How can different stages of the life cycle of a product influence the standardization/adaptation decision?
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.
Product: Offer a basic product
Price: Use cost-plus
Place: Build selective distribution
Advertising: Build product awareness among early adopters and dealers
Promotion: Use heavy sales promotion to entice trial
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, although 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.
Product: Offer product extensions, service, warranty
Price: Price to penetrate market
Place: Build intensive distribution
Advertising: Build awareness and interest in the mass market
Promotion: Reduce to take advantage of heavy consumer demand
Maturity.
During this stage, sales growth has started to slow down, and the product has already reached widespread acceptance in the market, in relative terms. Ultimately, during this stage, sales will peak. The company will want to prolong this phase so as to avoid decline, and this desire leads to new innovation and features in order to continue to compete with the competition which, by now, has become very established, advanced and fierce. Competitors ' products will begin to cut deeply into the company's market position and market share. However, despite this, sales continue to grow in the early part of the maturity phase. But, these sales will peak and ultimately decline, as the graph shows.
Product: Diversify brands
and models
Price: Price to match or beat competitors
Place: Build more intensive distribution
Advertising: Stress brand differences and benefits
Promotion: Increase to encourage brand switching
Decline.
Profitability will fall, eventually to the point where it is no longer profitable to produce, and production will stop. As a number of companies start to dominate the market, it becomes increasingly difficult for the company in question to maintain its level of sales. Consumer tastes also change, as do new technologies which may make the product become ultimately obsolete (as in the case of CDs and DVDs, and now Blu-Ray).
Product: Phase out weak items
Price: Cut price
Place: Go selective: phase out unprofitable outlets
Advertising: Reduce to
level needed to retain hardcore loyals
Promotion: Reduce to minimal level