CENTRAL INDIA INSTITUTE OF

TECHNOLOGY
INDORE

MAJOR RESEARCH PROJECT

Synopsis on
“PRODUCT LIFE CYCLE”
MBA (2009-2011)

Submitted To Submitted by:

Mr. Premlal Jagati Ravi Gupta
Roll no.- 09190165
TABLE OF CONTENTS

1. INTRODUCTION
2. REVIEW OF LITERATURE
3. RATIONALE OF THE STUDY
4. OBJECTIVES OF THE STUDY
5. RESEARCH METHODLOGY
 The Study

 The Sample

 Tools for Data Collection

 Tools for Data Analysis

 Implication of Study

6. REFERENCES
INTRODUCTION OF PLC

A product's life cycle (PLC) can be divided into several stages characterized
by the revenue generated by the product. If a curve is drawn showing
product revenue over time, it may take one of many different shapes, an
example of which is shown below:

Product Life Cycle Curve

The life cycle concept may apply to a brand or to a category of product. Its
duration may be as short as a few months for a fad item or a century or more
for product categories such as the gasoline-powered automobile.

Product development is the incubation stage of the product life cycle. There
are no sales and the firm prepares to introduce the product. As the product
progresses through its life cycle, changes in the marketing mix usually are
required in order to adjust to the evolving challenges and opportunities.

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Introduction Stage

When the product is introduced, sales will be low until customers become
aware of the product and its benefits. Some firms may announce their
product before it is introduced, but such announcements also alert
competitors and remove the element of surprise. Advertising costs typically
are high during this stage in order to rapidly increase customer awareness of
the product and to target the early adopters. During the introductory stage
the firm is likely to incur additional costs associated with the initial
distribution of the product. These higher costs coupled with a low sales
volume usually make the introduction stage a period of negative
profits.During the introduction stage, the primary goal is to establish a
market and build primary demand for the product class. The following are
some of the marketing mix implications of the introduction stage:

• Product - one or few products, relatively undifferentiated

• Price - Generally high, assuming a skim pricing strategy for a high
profit margin as the early adopters buy the product and the firm seeks
to recoup development costs quickly. In some cases a penetration
pricing strategy is used and introductory prices are set low to gain
market share rapidly.
• Distribution - Distribution is selective and scattered as the firm
commences implementation of the distribution plan.
• Promotion - Promotion is aimed at building brand awareness. Samples
or trial incentives may be directed toward early adopters. The
introductory promotion also is intended to convince potential resellers
to carry the product.

Growth Stage

The growth stage is a period of rapid revenue growth. Sales increase as more
customers become aware of the product and its benefits and additional
market segments are targeted. Once the product has been proven a success
and customers begin asking for it, sales will increase further as more
retailers become interested in carrying it. The marketing team may expand
the distribution at this point. When competitors enter the market, often
during the later part of the growth stage, there may be price competition

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And/or increased promotional costs in order to convince consumers that the
firm's product is better than that of the competition.

During the growth stage, the goal is to gain consumer preference and
increase sales. The marketing mix may be modified as follows:

• Product - New product features and packaging options; improvement

of product quality.
• Price - Maintained at a high level if demand is high, or reduced to
capture additional customers.
• Distribution - Distribution becomes more intensive. Trade discounts
are minimal if resellers show a strong interest in the product.
• Promotion - Increased advertising to build brand preference.

Maturity Stage

The maturity stage is the most profitable. While sales continue to increase
into this stage, they do so at a slower pace. Because brand awareness is
strong, advertising expenditures will be reduced. Competition may result in
decreased market share and/or prices. The competing products may be very
similar at this point, increasing the difficulty of differentiating the product.
The firm places effort into encouraging competitors' customers to switch,
increasing usage per customer, and converting non-users into customers.
Sales promotions may be offered to encourage retailers to give the product
more shelf space over competing products.

During the maturity stage, the primary goal is to maintain market share and
extend the product life cycle. Marketing mix decisions may include:

• Product - Modifications are made and features are added in order to

differentiate the product from competing products that may have been
introduced.
• Price - Possible price reductions in response to competition while
avoiding a price war.
• Distribution - New distribution channels and incentives to resellers in
order to avoid losing shelf space.
• Promotion - Emphasis on differentiation and building of brand
loyalty. Incentives to get competitors' customers to switch.

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Decline Stage

Eventually sales begin to decline as the market becomes saturated, the

product becomes technologically obsolete, or customer tastes change. If the
product has developed brand loyalty, the profitability may be maintained
longer. Unit costs may increase with the declining production volumes and
eventually no more profit can be made.

During the decline phase, the firm generally has three options:

• Maintain the product in hopes that competitors will exit. Reduce costs
and find new uses for the product.
• Harvest it, reducing marketing support and coasting along until no
more profit can be made.
• Discontinue the product when no more profit can be made or there is a
successor product.

The marketing mix may be modified as follows:

• Product - The number of products in the product line may be reduced.

Rejuvenate surviving products to make them look new again.
• Price - Prices may be lowered to liquidate inventory of discontinued
products. Prices may be maintained for continued products serving a
niche market.
• Distribution - Distribution becomes more selective. Channels that no
longer are profitable are phased out.
• Promotion - Expenditures are lower and aimed at reinforcing the
brand image for continued products.

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LITRATURE REVIEW
It is claimed that every product has a life period, it is launched, and it grows,
and at some point, may die. A fair comment is that - at least in the short term
- not all products or services die. Jeans may die, but clothes probably will
not. Legal services or medical services may die, but depending on the social
and political climate, probably will not.

Even though its validity is questionable, it can offer a useful 'model' for
managers to keep at the back of their mind. Indeed, if their products are in
the introductory or growth phases, or in that of decline, it perhaps should be
at the front of their mind; for the predominant features of these phases may
be those revolving around such life and death. Between these two extremes,
it is salutary for them to have that vision of mortality in front of them.

However, the most important aspect of product life-cycles is that, even under
normal conditions, to all practical intents and purposes they often do not
exist (hence, there needs to be more emphasis on model/reality mappings).
In most markets the majority of the major brands have held their position for
at least two decades. The dominant product life-cycle, that of the brand
leaders which almost monopolize many markets, is therefore one of
continued.

For example:-
COCA-COLA
Battered by competition from the sweeter Pepsi-Cola, Coca-Cola decided in
1985 to replace its old formula with a sweeter variation, dubbed New Coke.
Coca-Cola spent $4 million on market research. Blind taste tests showed that
Coke drinkers preferred the new, sweeter formula, but the launch of new
Coke provoked a national uproar. Market researchers had measured the taste
but had failed to measure the emotional attachment consumers had to Coca-
Cola. There were angry letters, formal protests, and even lawsuit threats to
force the retention of “The Real Thing.” Ten weeks later, the company
withdrew New Coke and reintroduced is century-old formula as “Classic
Coke,” giving the old formula even stronger status in the market place.

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 OBJECTIVES

 -Goals that an organization seeks to achieve through its promotional

program in terms of communication effects such as

 -Creating awareness of the product/brand,

 -Knowledge of the product/ brand

[features/ benefits of the product usage]

 -Images of the product/brand,

 -Attitudes of the users of the product,

 -Help people to show their preferences for the product,

 -Help people to make the purchase intentions.

 -Increasing response rates

 - Contributing to ROI business goals.

 -Build a brand image- Test customer awareness of brand recognition

and perceived values

 -Increase Sales- Levels of repeat purchase

 -Build customer loyalty and relationship- Levels of customer retention

RATIONALE OF THE STUDY

Since products are not living beings, why do they have life cycles? The
reason is that society accepts products at different rates, but all go through
similar stages of societal acceptance. This acceptance of innovations by
societies is called the diffusion of innovations. As society begins to adopt
and accept an innovation, the new product grows, eventually reaching
maturity. When there is a better alternative to the product or when public
preference changes, the products will enter a decline, possibly ending with
the death of the product.

The diffusion-of-innovations concept categorizes society by the speed with

which the individual members adopt a new product. It classifies people into
the five categories of innovators, early adopters, early majority, late
majority, and laggards.

RESEARCH METHODOLOGY
Any product or service is successful when it meets the user and market
requirements and is user-friendly. The product should not be complicated
and should match the user needs and lifestyle. The product should align with
the behaviors, habits and mental models of users.

To achieve this, appropriate ‘Research Methodologies’ should be used in

any stage of a product life cycle.

Phase 1: Concept and Plan

You are toying with an idea or a concept and are not sure about the need for
such a product or service and the user requirements. At this stage,
appropriate research methods will help you:

1. Evaluate your concept

2. Understand user motivations and aspirations
3. Learn user lifestyle and mental models

Research Methods that can be used in this phase:

 1. Surveys online and offline
2. Desktop research
3. Home visits
4. Shop Visits
5. In depth Interviews
6. Usability Test

This method gives you the access to the real user world and their need,
which helps you understand the gap between their requirements and your
concept. Thus helps you to define your concept which aligns with the user
and market needs.

Phase 2: Conduct Research

Once you have met your sample of users and done with research to confirm
on the concept directions, its time to deep dive into the real users world, as it
is important to ‘know’ the real users of the product /service. Understand
their lifestyle, work, day to day irritations and aspirations.

To achieve this, one can employ a combination of user research methods.

Research Methods that can be used:

1. In-depth interviews
2. Job shadow
3. Diaries
4. Camera journal
5. Show and tell
6. Day in a life of
7. Home visits
8. Body Storming
9. Contextual Inquiry

In these research methods, researchers meet real users and have complete
access to them. They find out their hidden needs and motivations.

Phase 3: Design Prototype

After the user requirements are collected and analyzed, it’s time to make
early design prototypes and not invest time and efforts on its look and feel
and its functionality. Designs prototypes help generate better solutions based
on research findings. But once this is done one is not sure if this matches
user’s behavior and mental models. In typical cases, this is either ignored or
a casual discussion with friends, family and team is done to confirm the
idea. Such discussions do not lead to correct design solutions as the group
you’ve tested with is not ‘the real user’ of the product.

Let’s discuss the appropriate research methods used to validate and iterate
your early design solutions.

1. In depth interviews
2. Usability test of the prototype. This is usually simple line wireframes
or wax models
3. Expert Review
4. Comparative benchmarking expert review
5. Participatory design

Discussing and showing the design prototypes with the end users early,
helps you learn more about user expectations and needs and check if all the
requirements gathered from.

Phase 4: Product Development and Launch

The product is ready for the development after the previous round of testing
and iteration. Once done, it’s ready for launch and it’s a good idea to run a
usability test to make sure that the product performs as expected and if any
last minute changes are required for the product. Test at this stage, will help
marketing department get a direction and focus of the product. Research
Methods:

1. Usability test of the product

2. Comparative usability testing with other competitor products/services

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IMPLICATION OF STUDY
The product life cycle is marketing concept that describes the way the
revenues from the sale of a product behave over time. Typically the product
life cycle is drawn as a bell curve, shown below, with the life cycle being
divided into four stages:

• introduction
• growth
• maturity and
• decline

The concept also applies to services, although the shape may be markedly
different. It can also apply to product categories and the market as a whole.

It should be noted that the product life cycle is not necessarily a good
'predictor' of product behavior. Rather it can aid the marketer in
understanding the market. For example, a product may have gone through a
period of rapid growth and sales may have begun to level off. This does not
necessarily mean that the product is maturing; it could just be a temporary
slow down that culminates in the product sales beginning to grow rapidly.
With living beings it is possible to have avery shrewd idea of where they are
in their life span, how long they are likely to live and consequently the sort
of issues that are going to occur at any given time, it is more difficult to gain
this level of understanding with products.

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QUESTIONNAIRE
 1. Indicate the nature of your product assortment?

2. If you have multiple product ranges, will you apply the PLC
concept on each individual product within each product range?

3. In what phase of the product life cycle concept is your primary

product positioned? The primary product can be regarded as the
bestselling product range in your organization?

4. Provide a short description of your primary product/product

range?

5. Provide a reason(s) why this product range is your best seller?

6. Described the market objective for the primary product or

product range in the product life cycle phase indicated?

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CONCLUSION
To conclude our report, we would say that the PLC theory has its share of
critics. That life cycle pattern is too variable in shape and duration. PLCs
lack what living organism’s have namely, a fixed sequence of stages and a
fixed length of stage.

Critics also charge that marketers can seldom tell what stage the product is
in. A product may appear to be mature when actually it has reached a plateau
prior to another usage. So, in the end, we would like to say that the PLC
concept helps us interpret product and market
Dynamics. It can be used for planning and control, although as a forecasting
tool it is less useful.

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REFERENCES
 www.wikipedia.com

 www.google.com

 Philip Kotlar (Marketing Management)

 www.netmba.com

 www.scribd.com

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