Using the life cycle concept - Marketing Management

The basic product life cycle concept brings with it a number of suggested implications for strategic market planning.

Different objectives and strategies for each stage

The major use of the product life cycle concept in strategic market planning is based on the notion that characteristics of each stage of the life cycle lend themselves to particular objectives and strategies. We examine this by tracing through each of the stages.

  1. Introductory stage At this stage, awareness of the new product is low, and competitors are few or non-existent. Considerable effort may have to be made to bring the product to the attention of distributors and consumers. Marketing efforts are likely to be focused on informing customers and promotional and distribution elements of the marketing mix will be targeted at innovator categories. Pricing strategies can be aimed either at ‘skimming’ the market through high initial prices that gradually reduce, or at ‘market penetration’, aiming to achieve high levels of market share quickly through low prices. Distribution will tend to be exclusive or selective, and advertising aimed at building awareness.
  2. Growth stage If the new product is successful, we can expect a rapid growth in sales. During this stage new competitors can be expected to enter the market and marketing strategies will need to be focused on combating these new entrants. Although price wars are unlikely to develop at this early stage, considerable effort may be required to establish the intensive distribution required for ultimate mass market demand. Communications will be aimed at creating brand image.
  3. Maturity stage Competition is at its peak. Market share needs defending, while at the same time preserving profit levels. Brand preferences and loyalties are likely to be already established by this stage, but there is likely to be considerable emphasis on trying to encourage brand switching through sales promotion. Price reductions feature here and distribution efforts are aimed at maintaining dealer relationships.
  4. Decline stage Sales promotion may be reduced to a minimum as the market shrinks. Price competition and price cutting are likely to be intense. Emphasis is likely to switch either to looking for ways to extend the product life cycle or to new products, with the old product being ‘milked’ for profits.

As we can see from this outline of strategies, within broad limits the suggestion is that by identifying the life cycle stage of a product we can develop appropriate marketing mix strategies for each stage.

These suggested emphases are not definitive, but they can serve as guidelines.

Criticisms and refinements of the basic product life cycle concept

Amongst the most cogent of these critics have been Dhalla and Yuspeh2 who have challenged the whole concept of the product life cycle. Indeed, in their influential article we are counselled to forget the concept. They argue that there is a danger of allowing the life cycle concept to dull the planner’s management judgement by over-relying on ‘recipe marketing’.

They suggest that its use can lead to costly and potentially irrevocable mistakes in strategy. There may be a danger of selecting entirely inappropriate strategies for a particular stage of the life cycle of a product because of the unique circumstances pertaining to that particular product.

Some critics have gone further in their assessment of the limitations of the conventional life cycle in strategic market planning. Essentially, such criticisms are based on the extent to which the concept is irrelevant or even misleading. The most fundamental criticism is that there is little or no consistent empirical evidence to support the notion of products following a natural and preordained life cycle with the distinct stages; in short, the product life cycle simply does not exist.

Doubt about the existence or otherwise of both the S-shaped life cycle and the distinct stages which it is supposed to comprise, can only be resolved by an appeal to the facts. With such a longstanding marketing theory, numerous empirical studies have been undertaken over the years designed to confirm or refute the PLC concept. Very early studies include those of Cox,3 Polli and Cook,4 and Day.5 More recently, Baker and Hart6 have provided further thoughts regarding the validity, or otherwise, of the PLC concept.

In general, evidence from these and other studies suggests that the classic S-shaped life cycle does exist, but not for all products or for similar products on all occasions; in other words, we should not consider the traditional PLC concept as a universal law. If this is the case, then where does this leave the strategic marketing planner with respect to the use of the concept with regard to suggested applications outlined earlier? We have counselled the use of judgement and experience in interpreting the concept for marketing strategy.

The view is taken that critics and researchers of the concept, particularly those who have not supported the classic S-shaped PLC, have added to the debate concerning the usefulness of the concept to strategic marketing planning. We can see that use of the product life cycle concept is one that raises uncertainty and debate as to its usefulness or otherwise in strategic market planning.

The position taken here with respect to this debate, and hence with regard to this use of the life cycle concept, is well summarized by Brassington and Pettit,7 with whose view we are in accord: ‘Despite its weaknesses, the PLC is a well used concept. Product marketing strategies should, however, take into account other considerations as well as the PLC.’

Different PLC patterns

In addition to the S-shaped life cycle, other variations on this pattern have been observed. We see that the product life cycle can exhibit different patterns from that epitomized by the traditional notion of an S-shaped curve. Moreover, there is evidence to suggest that the ‘typical’ shape of the pattern may be associated with the type of product/market under construction. Life cycle (a) is suggested as being frequently found in the market for many small household appliances. Initial sales growth after a new product launch is rapid, followed by a quite severe drop

Keep Taking the Tablets

Developed in 1897, ‘aspirin’ is one of the world’s longest established pharmaceutical products. Originally launched by the German company Bayer, aspirin was hailed as a wonder drug and was one of the most effective over-the-counter pain killers ever launched. By the late 1960s, however, it looked as if aspirin was approaching the end of its life cycle.

New modern products were being developed to compete in the painkiller market: products which were heralded as being much more effective and with fewer side effects. As a result, many of the large pharmaceutical companies with aspirin-based products began to look to develop their own new painkiller products. Some withdrew their aspirin-based products completely.

In the late 1980s and the early 1990s research began to emerge that aspirin might have the effect of reducing the incidence of heart attacks if taken regularly in small and managed doses. The research appears now to be conclusive and aspirin can be effective in preventing heart attacks. As a result, it has enjoyed a resurgence of sales, seeming to defy the product life cycle and the decline stage it had appeared to have reached.

Bayer now enjoy higher sales from aspirin than they ever have. Furthermore, ongoing research into aspirin is revealing that it may have other important uses in fighting a whole range of diseases from prostate to bowel cancer. Companies who withdrew their support for aspirin-based products are still feeling the pain.

The ‘truncated’ pattern. Its shape illustrates that there is no introductory period. Sales grow rapidly from product launch. This type of curve may be associated with new products, like petrol-driven motor cars where there is substantial market appeal and little learning is required or risk perceived.

Aa rapid growth in sales, with no introductory stage, followed by an equally rapid decline with no maturity stage. Products that exhibit this shape of life cycle are typical novelty products or fads, such as many children’s toys.

A cycle/recycle pattern of a succession of product life cycle curves with a relatively short introductory period, rapid sales growth, a short maturity, followed by rapid decline. After this, the process is repeated when a new model is introduced. This pattern is frequently associated with fashion products like clothing or viewing a popular film a number of times.

Different categories (levels) of life cycle

Related to different life cycle patterns we note that there are different categories or levels of life cycle. The same ‘product’ market may be examined at a number of different levels, giving rise to different categories of life cycle:

Alternative product life cycle patterns

Alternative product life cycle patterns

  1. Product category life cycles: Examples include the life cycle for washing powders, cars and cigarettes; i.e. the generic product. Product category life cycles may extend over considerable periods of time and may not even exhibit any sign of decline e.g. shoes.
  2. Product form life cycles: Examples are laundry liquid or powder detergents, un-tipped cigarettes or leather shoes. Product form life cycles exhibit shorter cycles than those at the product category level. The S-shaped curve is most prevalent here.
  3. Brand life cycles: Examples are Procter & Gamble’s Ariel ‘Ultra’ washing powder, Ford ‘Ka’ cars, Gallagher’s ‘Park Drive’ un-tipped cigarettes and Clark’s ‘big gripper’ shoes. In using the product life cycle for marketing decision making, we must be careful to distinguish between these different levels. Partly owing to criticisms of the product life cycle concept, and based on empirical research, our knowledge about the concept and how to use and interpret it in strategic market planning has improved. There is still controversy surrounding the utility of product life cycles, but like Brassington and Pettit cited earlier, most marketers agree that used with care, tempered by managerial judgement, the concept is of value as a tool of strategic marketing planning.

The product life cycle concept underpins many of the more recently developed tools of strategic market analysis, including some of the ‘portfolio’ planning tools.

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