Saturday, August 21, 2010

Innovation to Profits - Product Life Cycle (Part 4 of 4)

To continue to move a business forward a steady stream of innovation is needed to change with demands from the consumer. A new product goes through a sequence called the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix. The four stages of the product life cycle are:

  • Introduction Stage
  • Growth Stage
  • Maturity Stage
  • Decline Stage
The Decline Stage the company has several options:
  • Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
  • Harvest the product, reduce the costs and continue to offer it to a loyal niche segment.
  • Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product.
As Peter Drucker states, “The only thing we know about the future is that it is going to be different.”

The marketing mix in the decline phase will depend on the selected strategy.  The product may be changed if it is being rejuvenated or left unchanged if being harvested or liquidated.  The price may be maintained if harvested, or reduced drastically if liquidated.

Continue to develop a loyal customer base and offer new products, “The purpose of business is to create and keep a customer.” - Peter Drucker

Additional Readings:
Innovation to Profits - Product Life Cycle (Part 1 of 4)
Innovation to Profits - Product Life Cycle (Part 2 of 4)
Innovation to Profits - Product Life Cycle (Part 3 of 4)

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