Product is “everything that customer receives that of value in terms of a perceived want, need or problem” (Adcock, et al, (2001) p183). This report discusses four stages of product life cycle and use Sony Plc as example to show how a company can maintain all these four stages.
According to Chee and Harris, (1993) Product life cycle is when a product lives a life like human. Product life cycle involves four stages such as introduction, growth, maturity and decline, (Brassington and Pettitt, 2003). Moreover it helps company to know how successful its product is and where will it be in future in order to plan for improvement or maintenance.
At Introduction stage product is new and unknown by customers. Baker, (1996) reported that sales and profit of that product is always low due to low demand for it Therefore a company should plan promotion in order to stimulate its demand. This is because most of new products are an addition to the existing ones, so consumers need clear differentiation between those products in order to make buying decision. Furthermore, marketing cost at this stage is always high which leads to high price for a product. PSP 3000 is example of a product in this stage due to its high price of £146.79 and its low sales rate increase of 0.60 million units per year (Sony financial report, 2008) .A Company may run promotion not only to stimulate demand but also to attract distributors through stimulated demand.
Next stage is Growth stage, according to Dibb, et al (2006) sales and profit start to increase rapidly. This is because buyers have been informed and persuaded by promotion and price fall; therefore they started to repeat buying the product and hence increase the volume and product’s market share. PS3 is example for product which is in growth stage because of its high increase rate of sales by 10.7 million units up to 21.1 million units, (Sony’s financial report (2008). Moreover competition start to increase which may threaten firm’s distribution and buyers, therefore firm should be aware of it and try to either improve or modify the product. Xbox 360 is example of PS3’s competitors.
Next stage is maturity stage, according to Dibb, et al (2006) sales and profit continues to increase till they reach their peak and then started to decrease. This is due to high competition in industry and homogeneous products. For example PS2’s sales increased up to 38 million units and then started to decline up to 23.1 million units. Moreover oversupply leads to fall in price which leads to fall in revenue. However this is not always true because sometimes firm sale more than normal units when price is low and earn high revenue.
Last stage is decline stage. Adcock, et al (2001) reported that at this stage both sales and profit continue to fall rapidly . This may occur due to new technology or new social trend. PS1 is example of goods which are in decline stage because its sales had fallen due to new technology introduced by PS2. Moreover the focus of the firm is to cut cost and leave nature run the market. Firm may incur loss therefore it may think of either continue to sale its product or introduce new product. Furthermore, firm may increase price in order to earn profit from loyal customers
A successful product like Sony’s products must pass through all four stages due to company effectiveness in understanding their life cycle. However it is impossible to predict the product’s life span and to measure successfulness of the product in some situation. For example how can a firm know that its product is in maturity or decline during economic crisis? It is difficult because sometimes sales may fall due to economic crisis which leads to fall in demand, but in long run during recovery customers may continue to buy it and hence increase its sales again.
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Harlow, Pearson education limited
Baker, M. J. (1996) Marketing: An introductory text. 6th ed.
, Macmillan press ltd London
Brassington, F. and Pettitt, S (2003) Principles of marketing. 3rd ed.
Harlow, Pearson education limited
Chee, H. and Harris, R. (1993) Marketing: A global perspective.
, pitman publishing London
Dibb, S. and Simkim, L. and Pride, W. M. and Ferrell, O. C (2006) marketing concepts and strategies. 5th Ed.
, Houghton Mifflin. New York
Managing the product. Available at:http://www.udel.edu/alex/chapt12.html#growth (accessed on 12th march 09)
Sony’s financial report (2008). Available at: http://www.vgchartz.com/forum/thread.php?id=46984 (accessed on 17th march 2009)