Extending the Product Life Cycle


The concept of the product life cycle tells us that a sequence of actions is required to maintain a product’s sales and profits. The goal of the planning is to stretch out the life of the product, thus keeping it profitable longer. The following techniques are often effective in extending a product’s life cycle:

  1. New or extended uses: The sales of rugged four-wheel drive sport utility vehicles, ranging from inexpensive jeeps to Range Rovers, increased dramatically once they became accepted as family automobiles.
  2. b. Reduce price and build volume: Tylenol became a much more successful product after Johnson & Johnson reduced its price.
  3. c. Increased frequency of Use: Trade associations that are connected to the poultry and fish industries have been successful in informing the public that their products are low in cholesterol and should be eaten frequently as part of a healthy diet.
  4. d. Broaden the target market: As the ethical issue, American tobacco firms have successfully enlarged the market for American cigarettes by focusing on Japan. They have also been very successful in expanding the market for tobacco products in Europe and South America.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Market Survey


Stated most simply, the objective of a market survey is to determine a reasonably attainable sales volume in a specific market area for a specific type of business. This means finding out how many potential consumers of the planned merchandise or service there are in this market and how many of them can reasonably be expected to become customers of the firm under consideration.

The thoroughness of a market survey will vary under different conditions. The survey is essential for stores that plan to develop much of their own customer traffic. If sales are to depend on the firm’s merchandising policies, sales promotion efforts, special services, or uniqueness, a particularly thorough market survey should be made in advance. Firms that plan to rely on the established customer flow already generated by other businesses in the area may follow less thorough procedures. The latter types of firms have often been described as “parasite stores,” meaning that their location has been dictated by the existing firms in the area that have attracted a substantial traffic flow and which the new firm will tap for its own sales. Examples of small firms in this category are a restaurant in a skyscraper lobby, a medium-priced dress shop next to a large department store, an office-building tobacco shop, or a drugstore in an airline terminal. In these cases, the amount and nature of the traffic and its sales potential are pretty well established. Such firms may still, however, exert various types of sales promotion activities to increase total income within the traffic.

The chief concern here is with the types of firms that may rely heavily on a market survey to help them build much of their customer traffic.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

The Product Life Cycle


Customer demands are constantly changing. There are many reasons for this, ranging from fashions to new regulations. Sometimes there are obvious patterns to demand. Another pattern comes from the product’s life cycle. Demand for just about every product follows a life cycle with five stages:

  1. Introduction. A new product appears and demand is low while people learn about it, try it and see if they like it—for example, palmtop computers and automated checkouts at supermarkets.
  2. Growth. New customers buy the product and demand rises quickly—for example, telephone banking and mobile phones.
  3. Maturity. Demand stabilizes when most people know about the product and are buying it in steady numbers—for example, color television sets and insurance.
  4. Decline. Sales fall as customers start buying new, alternative products—for example, tobacco and milk deliveries.
  5. Withdrawal. Demand declines to the point where it is no longer worth making the product—for example, black and white television sets and telegrams.

The length of the life cycle varies quite widely. Each edition of The Guardian completes its life cycle in a few hours; clothing fashions last months or even weeks; the life cycle of washing machines is several years; some basic commodities like Nescafe has stayed in the mature stage for decades.

Unfortunately, there are no reliable guidelines for the length of a cycle. Some products have an unexpectedly short life and disappear very quickly. Some products, like full cream milk stayed at the mature stage for years and then started to decline. Even similar products can have different life cycles – with Ford replacing small car models after 12 years and Honda replacing them after seven years. Some products appear to decline and then grow again—such as passenger train services which grew by 7 per cent in 1998 and cinemas where attendances fell from 1.64 billion in 1964 to 54 million in 1984, and then rose to 140 million in 1997.

One thing we can say is that product life cycles are generally getting shorter. Alvin Toffler says, ‘Fast-shifting preferences, flowing out of and interacting with high-speed technological change, not only lead to frequent changes in the popularity of products and brands, but also shorten the life-cycle of products.’

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.