PRESENTATION ON

PROCESS/PRODUCT LIFE CYCLE

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PLC - Product Life Cycle
• The purpose of having a diagram is to help
you understand the changes, in the
revenue that is made, as you go through
the different stages of selling a product,
from the beginning, to the end.
•
 Length of Cycle Stages

• Products move through the cycle at different

speeds
• sometimes introduction is very long, or very
short, depending on how easy it is for the
public to understand the F.A.B.
• Not all products follow the same pattern
• Some products move very fast because they
are new and have no competition so the
intro stage is short, and they go direct to
growth stage.
•
Life Cycle Length

Because of


• technology and
• globalization
• the introduction stage is getting very short
• some cycles more quickly to maturity, then
have many product modifications so the
decline stage drags on and on
Speed of the PLC
• Since the Intro Stage is getting shorter, and
sometimes the Growth Stage doesn’t last
too long (because competitors move in)
companies must continually come up with
new products
• You can tell when they are in the growth
stage because this is when they introduce
new model variations, and some
improvements to the product
 Stages in the Product Life Cycle

Introduction Growth Maturity Decline

Digital cameras

Mini-disc
Electric cars
DVD
VR*

*= virtual reality The time at each stage varies

greatly
• Introduction • Sales are low, and profits are
• The seller tries to stimulate below the line because
demand your costs are greater than
the amount of money you
• Promotion campaigns to get make
increase public awareness
• you have “negative” profit
• Explain how the product is
used, • Need to spend a lot of money
on promotion
• Features Advantages
Benefits
• You will lose money, but you
expect to make profits in
the future
Growth
• A lot is sold - The seller tries
to sell as much as
possible
• Other competitor companies
watch, and decide about
joining in with a
competitor product
• “success breeds imitation”
(Text)
• Growth will continue until
too many competitors in
the market - and the
market is saturated
•
• At the end of the growth
stage, profits start to
decline when competition
means you have to
spend more money on
promotion to keep sales
going.
• Spending money on
promotion cuts into your
profit
•
Maturity
• Many competitors have joined -
the market is saturated
• The only way to sell is to begin
to lower the price - and
profits decrease
• It is difficult to tell the different
between products since
most have the same F.A.B.
- Features, Advantages &
Benefits
• Competition can get “Nasty”
and commercials are
intense
•
• “Persuasive Promotion”
becomes more important
during this stage
• That is to say, you have
commercials almost
begging the customer to still
buy your product because
you still make it just as
good.
•
Decline
• Newer products are • To increase volume
now more you try to
attractive - even a • 1. Increase the
low low price does number of
not make customers - get
consumers want to new customers
buy.
• 2. Increase the
• Profit margin declines amount each
- and so the only customer uses
way to make
money is to sell a •
high volume
Strategy & Issues During Product Life
Introduction
• Company vBest period to increase market share
Strategy & vR&D engineering are critical
v
Issues v
• v
vProduct design and development are critical
• vFrequent product and process design changes
vOver-capacity
• OM Strategy & vShort production runs
Issues vHigh skilled-labor content
vHigh production costs
vLimited number of models
vUtmost attentions to quality
vQuick elimination of market-revealed design
defects
Strategy & Issues During Product Life
Growth

• Company vPractical to change prices or quality

Strategy & image
Issues vMarketing is critical
vStrengthen niche
• v
• OM Strategy & vForecasting is critical
Issues vProduct and process reliability
vCompetitive product improvements and
options
vShift toward product oriented
vEnhance distribution
v
Strategy & Issues During Product Life
Maturity
vPoor time to increase market share
• Company vCompetitive costs become critical
vPoor time to change price, image, or quality
Strategy & vDefend position via fresh promotional and distribution
Issues approaches
v
• vStandardization
• vLess rapid product changes and more minor annual
model changes
• v
vOptimum capacity
• OM Strategy vIncreasing stability of manufacturing process
& Issues vLower labor skills
vLong production runs
vAttention to product improvement and cost cutting
vRe-examination of necessity of design compromises
Strategy & Issues During Product Life
Decline

• Company vCost control critical to market share

Strategy & v
Issues v
v
• v
• OM Strategy & vLittle product differentiation
Issues vCost minimization
vPrune line to eliminate items not returning
vGood margin
vReduce capacity
 Extending the Product Life Cycle

2 things can be done

Market Modification
1. Increase frequency of use by present
customers
2. Add new users
3. Find new uses
4. Change product quality or packaging

Product Modification

Purpose: to sell more product and cover original investment

 Extending the product
Cycle

• To prevent the product going into decline

you modify the market

MARKET MODIFICATION
• you look for new consumers by changing the
product so it has new users - and then new
customers (Baking soda, vinegar, Q-tips,
Avon Skin So Soft, vaseline
Extending the product
Cycle

• to prevent the product going into decline

you modify the product

PRODUCT MODIFICATION
• adding new features, variations, model
varieties will change the consumer reaction
- create more demand
• therefore you attract more users
Extending the product
Cycle

• PRODUCT MODIFICATION
• examples
• CD players
• chip flavours - many kinds
• flavoured tongue depressors
• couples seats at movie theatre
• digital sound at theatres
•
 Overlap of Life Cycle for Products A and B

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WINDOWS 95

1991 1995 1996 1997