due to the small volume of sales and high costs of implementing the distribution policy.

Growth stage.

If a product meets the requirements of buyers, then it gradually gains their acceptance. Many buyers make repeat purchases.

At this stage, sales volumes grow significantly, and the number of competitors increases, which leads to increased competition. Therefore, the company must continue to spend significant funds on promoting the product and at the same time reduce its price. But, unfortunately, such measures can only be taken by financially independent enterprises. Other enterprises go bankrupt and their market positions are taken over by the remaining enterprises, as a result of which competition decreases and prices stabilize. As a result, sales volume increases and the company's profit increases.

Every company wants this situation to continue as long as possible. To do this, it can make one or simultaneously several decisions from the following possible ones:

Enter new market segments;

Increase the level of product quality;

Increase the number of product assortment items;

Reduce the price of a product;

Ensure a higher level of product promotion policy on the market;

Improve the product distribution system.

Maturity stage.

Sales volume at this level increases slightly for some time, then stabilizes at approximately the same level and finally decreases.

The maturity stage is usually longer than the others. This is due to the fact that the demand for goods is becoming massive; Many buyers purchase goods multiple times.

Over time, new developments of new products from competing companies appear on the market. Some buyers test new products, as a result of which the demand for the previous product decreases. The enterprise is forced to look for ways to maintain its position in the market. To do this, she can choose one of three options:

1) modify the market - enter new markets or segments, identify new ways to use the product.

2) modify the product, that is, improve its quality, modernize it, improve the design of the product.

3) modify the marketing mix, that is, improving product policy, pricing policy, and distribution policy.

Decline stage.

At this stage, sales volumes are significantly reduced and profits from the sale of this product decrease. An enterprise can make a variety of decisions regarding a product, for example:

Gradually reduce production of goods without reducing marketing costs;

Stop production of a product and sell off existing stocks at low prices;

Organize the production of a new product instead of an obsolete one.

When making a final decision, the company must take into account the needs of consumers of the product and do everything possible to ensure that they are satisfied and the company’s image is preserved.

When working towards meeting customer needs, it is necessary to take into account the stages (stages) of the product life cycle (PLC).

Like people, products (services) have their own life cycle. Product life cycle (Life cycle production) is the period of existence of a product on the market, the period of time from the conception of the product to its removal from production and sale.

The concept of a product life cycle was first proposed by American marketer Theodore Levitt in 1965. The concept is based on the fact that any product is sooner or later replaced from the market by another, more advanced or cheaper product. According to his theory, four stages or stages can be distinguished in the classical life cycle: entering the market (implementation); height; maturity (saturation); decline The life cycle concept describes product sales, profits, competitors and marketing strategy from the moment a product is developed and introduced into the market until it is withdrawn from the market. The life cycle of a product can be presented as a certain sequence of stages of its existence on the market, which has a certain framework. The dynamics of the life of a product shows the sales volume at each specific time of existence of demand for it.

There are different approaches to identifying individual stages of life cycle. There are discrepancies in the definition of the first life cycle: some authors consider the starting point of the cycle to be the period of introducing a product to the market, others – the period of product development. There is a more detailed consideration of the stages of slowing growth and decreasing sales volume in terms of identifying stages. Some classifications of life cycle add a stage of demand resuscitation. Such discrepancies indicate the existing possibilities for the development of marketing theory.

A typical life cycle and the nature of sales and profits throughout it are represented by the curve in Fig. 3.2.

• 1. Product development. At this stage, the company finds and implements a new product idea. During this time, sales are zero and costs increase as the project reaches its final stages.
• 2. Market introduction stage. This stage is characterized by slow sales growth as the product enters the market. Due to the high costs of introducing the goods, there is no profit at this stage yet.
• 3. Growth stage. At this stage, there is a rapid acceptance of the product by the market and rapid growth in profits.
• 4. Maturity stage (stabilization, saturation). This is a period of slowdown in sales due to the fact that the product is already

Rice. 3.2. Life cycle curve

achieved acceptance by the majority of potential buyers. Profits stabilize or decline due to rising costs of protecting the product from competitors.

5. Decline stage. This stage is characterized by a sharp drop in sales and a decrease in profits.

On product development stage the company finds and implements a new product idea. During this time, sales are zero and costs increase as the project reaches its final stages.

The life of a product begins long before its birth as a product - in ideas, plans, developments. The role of marketing at this stage is to support the process of creating a product from an idea to its implementation in a product. For an enterprise, this stage of creating a product is only costs and possible future income.

The process of developing a new product from idea to finished product includes five main stages: idea development; conceptual development; experimental design development, including the creation of a prototype; test entry into the market (test marketing); commercialization.

Developing an idea involves an initial assessment of proposals for the development of new products and services in order to select the more effective ones.

Ideas that pass the initial evaluation are subject to conceptual development, where they are clarified taking into account the requests of potential consumers. At this stage, the first (working) version of the business plan is drawn up, which describes the main characteristics of the product and the proposed strategy for its sales, taking into account, if possible, the opinions of potential buyers.

Once the concept is approved, the development stage, where all circuit design, technological, production, technical and engineering issues are resolved.

The development stage ends with the creation of a prototype for testing design documentation, debugging the entire production process, testing and presentation to customers to study their opinion on competitiveness.

Test marketing, otherwise known as market testing, consists of conducting a controlled experiment on a limited and carefully selected part of the market. The main goals of trial marketing are to assess the degree of success of a product entering the market and testing options for combinations of a number of factors.

Under commercialization refers to the process of bringing a finished and finished product to the market. Commercialization involves cost-effective production.

Marketing tasks at the product development stage:

• study whether the consumer needs this product, what the potential consumer is, what market can be counted on when implementing the plan;
• explain to potential consumers how a new idea embodied in the product being created can benefit them.

In order for a new product to meet customer expectations, additional functions and services (additions that increase the value of the product) are also necessary.

The following product evaluation factors are distinguished (Fig. 3.3):

• service– technical consultations, installation, maintenance, repairs;
• peculiarities– quality, design, technological complexity, reliability (durability);
• base product – raw materials, components, scope of application, key performance indicators.

The stage of introducing a product to the market begins from the moment the product goes on sale. Since the distribution process

Rice. 3.3. Product evaluation factors

dividing a product into multiple markets takes time, and sales volume increases slowly during this period. Well-known products such as instant coffee, orange juice and creamer powder took several years before they entered a period of rapid growth. In the case of expensive new products, such as high-definition televisions, sales growth is also constrained by a number of other factors, such as the small number of consumers who can afford to buy the new product.

At the implementation stage, the company either incurs losses or makes a small profit due to low sales volumes and high costs associated with sales and advertising.

The company directs its main efforts in selling goods to attracting consumers, usually representatives of high-income groups, since prices at this stage are quite high.

Typically, a number of product design decisions come into play. However, only one or a few of them reach the stage of real competition for profit. Advertising accustoms the consumer to the product, and it also creates initial demand. At this stage, brand differences are still poorly differentiated. Personal shopping informs both distributors and buyers about the use and value of products and reduces uncertainty about these parameters. The price at this stage does not fully cover production costs.

The company incurs large expenses, since at this phase production costs are high, sales promotion expenses usually reach the highest level. It is assumed that later, when production volume increases significantly, all costs - direct and indirect - will be compensated. Consumers here are innovators who are willing to take risks in testing a new product. There is a very high degree of uncertainty in this phase.

The duration of the implementation phase can vary and range from several months to many years. The determining factor here is the set of marketing activities aimed at promoting the product.

Marketing tasks at the implementation stage:

• inform potential consumers about a new, yet unknown product, maximize consumer attraction, enhance advertising;
• convince them to try the product;
• ensure sales through retail outlets;
• create a market for a new product.

Growth stage Sales can be broken down into two parts: the early stage and the subsequent stage.

Early stage of sales growth characterized by an increase in the rate of sales growth. Competitors, attracted by increased sales of a product in the market, rush to this market and through their efforts contribute to additional sales growth. Often, pioneer companies cannot fully satisfy the needs of a growing market, which makes it easier for new competitors to enter this market.

New competing companies at this stage offer products that are not much different from the original original. Usually it simply imitates a structure or design solution, rather than radically transforming it. As the struggle for position in the market intensifies, new and new channels of product distribution are being found, and a broad campaign is underway to promote the product. But as sales volume increases, the share of promotion costs begins to decrease. Advertising efforts are now directed towards demonstrating the differences between the brands of a given product and creating demand for the different brands. As production scales increase, prices begin to decline, and sales growth allows them to be used as a serious tool of competition.

At the early stage of sales growth, competition is not yet so intense: many companies can still share the growing market share. Sales continue to grow not due to the efforts of competitors, but due to the expansion of the market itself. Consequently, the company can expand its sales while its market share may decline.

The next stage of sales growth characterized by continued growth in sales volumes, but the growth rate is decreasing. Strong competitors are making vigorous efforts to maintain sales growth, forcing weaker ones out of the market.

The outlines of market segments are beginning to emerge. The struggle is unfolding not for imitation of the product, as in the initial stages, but for its serious modifications, since competitors are looking for advantages precisely in the design differences of products. Competitors are beginning to offer products that meet special requirements, and numerous types of these products are being released onto the market. The product is now widely distributed, but a slight slowdown in sales growth is forcing distributors to offer a specialized set of brands and product names. Price becomes the main tool of competition. Efforts are now shifting to the fight for discounts. Sales conditions, loan amounts and terms are becoming more and more preferential, and the policy of guarantees and services to customers is becoming more complicated. The weaker ones are retreating; lower prices and costs of product promotion are still keeping companies from going out of business.

At the growth stage, sales volume largely depends on the processes of disseminating information about the product and its recognition by the consumer. Recognition consists of five stages:

• 1) knowledge– the consumer learns about the product and its functioning;
• 2) belief - the consumer forms a favorable (unfavorable) attitude towards the product;
• 3) solution– the consumer makes a choice; accept or reject the goods;
• 4) implementation– the consumer uses the product;
• 5) confirmation– the consumer seeks reinforcement and may change his or her decision if faced with conflicting information.

Marketing tasks at the stage of sales growth:

• improve the quality of the product, give it additional properties, release new models;
• strengthen buyer commitment;
• penetrate new market segments;
• use new distribution channels;
• reorient some advertising from spreading awareness about the product to stimulating its purchase;
• reduce prices in a timely manner to attract additional consumers.

On stage of maturity sales volume remains fairly stable and is influenced only by macroeconomic and demographic factors. Demand equals supply. Price competition continues. There are increasing efforts to segment the market through packaging and special promotion methods rather than through product variety. At this stage, industry structures created at earlier stages, often oligopolies, are usually completely stabilized, and positions gained at an early stage of maturity are usually maintained for many years.

The main thing is distribution. It is now difficult to maintain advantages in product differentiation, so manufacturing companies strive to retain the best sales and distribution locations. Companies with a wide range of products that are sold through regular retail outlets have significant advantages over specialized manufacturers. Economies of scale and positional advantages make it very difficult for competitors to enter the market at this stage. "Newcomers" will need significant resources to make major achievements in promoting products and gaining market share, which, in turn, would provide them with competitive costs. Newcomers can do well in this phase if they have state-of-the-art technology or target specific market segments.

Marketing tasks at the maturity stage:

• enter new market segments;
• win over clients of competing companies;
• improve the functional characteristics of the product (durability, reliability, taste);
• improve conditions of sales and service;
• introduce a set of measures to stimulate sales (discounts, discount cards, loyalty programs, competitions among consumers, gifts, studying consumer satisfaction, developing recommendations for increasing consumer loyalty);
• give the product new properties (for example, size, additives, accessories) that make it more versatile, safe or convenient.

Each product, regardless of the field of production, has a certain life cycle. Each stage determines the profit received and the company's sales volume. The product cycle ends when it becomes obsolete - a cheaper or improved product appears. Life cycle theory is universal in marketing. And knowledge of the characteristics of a particular product helps to develop strategies that bring the greatest benefit to the manufacturer.

What is life cycle

The life cycle of a product (LPC) is characterized by the duration of its circulation on the market. It starts from the moment of the first sale and ends with the complete cessation of sales.

The stages of the life cycle are:

• Market introduction stage.
• Sales growth stage.
• Market saturation stage.
• Sales decline stage.

The product life cycle does not coincide with the production cycle, which includes 5 stages. The first of these is development (R&D, research and other developments at the stage of technology implementation).

Product life cycle concept

The concept of the product life cycle is used constantly in marketing. It is a fundamental theory built on the basis of research into various products and consumer psychology.

Theodore Levitt, an American economist, first spoke about the concept. He formalized the concept of natural replacement of goods (old with new) and proposed a rationale for this process. The basis of the theory was the thesis that any product, no matter how popular it may be, will eventually leave the market.

New customer needs will force manufacturers to improve the product or abandon production altogether (competitors, low profits, market oversaturation, uselessness of the product). That is, each product is limited by the sales time frame. The only exceptions are “eternal” goods, the production technology of which has not changed for centuries (monopolistic industries).

The main postulates of the theory are:

• The lifespan of a product is limited by its relevance at each time period.
• VCT is characterized by different stages, for which different promotion strategies are applied.
• Each stage is characterized by separate dynamics of profit and sales volume (life cycle curves).

Modern marketers have refined the theory and presented the life cycle cycles of various products:

• Life cycle of a large class of products. Has a long maturity stage (machines, equipment, soft drinks).
• Life cycle of a product type. Depends on the industry and the specific manufacturer (any class of product taken separately).
• Life cycle of ways to use products. Short in time. Once the last possible use for the product is found, sales will decline.
• Life cycle of product brands. The most durable product is the one that enjoys the trust of the buyer.

Leviticus's concept was continued by the economist Raymond Vernon. He formalized the idea of ​​international trade into his life cycle theory (new product adoption, maturity and standardization). Using theory, he explained how foreign trade impacts U.S. profits and how innovation can provide segment leadership.

Product life cycle stages

Market introduction - placement

The stage implies the start of sales with an uncertain result. The launch of sales of mass goods is unsuccessful in 35-45% of cases, industrial - 20-35%, services - 15-18%. At this stage, the consumer is not yet familiar with the product. And the expected profit is calculated based on the expectations of marketers (manufacturers).

Stage of growth and development

The growth stage occurs after a sufficiently long period of regular sales. This means that the consumer has recognized the product or is satisfied with the quality. The manufacturer, in turn, expands the range and nomenclature if necessary. In other cases, assessing the quality of products and services is sufficient. At this stage, a strategy is built to completely capture the market to obtain the maximum possible profit.

Stage of maturity - saturation

The maturity stage involves supplying the product to the majority of customers in the target group. The manufacturer is looking for new sales channels. This is possible by reducing prices, entering adjacent markets (partnerships), searching for new uses for products from another target audience, or using technology to produce another product.

Sales volume is stable due to the high quality of the product. It is resold by intermediaries and individual entrepreneurs. But sales are gradually declining. Here it is important to identify the stage of peak sales and the subsequent stage of decline, so that production costs are recouped, and the products are purchased until the market is completely saturated and does not stagnate in warehouses.

Decline stage

The decline stage is typically characterized by a slow decline in sales. Income comes from newly received applications (purchases, transactions) and new sales segments. Constant sales volume stabilizes. This is especially true for everyday goods and essential goods.

To make a profit at this stage, enterprises decide whether to fight for a place in the sun (improve the product, release new products in the same category) or move to another industry and diversify production. For goods of periodic demand (equipment, one-time services, entertainment), the decline stage may mean a complete cessation of activity.

The dynamics of profit and sales volume will help you distinguish one stage from another:

• Growth phase: profit margin is increased, sales volume is progressive.
• Maturity phase: profit margins and sales volume correspond to intra-industry (average) ones.
• Decline phase: indicators decrease in comparison with industry average and intra-company indicators of previous periods.

Characteristics of the stages of the product life cycle

Product life cycle model: disadvantages

• Despite the fundamental nature of the concept and the possibility of its application in any field, taking into account innovation, the product life cycle cannot be determined by mathematical modeling. Nobody knows how the consumer will behave tomorrow.
• The life cycle theory is not used in business management. Not taken into account when planning and forecasting. It is not a fulcrum in decision making.
• It is used as a retrospective analysis of the company’s activities (sales and profits over time).
• It is difficult to determine the period of onset of the phase. Life cycle curves (graphs in the “sales-period” coordinate system) do not characterize the exact direction of sales – “up-down” – on a specific date.

Product life cycle model: application

• Forecasting the dynamics of sales of a new product. It is used when planning general marketing tasks in conjunction with market and competitor analysis.
• Used in the analysis of similar products of competitors. Provides an opportunity to compare sales and profit rates and identify the strengths and weaknesses of activities.
• Assortment management. It is used to make a decision about the need to expand the range or replace it with another product.
• Inventory management. Allows you to manage warehouse capacity and calculate the volumes of production and inventory required for each stage.
• New product development management. Allows you to predict the period in which it is necessary to develop a substitute product, an analogue with new functions (saturation stage).

5 basic life cycle curves

The traditional product life cycle curve characterizes sales and profits over a certain period of time, including all stages of sales. To build it, you need enterprise statistics on the product.

There are also additional types of curves that characterize the demand for a product depending on the promotion strategy or other management decisions (innovation, competition, price collapse).
The most common are the following models.

"BOOM" curve

Describes high demand for a product over a long period of time. Sales and profits are stable. Characterizes a popular type of product. Such a product does not enter the stage of maturity and decline in the medium term. Examples include Apple products and the carbonated drink Coca-Cola.

Plateau curve or growth-decline curve

This curve is characterized by rapid growth and rapid decline in demand, but sales continue continuously into the maturity stage. The graph characterizes a quality product that has received the trust of the buyer. The influence of fashion trends is also considered. At the maturity stage, the product is used by conservators or buyers who have available funds for purchase. Examples include Ray-ban sunglasses, Adidas clothing, tablets and other gadgets.

Seasonal curve or repeating cycle curve

The curve characterizes renewable demand at certain intervals. To the greatest extent characterizes seasonal goods, as well as goods of periodic demand. During the maturity and decline stages, the curve deviates up and down, forming a repeat cycle. The demand for such goods is provoked by fashion (nostalgia for the old days) or the season. An example is retro clothing, sunscreen, rubber boots or personal protective equipment for constant fires.

Scallop curve or new rise curve

Describes the wave-like growth of demand in the maturity stage. Characterizes a quality product that is being purchased by an increasing number of consumers. They are satisfied with the quality and service. This means that the company evaluates the results of its activities, modernizes its product range, and produces modifications, thereby extending the maturity stage.

An example is the BMW car consortium. New buyers buy cars due to reliability and modern design and tuning. Another example is a hosiery factory that is able to increase sales due to frequent purchases, which increase during the winter. These products have a scalloped curve, describing the peak and decline of sales, but growing in dynamics.

Failure Curve

Characterizes an unsuccessful product, which, after the start of sales, was no longer purchased. Such a product does not have a stage of growth and maturity. The curve suggests that purchases were made for testing purposes in small quantities. The buyer was not satisfied with the quality or property of the product. Therefore, repeat purchases were not made, and sales dropped sharply. As an example, they cite medicines that have cheaper or more effective analogues.

How to extend the life cycle of a product

Extending the product life cycle is possible at any stage. It is carried out at the discretion of the company’s management if there are objective reasons. The exception is the implementation stage. The stage is delayed until the initial developments are used in the future (concept, product range, substitutes, loyalty programs, partners).

The growth stage is extended by changing the design, completeness and characteristics, properties, and functions of the product. That is, they use production levers and opportunities.
At the saturation stage, the cycle is extended by upgrading and modifying the product.
At the maturity stage, a marketing program, development of commercial offers for customers and the creation of a new product can increase sales.

The main ways to prolong life cycle are:

• Product modification (unique functions, ergonomics, practicality, combination of parameters).
• New design or packaging (with a wide choice, sometimes they become decisive when purchasing).
• Support for a large-scale event (creating the image of a general sponsor).
• Holding your own events (shows, sports relay races, attractions, exhibitions, free screenings).
• Intensification of activities during a crisis, during periods of environmental disasters or product shortages.
• A new service or additional product (gifts, services in addition to the main product).
• New commercial and slogan (video broadcast on screens and TV).
• Launching a new advertising campaign (audio, video or through a marketing service).
• Release of a new product of the same brand.
• Price changes in accordance with the relevance of the offer.
• Improving product quality, reducing the percentage of defects.
• Service maintenance.
• Non-price stimulation of demand.

Product life cycle analysis (examples)

IPhone phones (USA)

• 2007 – start of sales: strict design, absence of buttons and joystick, prototype of all today’s phones from other brands.
• 2007-2013 – growth stage: adding new functions and capabilities; expansion of the range of colors; increasing the display diagonal; annual design change.
• 2013-2018 – saturation stage: stereo sound, powerful battery, water protection, flexible body, fingerprint scanner.

The apple brand is in demand all over the world. Without a flexible pricing policy, the company earns prestige. Every year, long lines line up to buy new items. The recession phase, judging by sales volumes, will not come soon.

Chocolate Roshen (Ukraine)

• 2000 – implementation stage: development of an assortment based on the existing product range under a new brand.
• 2000–2002: growth phase: opening branches abroad, searching for retailers (more than 100 worldwide), emergence of new products (cakes, waffles, marshmallows, cookies, etc.).
• 2002–2018: saturation phase: high rating (TOP-20), development of fillings (with orange nougat, cognac, cranberry, extra milk, extra black, etc.), improvement of Swiss manufacturing technology.

Production is constantly expanding, despite the closure of the Lipetsk branch. Sales volumes have been set at the same level for several years ($800 million). By maintaining quality at the proper level, the company is able to grow into an entire empire and maintain sales volume at a constant level.

Akbar tea (Sri Lanka)

• 1860–1907 – implementation stage: purchase of plantations and harvesting of the first harvests.
• 1907–1979: – growth stage: development of corporate design, formation of two sales directions (Ceylon black and Chinese green tea); entering the global market, the emergence of packaging partners in America, Canada and European countries.
• 1978–2018 – saturation stage: leadership in global production (22%), the world's first sale of bagged tea, creation of more than 300 blends, appearance in the assortment of granulated coffee and tea in pyramids.

Akbar has a leading position in the market. The formation of the enterprise occurred before the actual monopolization of the industry. High-quality raw materials from Ceylon make the product in demand. And the high quality (leaves from the highlands) allows us to sell tea in more than 80 countries around the world on an ongoing basis. Therefore, a period of decline in production will occur only if the mass consumer switches to other drinks.

Book “I explore the world” by AST publishing house (Russia)

• 1997–1998 – implementation stage: introducing the reader to the children's encyclopedia; development of new series in a language that is understandable and exciting for children, with illustrations and a search index.
• 1999–2005 – growth stage: sales to children's libraries and schools, single sales; development of new programs that may be of interest to children.
• 2005–2009 – saturation stage: almost every family has children’s volumes.
• 2009–2014 – stage of decline: decrease in sales, reduction in circulation, stop of series production, sales by order through online stores.

Book publications in volumes are characterized by a uniform life cycle, unlike textbooks (nostalgia curve) and reprinting of old or rare books (boom). Any book has a limited period of popularity. Therefore, it cannot be classified as “eternal” goods, with the exception of collected works and multi-volume works on art (almanacs, albums, collector’s editions). The decline stage of the “I explore the world” anthology is largely due to the development of the Internet and the emergence of other worthy analogues.

Relationship between the theory of life cycle and other marketing methods

Generally accepted typology of goods

Classification of goods according to various properties and functions directly affects the life cycle. Depending on the relevance and need for the buyer, different products will have different life cycle curves. In marketing, a constant analysis of consumer demand and the dependencies of the manufacturer’s supply is carried out. For each product, specific promotion strategies are proposed that work at each stage of the life cycle.

Brand Extension Strategies

A brand expansion strategy is understood as increasing the range of products (linear expansion) or creating a new product (categorical expansion). Depending on the stage of life cycle, one or another concept is used. At the same time, they do not forget about the cannibalization effect, when a new product can bring down the sales of the previous one. This happens at the stage of product decline.

For steadily growing industries, a linear expansion strategy is used. Product modifications do not replace each other due to the uniqueness of their purpose. That is, they serve as a mechanism for attracting new customers. In the case of a categorical expansion (partner brand, transition to another product category), the brand risks losing its own image and concept, becoming dependent on partners and more developed competitors.

The concept of the product life cycle is fundamental. But its use is difficult due to the variety of goods sold and their range. Promotion strategies complement the theoretical basis of the life cycle and link a specific stage of the cycle with a specific marketing policy.

The period from the introduction of a product to the market until its discontinuation. The life cycle length is not the same for different products.

However, the general modern trend is to reduce its continuation, acceleration, due to manufactured products.

The life cycle of goods can be divided into several main stages:

Stage of bringing a product to market

• It is characterized by a very high degree of uncertainty of results, since it is difficult to determine in advance whether a new product will be successful.
• The company's marketing efforts are aimed at informing consumers and intermediaries about the new product.
• At this stage, the enterprise has high marketing costs, production costs are also high due to the low volume of output.
• There is no profit at this stage.

Growth stage

• Characterized by rapid development of sales.
• If the product turns out to be successful and moves into the growth phase, the manufacturer begins to reduce the cost of producing the product due to an increase in output volume and sales price.
• Prices may be lowered, which may allow the enterprise to gradually cover the entire potential market.
• Marketing costs continue to be high.
• At this stage, the company usually has competitors.

Maturity stage

• The volume of demand reaches its maximum.
• The market at this stage is highly segmented, enterprises are trying to satisfy all possible needs. It is at this stage that the likelihood of repeated technological improvement or modification of the product is most effective.
• The main task of the enterprise at this stage is to maintain and, if possible, expand its market share and achieve a sustainable advantage over direct competitors.

Decline stage

• Manifests itself in a decrease in demand.
• As sales and profit prospects decline, some firms reduce their investments and exit the market. Other firms, on the contrary, try to specialize in the residual market if it is of economic interest or the decline occurs gradually. However, with the exception of occasionally observed cases of market revival, the cessation of production of a technologically obsolete product becomes inevitable.

Product life cycle

Each product lives on the market for a certain time. Sooner or later it is replaced by another, more perfect one. In this regard, the concept of a product life cycle is introduced (Fig. 9.3).

Product life cycle- the time from the initial appearance of a product on the market until the cessation of its sale in this market. (This should not be confused with the production life cycle, which includes R&D, development in production, production itself, operation and discontinuation.) The life cycle is described by changes in sales and profit indicators over time and consists of the following stages: start of sales (market introduction) , growth, maturity (saturation) and decline.

Rice. 9.3. Product life cycle

Market introduction stage is characterized by a slight increase in sales volume and may be unprofitable due to high initial marketing costs, small volumes of product output and the lack of development of its production.

Sales growth stage characterized by rapid growth in sales volume driven by consumer acceptance of the product, profitability increases, the relative share of marketing costs typically falls, prices are constant or fall slightly.

On maturity stages sales growth slows down and even begins to fall, since the product has already been purchased by the majority of potential consumers, competition intensifies, marketing costs usually increase, prices may decrease, profits stabilize or decrease. When upgrading the product and/or market segments, it is possible to extend this stage.

Recession manifests itself in a sharp decline in sales and profits. Product upgrades, price reductions, and increased marketing costs can only prolong this stage. It is necessary to note that the maximum profit, as a rule, in comparison with the maximum sales volume, shifts towards the initial stages of the life cycle. This is due to increased costs of maintaining sales at later stages of the product life cycle.

The concept of life cycle is applicable to a class of product (telephone), type of product (cordless telephone), to a specific brand of product (radio telephone of a specific company). Of greatest practical interest is the study of the life cycle of a specific brand of product. This concept is also applicable to such phenomena as style (clothing, furniture, art, etc.) and fashion. Different marketing strategies are used at different stages of the life cycle.

Life cycle curve shape, as a rule, remains more or less the same for most products. This means that once a product appears on the market, if consumers like it, then its sales volume grows and then falls. However, the duration and intensity of the transition from one stage to another vary greatly depending on the specifics of the product and market. The transition from stage to stage occurs quite smoothly, so the marketing function must closely monitor changes in sales and profits in order to grasp the boundaries of the stages and make changes to the marketing program accordingly.

It is especially important to catch the stage of saturation, and even more so - the decline, since keeping an exhausted product on the market is unprofitable, and in terms of prestige, it is simply harmful. Obviously, you also need to choose the right moment to enter the market with some new product.

If the demand for such a product is already falling, it is hardly worth starting commercial activities on the market. Obviously, when it is determined that a product is at the stage of maturity or saturation, then efforts must be made to develop a new product to replace the product that has exhausted itself.

Other options for life cycle curves are also possible (Fig. 9.4).

Despite the popularity of product life cycle theory, there is no evidence that most products go through a typical 4-phase cycle and have standard life cycle curves. There is also no evidence that the turning points of the various phases of the life cycle are to any degree predictable. In addition, depending on the level of aggregation at which a product is considered, different types of life cycle curves can be considered.

Rice. 9.4. Various life cycle curve options

The first thing to remember is that market research does not start with the product, but with the needs of consumers. For example, consumers have a need for transport (Figure 9.5). Such needs may remain constant, grow from century to century, and may never reach a decline phase.

Rice. 9.5. Life cycles of needs, technologies, products

The need for transport is concretized into the demand for certain technological methods of satisfying it (from primitive vehicles, from horse-drawn carriages to cars and other modern vehicles).

Life cycle of technological methods, although shorter than needs, can be extremely long.

Technological methods can be implemented using various specific technical and technological solutions. For example, cars can use steam, piston, turbine, and electric engines, which also have their own life cycle. Radio transmitting devices consistently used vacuum tubes, semiconductors, and integrated circuits. Hidden under each such curve is a series of life cycle curves for individual technical and technological innovations. These life cycle curves can be very short and they certainly tend to shorten.

The nature of the life cycle curve is often the result of management actions and is not due to external causes. Many managers believe that every product inevitably follows its own life cycle curve. When sales volume stabilizes, instead of updating the technology and looking for new market opportunities, managers classify the product as a “cash cow” and begin to look for other business.

In addition, the core concept of marketing is to focus on consumer needs rather than focusing on selling products. The life cycle concept has a product rather than a marketing orientation. The product of a particular organization will “die” if needs change, if a competitor makes a better offer, if new technologies allow us to offer something new to consumers. Therefore, it is better to focus your efforts on identifying the causes of change rather than studying their consequences using a life cycle curve.

Identifying the reasons for changes will allow us to anticipate future changes and develop a product policy that is maximally adapted to them.

When developing and implementing product policy, it is necessary to take into account that the same product in different markets may be at different stages of its life cycle.

In practice, most companies sell multiple products in different markets. In this case, the concept " product portfolio", which refers to the totality of products produced by the company. The product portfolio must be balanced and include products at different stages of the life cycle, which ensures the continuity of the organization's production and sales activities, constant profit generation, and reduces the risk of not receiving the expected amount of profit from the sale of products, at the initial stages of their life cycle.

Product life cycle (PLC)- time of existence of the product on the market.

The best known and most criticized marketing concept is the Product Life Cycle (PLC) concept. Its main idea is that any policy regarding a product on the market can be modified under the influence of existing market conditions, and the manufacturer is not a passive observer of this process, but has the ability to manage it.

The concept of life cycle is based on the fact that any product is sooner or later forced out of the market by another, more advanced or cheaper product.

There may be long-lived goods, but there are no eternal goods.

The life cycle is characterized by two necessary conditions:

· the duration of each stage has certain deadlines;

· the sequence of each stage is also constant: one stage follows another invariably and irreversibly.

Graphically, the life cycle can be represented as a period of time T(Figure 3). The graph expresses the volume of sales of goods on the market in physical (in the number of units sold) or in value (in the form of the amount of money received for the sale) expression. A number of characteristic sections (t 1 -t 6) can be identified on this curve.

Stage of development and entry into the market

Main characteristics - significant production and research costs.

The procedure for bringing a product to market takes time, and sales during this period usually grows slowly .

Example: Well-known products such as instant coffee, frozen orange juice, and creamer powder had to wait many years before they entered a period of rapid growth.

Slow growth can be explained by the following circumstances:

§ delays in expanding production capacity;

§ technical problems;

§ delays in bringing goods to consumers;

§ clients’ reluctance to give up their usual patterns of behavior.

The company suffers losses due to insignificant sales and high costs of organizing the distribution of goods and stimulating their sales. Promotional spending reaches its highest level at this time “due to the need for concentrated efforts to promote the new product.”

There are few manufacturers at this stage, and they release only basic variants of the product, since the market is not yet ready to accept its modifications.

Prices are usually higher at this stage.

If the demand for a given group of goods is stable, then the implementation phase may be practically absent. The product is either not sold at all, or, from the first sales, it immediately replaces a product with high demand ( biotechnology products, video discs and other fundamentally new types of products).

The modern world is characterized by a noticeable reduction in the interval between the discovery of a product and its mass use in production. An important aspect of any product strategy is the dissemination of information about the benefits that they will receive from using this product. Experiments have shown that demand begins to adapt to a new product if the first 2-5% of consumers have adapted to it.

Growth stage

If the new product satisfies the interests of the market, sales begin to grow significantly.

The product is recognized by customers and rapid increase in demand on him.

The product encounters its competitors for the first time, and this in turn creates greater choice for the consumer. Growing number of competitors leads to a sharp increase in sales from factories in order to increase distribution channels for goods.

Prices remain at the same level or slightly are decreasing as demand grows. Firms' sales promotion spending increases slightly to counteract competitors and continue to educate customers about the product.

Profits are growing, since sales promotion costs fall on a larger volume of sales while simultaneously reducing production costs.

In order to maximize the period of rapid market growth, a company can use several strategic approaches:

ü improve the quality of a new product, give it additional properties, release new models;

ü penetrate new market segments;

ü use new distribution channels;

ü reduce prices in a timely manner to attract additional consumers.

The main pricing strategies at this stage include:

“reward” or “cream skimming” strategywhen the price is set above competitors' prices, emphasizing the exceptional quality of the products. In this case, the focus is on a less price-sensitive group of consumers; the manufacturer works with individual market segments;

parity price strategywhen there is an overt or secret conspiracy with competitors or when there is an orientation towards the leader in setting the price. In this case, the focus is on the most typical mass buyer, i.e. the company works with the entire market;

market penetration strategy due to low price. Manufacturers of innovative goods rarely use it, since by reducing the price for the most sensitive group of consumers, they thereby reduce the effect of the “price-quality” relationship, which is dangerous for the reputation of the product.

At this time, the market is expanding as a result of changes in the lifestyle of previously unreached potential consumers and the geographical expansion of the market. It is at this stage that a certain general market price appears, towards which producers gravitate to a greater or lesser extent. Such a variety of pricing strategies allows the company, in the presence of a large number of competitors and a decrease in market share, not to reduce sales volume.

Product maturity stage

At some point, the rate of sales growth will begin to slow down - the maturity stage begins.

Slowdown in sales growth means that many manufacturers are accumulating inventories of unsold goods. This leads to increased competition . Competitors are increasingly resorting to selling at reduced prices. Advertising is growing and the number of preferential deals is increasing. R&D spending is increasing to create improved product variants. All this means decline in profits .

A very important issue is the ability of firms to extend the maturity stage to ensure the life of their product. A company needs to protect its product; it can:

ü modify the market - search for new markets and new market segments, repositioning the product for a larger or rapidly growing market segment;

ü modify a product - change the characteristics of a product (quality level, properties or appearance) in order to attract new users and intensify consumption.

Strategy quality improvement– improving the functional characteristics of the product, such as durability, reliability, speed, taste.

Strategy improving properties– giving the product new properties that make it more versatile, safer and more convenient.

Strategy improvement of external design– increasing the attractiveness of the product.

ü modify the marketing mix:

v reduce the price;

v active methods of sales promotion (discounts on prices, distribution of souvenirs, holding competitions);

v new or improved types of services.

For "saturation" phase It is typical for sales growth to cease with some increase in profitability if a significant reduction in production costs is achieved.

Falling stage

The stage occurs when the manufacturer experiences sustainable decrease in demand, sales volume, profit . The consumer loses interest in the product. The decline in sales is due to a number of reasons (advances in technology, changing consumer tastes, increased competition).

The company's management has three options for activities at this stage:

ü continue to produce goods - in the hope that competitors will leave a particular field of activity;

Example: The Procter and Gamble corporation at one time did not, like others, abandon the production of such a decrepit product as liquid soap, continued to produce it and received considerable profits.

ü “reap the benefits” - reduce any costs (materials and technical supplies, R&D, advertising, sales staff, etc.) in the hope that sales will remain at a fairly decent level for some time;

ü stop production of products.

In fact, depending on the specifics of individual types of goods and the characteristics of demand for them, there are various types of life cycles, which differ significantly both in duration and form of manifestation of individual phases (Figure 4).

The transition from one phase of the cycle to another usually occurs smoothly, without jumps. Because of this, the marketing service must closely monitor the dynamics of sales and profits in order to grasp the boundaries of the phases and, accordingly, make changes to the marketing program, redistribute marketing efforts, adjust the structure of the marketing mix, etc. It is especially important to catch the stage of saturation and even more so of decline, since keeping a “sick product” on the market is very unprofitable.