INTRODUCTION

Products usually go through different stages of development and completion. The product life

cycle can be used as a tool to determine the stage that the product is staying in. So, this will help

the managers to make a favorable decision for continuing use of the method and introduce the time

of the new product Therefore, product life cycle is one of the fundamental concepts in

management, because the managers are under pressure before and after the changing points and

sale rate is different during different stages of product life cycle. Furthermore, the managers need

to be aware of such changes for developing a proper strategy for different factors such as product

rate, stock, employer affairs, sale, marketing, advertisement and etc. In order to formulate strategy

for producing graph of life cycle, methods have been studies regarding to the system needs .But

method errors rate, determine the distance point with verity axis. Historical methods mostly predict

due to linear methods.

Two studies about the history of the marketing done by Bartels 1976 and Converse 1959 have been

reviewed, but nothing was found about the origin of the product life cycle. However, Rink and

Swan, mentioned Joal Din as person who introduced the product life cycle in 1950. He offered a

paper entitled ” New Product Pricing Policies” which used product life cycle for the first time in

managerial text. On the other hand, he made a biological analogy and coined the expression

"product life cycle in managerial context". (William F.Muhs, 1986). Frank Bass offered a model

to predict the product life cycle in 1969. (Peres et al, 2009) His model is so famous in marketing

fields. Bass proposed that people usually buy products because of the company’s advertisements

or because of other customer’s suggestion. In other words, customers falls into two categories

(effective and potential customers).This model is one of the most applicable and famous new

product sale scale prediction model which is used in marketing ,developing strategy , and

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technology management. Alvares and Lourenco proposed a model for tourism in 2002. They used

plan – processing methods. This model has been developed in 70th Mario Tabucano, made a sample

system dynamics model for product life cycle. He investigated the factors affecting the product

life cycle curve. They fell into different categories including market factors, advertisement factors,

customer’s factors .This factors divided into two groups .The first group included direct factors

related to producer and customers behavioral factors and the second one included the factors

related to markets which were market direct factors, factors related to product outpouring from

market and factors affected the innovation variance. Jeferry Morison predicted the product life

cycle while there is not enough historical data (Morison, 1995).Tsure predicted the sales of the

next stage of the product life cycle in 2002. He used AHP methods and knowledge of the experts.

At last, he used the fuzzy logic to determine the product life cycle curve (Tsure, 2002). Solomon

could forecast forecast the electronic part life cycle and their obsolescence as well (Solomon et al,

2000). Emil Petrescu proposed the statistical distribution to predict the four stages of the product

life cycle. This distribution is the so-called ALPHA distribution (Emil petresku, 2009). Alexandru

ISAIC-MANIU analyzed a modified model for product life cycle from the reliability theory

viewpoint. (ISAIC-MANIU etal, 2008)

Determining the behavior of the most important factors affecting the product life cycle, the

behavior of the product during its life would be simulated via system dynamics concept. Finally,

the most suitable strategy for increasing the sales would be proposed.

DEFINITIONS

The life cycle can be used to observe the behavior of many concepts in business. In its classic

form, which is described in a later section, it is best applied to products and industries. Used in this

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form, a product is not individual but a group of similar products. For example, the Chevrolet

Malibu, Ford Taurus, and Honda Accord are a product group of mid-sized sedans.

Industry is a much broader classification than product; an industry consists of many similar groups

of products. The product groups of mid-size sedan, pickup truck, and sport-utility vehicle all

belong to the automobile industry.

Generally, industries have longer life cycles than products. The automobile industry has lasted

more than 100 years and shows no signs of declining. However, the large family-sedan appears to

be well into the decline stage. After decades of dominance in the automobile industry, only a few

large cars, such as Ford's Crown Victoria, are being manufactured.

The life-cycle concept also describes individual brand products, such as the Ford Taurus. However,

individual products in a group of products usually have much shorter life cycles, and they do not

always follow the classic shape of the product life cycle. They may be introduced and die, and then

be reintroduced again at a latter point. For example, the Chevrolet Nova has had more than one

life cycle. Consequently, products are defined as groups of similar products, and industries defined

as a collection of comparable product groups.

RATIONALE FOR THE PRODUCT LIFE CYCLE

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.

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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.

Product Life Cycle: Overview

The product life cycle (PLC) describes the life of a product in the market with respect to

business/commercial costs and sales measures. It proceeds through multiple phases, involves many

professional disciplines and requires a multitude of skills, tools and processes.

This is not to say that product lives cannot be extended – there are many good examples of this –

but rather, each product has a ‘natural’ life through which it is expected to pass.

The stages of the product life cycle are:

 Introduction

 Growth

 Maturity

 Decline

NEW-PRODUCT DEVELOPMENT

Although product development is not usually recognized as a formal stage in the product life cycle,

many ideas for long-term product planning are derived from the concepts that are generated

through this preliminary process. Product development is defined as a strategy for company growth

by offering modified or new products to current market segments. Additionally, product

development focuses on turning product concepts into a physical product, while ensuring that that

the idea can be turned into a workable product through each stage.

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In the product development stage, costs begin to accumulate due to the investment in proposed

concepts and ideas. Before introduction, a successful product in the marketplace will go through

the following eight distinct stages of new product development: idea generation, idea screening,

concept development, marketing strategy, business analysis, product development, test marketing,

and commercialization.

Idea generation usually stems from the organization's internal sources (R&D, engineering,

marketing). Company employees will brainstorm new ideas to generate viable product concepts.

Additionally, a company may also analyze their competition's new product offerings with the

intention of differentiating and improving on existing designs.

Ideas are ultimately screened, reducing the number of unrealistic concepts and focusing on

realistic, attainable concepts. A single idea is developed into a product concept. Concepts are then

tested to measure how appealing the product might be to consumers from the anticipated target

market. Testing may range from focus groups to random surveys.

After concept testing, a marketing strategy is needed to define how the product will be positioned

in the marketplace. Identifying the product's anticipated target market, financial expectations,

distribution channels, and pricing strategy are also determined at this time.

PLC management makes these three assumptions:

1. Products have a limited life and, thus, every product has a life cycle.

2. Product sales pass through distinct stages, each of which poses different challenges,

problems and opportunities to its parent company.

3. Products will have different marketing, financing, manufacturing, purchasing and human

resource requirements at the various stages of its life cycle.

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The product life cycle begins with the introduction stage (see ). Just because a product successfully

completes the launch stage and starts its life cycle, the company cannot take its success for granted.

Product Development and Product Life Cycle: The Product Life Cycle follows directly after

new product development.

A company must succeed at both developing new products and managing them in the face of

changing tastes, technologies and competition. A good product manager should find new products

to replace those that are in the declining stage of their life cycles; learning how to manage products

optimally as they move from one stage to the next.

Product Lifecycle Management Stage 1: Market Introduction

This stage is characterized by a low growth rate of sales as the product is newly launched and

consumers may not know much about it. Traditionally, a company usually incurs losses rather than

profits during this phase. Especially if the product is new on the market, users may not be aware

of its true potential, necessitating widespread information and advertising campaigns through

various media.

However, this stage also offers its share of opportunities. For example, there may be less

competition. In some instances, a monopoly may be created if the product proves very effective

and is in great demand.

Characteristics of the introduction stage are:

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  High costs due to initial marketing, advertising, distribution and so on.

 Sales volumes are low, increasing slowly

 There may be little to no competition

 Demand must be created through promotion and awareness campaigns

 Customers must be prompted to try the product.

 Little or no profit is made owing to high costs and low sales volumes

Growth

During the growth stage, the public becomes more aware of the product; as sales and revenues

start to increase, profits begin to accrue.

roduct Lifecycle Management Stage 2: Growth

The growth stage is the period during which the product eventually and increasingly gains

acceptance among consumers, the industry, and the wider general public. During this stage, the

product or the innovation becomes accepted in the market, and as a result sales and revenues start

to increase. Profits begin to be generated, though the break even point is likely to remain

unbreached for a significant time–even until the next stage, depending on the cost and revenue

structures.

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Growth Stage: The graph shows the growth stage in the overall product life cycle.

Initial distribution is expanded further as demand starts to rise. Promotion is increased beyond the

initially high levels, and word-of-mouth advertising leads to more and more potential customers

hearing about the product, trying it out, and–if the company is lucky–choosing to use the product

regularly. Repeat orders from initial buyers are also obtained.

If a monopoly was initially created, then it still exists in this stage. Because of this, the

manufacturing company can look at ways to introduce new features, alterations, or other types of

innovation to the product according to feedback from consumers and from the market in general.

This would be done in order to maintain growth in sales and ensure that interest in the product

continues to grow and not stagnate, thus maintaining the growth stage. In fact, the growth stage is

seen as the best time to introduce product innovations, as it creates a positive image of the product

and diminishes the presence of competitors who will be attempting to copy or improve the product,

and present their own products as a substitute.

Features of the growth stage:

 Costs reduced due to economies of scale: as production and distribution are ramped up,

economies of scale kick in and reduce the per unit costs.

 Sales volume increases significantly: as the product increases in popularity, sales volumes

increase.

 Profitability begins to rise: revenues begin to exceed costs, creating profit for the company

 Public awareness increases: through increased promotion, visibility and word of mouth,

public awareness grows.

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Maturity

During the maturity stage, sales will peak as the product reaches market saturation, and

competition will grow increasingly fierce.

How to Tell What Stage in the Product-Life Cycle a Product is At

It is important to note that the diagram of the product-life cycle represents an idealized product-

life cycle and that most products do not follow the curve in a perfect manner. There may be sudden

dips, in sales during growth or maturity, which do not accurately reflect the position of the product

in the lifecycle, for example.

Thus there are no absolute indicators for the position of a product during the life cycle. However,

there are general indicators which can be applied – in the context of your own observations over

time – which will give some indication of a product’s position in its lifecycle. These can be

summarized as follows:

Indicative Feature Life Cycle Stage

Introduction Growth Maturity Decline

Sales Volumes Low High Maximum Low

Investment Costs Maximum High Low Low

Competition Low Low – Medium High Maximum

Profitability Low Maximum High Low

Challenges of Using the Product-Life Cycle

It is important to note that a product life cycle is a complex thing. Some products have life-cycles

measured in months or years whereas others may be measured in decades or centuries.

Rising sales do not always indicate growth, falling sales do not always indicate decline. Some

products may not experience a decline at all within the lifetime of the business management team

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(think about Coca-Cola for example which has enjoyed relatively consistent sales for over 100

years).

Because of this, it is important to use the product-life cycle as a guideline to which large quantities

of common sense must be applied rather than to use it as a rigid tool for decision making. Maturity

and decline, in particular, can be difficult to identify with any form of precision and strategic

decisions must be approached with caution to deliver the expected outcomes.

CONCLUSION

The product-life cycle provides guidance to a business as it progresses a product from introduction,

through growth and maturity to decline. It is not designed to be a rigid tool and it is important that

common sense and general understanding of the market be used alongside the product-life cycle

in order to get the most value from it. Designers are most likely to be involved with the stages of

introduction, growth and maturity and be moving on to new projects when a product is in decline.

Never forget Philip Kotler, the world famous marketer’s, advice though; “Watch the product life

cycle; but more important, watch the market lifecycle.” It’s not just products that come to an end

but markets can too.

REFERENCES

Gorchels, L. (2002) “The Product Manager’s Handbook: The Complete Product Management

Resource” , McGraw-Hill, ISBN 978-0658800 13522

Day, G. (1981) The product life cycle: Analysis and applications issues, Journal of Marketing, vol

45, Autumn 1981

Levitt, T. (1965) Exploit the product life cycle, Harvard Business Review, vol 43, November–

December 1965

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