Just as living being have a life cycle from childhood to old age, products do have a life cycle. It can be well noticed that over a period, most products disappear while new ones emerge. The concept of product cycle is one of the fundamental notions and affects the marketing strategies substantially. This product life cycle implies that:
‣ Lifespan of products is limited
‣ Quantum of Sales passes through distinct stages
‣ Different challenges, opportunities, threats will be experienced during this cycle
‣ Rise and fall of profits takes place at different stages
Initially the concept of product idea and product development takes place before a product is launched in the market. Then different marketing strategies are to be adopted at each of the under mentioned 4 stages of sales curve.
1. Introduction
2. Growth
3. Maturity
4. Decline
Intoduction: Initially when the product is introduced, the sales pick up will be at low pace as it takes time to reach the existence of this product to the consumers. Net Banking and Mobile banking can be quoted as examples in bank industry.
Growth: The pace of sales will improve and target group consumers will accept the product resulting in substantial improvement in profits. Ex. RTGS and NEFT
Maturity: A slow down in sales having reached almost the saturation point since all potential buyers are tapped fully. Profits at this stage may stabilise or even decline in view of increasing marketing expenses. Traditional products will be in this stage.
Decline: Sales at this stage experience a down trend resulting in erosion of profits. Purchase of Demand Draft is in the decline stage as the demand for RTGS and NEFT is picking up.
Though, normally, the product life cycle undergoes these stages, some products may get sound business and profits in the initial stages itself. Some products like Land Line telephones may have prolonged maturity stage. SB and Fixed deposits in bank industry are also examples of continuously remaining in maturity stage since they are evergreen products. Traveller cheques and Mail Transfers are no longer on the active product shelf because of credit and debit cards.
Marketing characteristics of different stages.
At different stages a product needs different marketing mix for achieving the desired objectives. Further life cycle of same product may be different in different markets. Hence the marketing strategies to be adopted should be product and region specific keeping in mind the consumer behaviours aspects of the market.
New Product Development: Though any company starts their business with one product they should add more products shortly to their portfolio as otherwise the competitors will take over the market. The process of product development comprises of five stages:
1. Idea screening
2. Concept testing
3. Product development
4. Testing the market nd
5.Commercial launch.
Ideas: are necessary for a firm to develop a new product. Ideas can come from different sources viz., Employees, customers, competitors, channel members and top management, investors, research institutions, advertising agencies and consultants. As rightly advocated in Moslow’s Theory of Hierarchy of needs i.e, Physiological needs, safety needs, Social Needs, Esteem Needs and Self actualisation needs, it is always necessary for the manufacturer to think of the basic needs of the target group consumers.
Hence the need and wants of the customers should generally form the basic part of the ideas. So different ideas to innovate different products (customisation) will meet the needs of customers. Conversion of ordinary SB account into Flexi Deposit, which enables the depositor to enjoy fixed deposit interest over and above certain amount – which is normally 10,000/- in majority of the banks. This deposit is named as Flexi Deposit or Two in One account. The beauty of this Flexi Deposit product is whenever the SB account balance falls below Rs 10,000/- it automatically reverse sweeps the balance from FD to SB account in last in first out method which is again more advantageous to the customer.
Concept Development and Testing: The selected idea has to be developed into testable product concept. Several product concepts may emerge from an idea. The concept is also put through a business analysis to evaluate its commercial attractiveness without compromising with the objectives of the organisation.
Product Development: The third stage besides other aspects, packaging and other associated aspects like distribution are also developed at this stage.
These prototypes are subjected to use bus me sample consumers to ascertain their reactions to the product. Launching of financial inclusion scheme in Warangal District initially before final implementation is a perfect example.
Test Marketing: The next stage is to introduce the product to the market and know the real life reactions to assess how many people are using this product and their experiences and repeat purchases etc. This helps in more reliable forecast of future sales or to chalk out better promotional strategies to penetrate in to the market, in case the product is not picking up well.
Launching: The final stage is that of full scale launch in the market. This is the stage which requires committing resources to the largest extent involving manufacturing and marketing. While launching what is important is Timing of launch, Geographical reach, prospect consumer groups, Market strategy.
GOALIFE CONCEPT
While purchasing decisions are taken customer’s environment and circumstances influence his/ her decision to buy. Different age groups have different needs. Youngsters will have a particular need, young couple may have different needs, Senior Citizen may need different products depending on their risk apetite. As such we should list out certain parameters which influence their decisions collectively which can be termed as GOALIFE:
‣ Gender
‣ Occupation
‣ Age
‣ Lifestyle
‣ Income
‣ Education
