1. PRODUCT LIFE CYCLE
Marketing and the Product Life Cycle
Product Life Cycle is one of the most important principles of entrepreneurship. Every product goes
through stages during its lifetime. Product life cycles can vary in length - weeks, or months, or years.
Cycles also vary in expectation and success at achieving a particular level of sales and profits.
A product's life cycle begins with its development where there are no sales or profits.
When the product is introduced, sales begin slowly and then, hopefully, the product has a period
of high growth in sales and profits.
At the mature stage, profits begin to level off.
Sales continue to increase until the market is saturated with the product and competing products.
Because of competition for market share, profits typically decrease earlier than sales.
In its decline stage, profits are very low even with considerable sales. With declining demand for
a product and a saturated market, profits, sales volume, and prices are all in decline.
This life cycle pattern can help you to understand the relationship between sales volume and time
in the marketplace. No matter how innovative and functional a product idea may be, you must
plan for its growth as well as its maturity and decline. Marketing and pricing strategies should be
different when a product's sales are growing than when declining.
Basic, Fashion, and Fad Products
Apparel and other consumer products can be classified by the length of their life cycles. Basic
products such as T-shirts and blue jeans are sold for years with few style changes. Businesses
selling basic products can count on a long product life cycle with the same customers buying
multiple units of the same product at once or over time.
The life cycle curves of basic, fashion, and fad products are pictured below.
2. Life Cycle for Basic and Fashion Products
Fashion product life cycles last a shorter time than basic product life cycles. By definition,
fashion is a style of the time. A large number of people adopt a style at a particular time. When it
is no longer adopted by many, a fashion product life cycle ends. Fashion products have a steep
decline once they reach their highest sales.
The fad has the shortest life cycle. It is typically a style that is adopted by a particular sub-culture
or younger demographic group for a short period of time.
The overall sales of basic products are the highest of the three types of products, and their life
cycles are generally the longest.
Apparel products often have a fashion dimension, even if it is just color. As fashion features
increase in a product, the life cycle will decrease. Therefore, if you are designing a fashion
product, you will want to have multiple products in line for introduction as each fashion
product's cycle runs its course.
Some firms build their lines to include basic, fashion, and fad products in order to maximize
sales. For example, with a sweater line, a business may have four styles that have classic styling
and colors and are always in the line. Four additional styles may be modified every two years to
include silhouette, length, and collar changes based on the current fashion. One or two short-
cycle fashion or fad styles based on breaking trends may be introduced once or twice a year.
Styles that a popular celebrity or sports hero is wearing are examples of fashion and fad styles.
We can also look at the number of fashion product adopters against time.
Five types of consumers emerge at each of the life cycle stages.
3. Fashion Adoption Consumer Types
Different marketing strategies should be used to reach each of these consumer types.
Fashion innovators adopt a new product first. They are interested in innovative and
unique features. Marketing and promotion should emphasize the newness and distinctive
features of the product.
Fashion opinion leaders (celebrities, magazines, early adopters) are the next most likely
adopters of a fashion product. They copy the fashion innovators and change the product
into a popular style. The product is produced by more companies and is sold at more
At the peak of its popularity, a fashion product is adopted by the masses. Marketing is
through mass merchandisers and advertising to broad audiences.
As its popularity fades, the fashion product is often marked for clearance, to invite the
bargain hunters and consumers, the late adopters and laggards, who are slow to recognize
and adopt a fashionable style.
5. Summary of Product Life Cycle Marketing Objective and Strategies (Kotler, 1997)
Let's use the chart to compare the marketing strategies for the introduction of a new sweater line
with a sweater line that is in the maturity stage of its life cycle.
Price for an introduction might be cost plus profit (or markup) to reflect the true cost at first
offering. In the mature stage of the life cycle, the price will be set to match competing product
Distribution (or "Place") will be selective in the introduction stage. In the maturity stage,
greater distribution will play a larger role in profitability.
Advertising (or Promotion) in the introduction stage will focus on creating awareness among
dealers as well as innovators. In the maturity stage, advertising will focus on creating brand
awareness and comparing the brand with competing products.
There will be heavy promotion in the introduction stage to encourage people to try the product.
In the maturity stage, promotion will be focused on switching brands to increase market share.
PROBLEMS WITH THE PRODUCT LIFE CYCLE
While the product life cycle theory is widely accepted, it does have critics who say that the
theory has so many exceptions and so few rules that it is meaningless. Among the holes in the
theory that these critics highlight:
There is no set amount of time that a product must stay in any stage; each product is
different and moves through the stages at different times. Also, the four stages are not the
same time period in length, which is often overlooked.
There is no real proof that all products must die. Some products have been seen to go
from maturity back to a period of rapid growth thanks to some improvement or re-design.
Some argue that by saying in advance that a product must reach the end of life stage, it
becomes a self-fulfilling prophecy that companies subscribe to. Critics say that some
businesses interpret the first downturn in sales to mean that a product has reached decline
and should be killed, thus terminating some still-viable products prematurely.
The theory can lead to an over-emphasis on new product releases at the expense of
mature products, when in fact the greater profits could possibly be derived from the
mature product if a little work was done on revamping the product.
The theory emphasizes individual products instead of taking larger brands into account.
The theory does not adequately account for product redesign and/or reinvention.