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.

Advertisements

Pulling in High Quality


Organizations pay a lot of attention to product quality. Thousands of companies advertise that they are “ISO 9000 registered,” and man have objectives of making ‘products of the highest quality.’ They emphasize quality for four reasons:

a.    Processes can now make products with guaranteed high quality;

b.    High quality gives a competitive advantage;

c.    Consumers have got used to high quality products, and won’t accept anything less;

d.    High quality reduces costs.

 

If you make poor quality products, your customers will simply move to a competitor. Although high quality won’t guarantee the success of your products, low quality will certainly guarantee their failure. So survival is one of the benefits of high quality, and others include:

a.    Competitive advantage coming from an enhanced reputation;

b.    Larger market share with less effort in marketing;

c.    Reduced liability for defects;

d.    Less waste and higher productivity;

e.    Lower costs and improved profitability;

f.     Enhanced motivation and morale of employees;

g.    Removal of hassle and irritants for managers.

 

Most of these are fairly obvious – if you increase the quality of your products, you expect people to switch from competitors. But the idea that higher quality can reduce costs is particularly interesting. This goes against the traditional view that higher quality automatically means higher cost. Gucci are well known for this combination, and say, ‘Quality is remembered long after the price is forgotten’

 

When you take a broader look at the costs, you can see that some of them really go down with higher quality. If you buy a washing machine with a faulty part, you complain and the manufacturer repairs the machine under its guarantee. The manufacturer could have saved money by finding that fault before the machine left the factory, and it could have saved even more by making a machine that did not have a fault in the first place.

 

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, Line of Sight