Open Library - an open library of educational information. Theoretical foundations of the product life cycle concept

“Each product exists on the market for a certain time. Sooner or later it is forced out of the market by another, more advanced one.” - This was the opinion of Theodore Levit, who first published the concept of the product life cycle (PLC) in 1965.

The concept of the product life cycle in marketing (abbreviated as “LPC”) describes the stages of development of any product or service, starting from the moment it first appears on the market until its cessation of sale and discontinuation. This article contains comprehensive information on how to make the most of the product life cycle model in marketing. We will briefly describe the essence of the concept, analyze the concept and each stage of the product life cycle theory, and show possible types of life cycle curves on specific examples. At the end of the article you will find recommendations on which marketing programs, strategies and promotions are most effective in different stages product life cycle.

General characteristics of the life cycle model

The product life cycle theory quite fully describes the dynamics of sales and profits of any product on the market. According to the life cycle model, the sales volume, and therefore the profit volume, of any product or service changes over time in a predictable manner; and all products go through sequentially 4 stages of existence on the market: introduction, growth, maturity (or saturation) and decline.

The model has a high practical use and allows you to more effectively launch a new product on the market, strengthen its position in the segment and extend its life on the market. The concept of a product life cycle quite fully describes the dynamics of product sales and profits. The theory states that the sales volume, and therefore the profit margin, of any product or service changes in a predictable manner over time.

The concept of a product life cycle is very often used in marketing. After all, understanding what stage of development a company’s product or service is at allows you to correctly build competition, build a forecast of sales volumes and profits, and choose a strategy for pricing, promotion and distribution of goods.

The main disadvantage of the product life cycle model is its normative approach to the formation of new product development strategies. Using the life cycle theory, it is necessary to take into account market realities, competition, changes in macroeconomic factors and consumer behavior - everything that can also affect the company’s successful functioning in the product market.

Life cycle curve

The classic product life cycle curve looks like a graph of sales and profit over time. The graph shows the main stages of the product life cycle: introduction to the market, growth stage, stage of product maturity, stage of sales decline.

Fig. 1 View of the traditional product life cycle curve

It is very easy to construct a product life cycle curve for your product. It is enough to have accumulated sales statistics, using which you can build a graph of sales dynamics for the available periods. The resulting sales dynamics will be the product life cycle curve. The longer the analyzed period, the more accurate the graph is.

How to manage a product at each stage?

The concept of product life cycle (PLC)- ϶ᴛᴏ the foundation of knowledge, when you do business you need to evaluate the place of the product in the market every day.

The concept of life cycle is based on the fact that each product has a certain period of market stability, ᴛ.ᴇ. lives (stays on the market) for a limited time. Sooner or later, it is forced out of the market by other more advanced or cheaper products.

ZhCT- ϶ᴛᴏ a concept that attempts to describe the marketing of a product, profits, consumers, competitors and marketing strategy from the moment the product enters the market until it is withdrawn from the market.

Marketers are interested in LCT for a number of reasons:

1) the life of a product has become shorter (for example, in the USA in the 50s, life cycle was 10–15 years; in the 60s – 10–6 years; in the 70s – 3–6 years; in the 80s . – 2–3 years). So, currently IBM can release a computer in 6 months, new development must pay for itself within a short period of time;

2) new goods and products require growing investments;

3) the concept of life cycle allows you to anticipate changes in consumer tastes, competition and support for distribution channels and adapt the marketing plan accordingly.

The life cycle concept gives the marketer the opportunity to analyze the product range; many companies strive to achieve a balanced combination of new, developing and mature products in their production.

Types of gastrointestinal tract vary greatly in both duration and form.

The life cycle cycle, or the curve describing it in “time – profit” coordinates, can be divided into the stages of introduction, growth, maturity, and decline (Fig. 1).

Figure 1 - Stages of life cycle and its characteristics

5. Characteristics of traditional life cycle*

*Evans J.R., Berman B. Marketing. – Moscow, 1993. P. 146.

At the implementation stage: the goal is to create a market for a new product. The pace of sales is determined by the novelty of the product and how much the consumer desires it. Typically, a modification increases sales faster than a major innovation. At this stage, one or two firms enter the market and competition is limited. Due to high production and marketing costs, the profit share is correspondingly low. Sales and pricing depend on the product; a company can start with a high prestigious or low mass market price.

When entering the market with a new product, it is necessary to create an image for it; the marketer needs knowledge about it, since this is a new product, sales channels are needed for its distribution.

At the growth stage: The goal of marketing is to expand sales and the range of available modifications.

At the maturity stage: companies are trying to maintain a differentiating advantage (such as more low price, product parameters and extended warranty). During this period the product has a good place in the market, it needs to be diversified. At this stage, purchases are made by the mass market with an average income level.

During the decline stage: expenses are reduced, as if everything has already been removed from this product, there is no need to make new investments. Although firms have 3 alternative courses of action: reduce marketing programs, thereby reducing the number of products produced, the number of outlets through which sales are made, and the promotion used;

revitalize the product by changing its market position or packaging or marketing it differently;

stop releasing.

A good example of a product that has gone through its life cycle is pocket calculators. They have gone from an expensive product (at average prices) to an inexpensive product produced on a mass scale.

The transition from stage to stage occurs without sharp jumps, in connection with this, the marketing service must carefully monitor changes in the rate of sales and profits in order to catch a decline, since keeping an unnecessary product on the market is very unprofitable, and in terms of prestige it is simply harmful.

It is necessary to note in the life cycle important points:

The duration of the life cycle as a whole and its individual phases depends both on the product itself and on the specific market. Thus, raw materials have a long life cycle, finished goods have a shorter life cycle, and technically advanced goods have a very short life cycle (2–3 years);

The life cycle value of the same product is different in different markets. Our market is less demanding than in the USA, Japan, Germany with their competitive markets;

With the help of marketing means, the life cycle cycle in the target market can be either extended or shortened.

The costs of introducing a new product to the market and sales volumes affect all functions of the company, and success largely depends on the synchronization of the work of all its services.

Questions for self-control:

1. What is a product, trademark, trademark; what are their differences and relationships?

2. What is product policy?

3. What is assortment?

4. What is the product life cycle?

1. Kotler F. Fundamentals of Marketing. - M.: Progress, 2000

2. Marketing. Ed. Romanova A.N. - M.: Banks and exchanges, UNITY, 1995

3. Marketing: Textbook, ed. Utkina E.A. - M.: EKMOS, 199814. 31. Marketing. / Ed. Mamyrova N.K. - Almaty: Economics, 1999

4. Nozdreva R.B., Tsygichko L.I. Marketing: how to win in the market. - M., 1991

5. Evans J. Berman B. Marketing. - M.: JSC "Finstatinform", 1994

The volumes and duration of production of a particular product change cyclically over time. This phenomenon is called the product life cycle.

Life cycle goods(English: Life cycle product) is the period of existence of a product on the market, the period of time from the conception of the product to its removal from production and sale.

The concept of the product life cycle describes a product's sales, profits, competitors, and marketing strategy from the time a product enters the market until it is withdrawn from the market. It was first published by Theodore Levitt in 1965. The concept is based on the fact that any product is sooner or later forced out of the market by another, more advanced or cheaper product. There is no permanent product!

The concept of product life cycle applies to both classes of goods (TVs) and subclasses (color TVs) and even to a specific model or brand (Samsung color TVs). (Although many economists talk primarily about the life cycle of only a product, almost denying the existence of a life cycle for classes and subclasses of goods.) A specific product model more clearly follows the traditional product life cycle.

The life cycle of a product can be presented as a certain sequence of stages of its existence on the market, which has a certain framework. The dynamics of the life of a product shows the sales volume at each specific time of existence of demand for it.

Product life cycles are very diverse, but it is almost always possible to identify the main phases. The classic product life cycle can be divided into five stages or phases:

1. Introduction or entry into the market. This is the phase when a new product appears on the market. Sometimes in the form of trial sales. It begins from the moment the product is distributed and goes on sale. At this stage, the product is still new. The technology has not yet been sufficiently mastered. The manufacturer has not decided on the choice production process. There are no product modifications. Product prices are usually slightly higher. The sales volume is very small and is growing slowly. Distribution networks are cautious about the product. The growth rate of sales is also low, trade is often unprofitable, and competition is limited. Competition in this phase can only come from substitute products. The goal of all marketing activities is to create a market for a new product. The company incurs high costs, since production costs are high in this phase, and sales promotion costs usually reach the highest level. Consumers here are innovators who are willing to take risks in testing a new product. There is a very high degree of uncertainty in this phase. Moreover: the more revolutionary the innovation, the higher the uncertainty.

2. Growth phase. If the product is required in the market, then sales will begin to grow significantly. At this stage, the product is usually recognized by customers and the demand for it quickly increases. Market coverage is increasing. Information about the new product is transmitted to new customers. The number of product modifications is increasing. Competing companies pay attention to this product and offer their own similar ones. Profits are quite high since the market acquires a significant number of products and competition is very limited. Through intensive sales promotion activities, market capacity is significantly increased. Prices are slightly reduced as the manufacturer produces a large volume of products using proven technology. Marketing expenses are distributed over the increased volume of production. Consumers at this stage are people who recognize novelty. The number of repeat and multiple purchases is growing.

3. Maturity phase. Characterized by the fact that the majority of buyers have already purchased the product. Sales growth rates are falling. The product becomes traditional. A large number of modifications and new brands appear. The quality of goods and smooth production are increasing. Service is being improved. Maximum sales volume is achieved. The company's profit decreases. Profits are growing slowly. Stocks of goods appear in the warehouse, competition intensifies. Price competition. Sales at reduced prices. Weak competitors leave the market. Sales promotion activities reach maximum efficiency. Consumers here are slow adopters and conservatives. This stage is the longest in time.

4. Saturation phase. Sales growth stops. The price is greatly reduced. But, despite the price reduction and the use of other measures to influence buyers, sales growth stops. Market coverage is very high. Companies are looking to increase their sector in the market. The sales network is also no longer expanding. The technology is the same. At this stage, there is a high probability of repeated technological improvement of the product and technology. This stage is often combined with the maturity stage for the reason that there is no clear difference between them.

5. Recession. A recession is a period of sharp decline in sales and profits. Sales may drop to zero or remain at very low levels. The main reason: the emergence of a new, more advanced product or a change in consumer preferences. Many firms are leaving the market. Sales promotion spending is reduced or eliminated altogether. Consumers are losing interest in the product, and their number is decreasing. The bulk of consumers are conservatives with low solvency. At this stage, it is advisable to discontinue the product in order to avoid large financial losses.

The transition from stage to stage occurs without sudden jumps. The duration of the cycle and its individual phases depends on the product itself and the specific market. The life cycle is also affected external factors, such as the economy as a whole, inflation rates, consumer lifestyle, etc.

The life cycle of a product and its stages can be depicted graphically.

To do this, let’s plot time on the X-axis, and on the Y-axis the volume of sales of goods at a given time (Fig. 1)

Figure 1 - Stages of the product life cycle

The figure shows the traditional product life cycle curve. It describes distinct periods of introduction, growth, maturity, saturation and decline. There is also an ideal curve.

At each stage of the product life cycle, a special approach to advertising is required. The need for this is due to the fact that the economic and competitive environment changes in each phase of the life cycle, and the manufacturer’s cost structure changes when moving from phase to phase.

The need to use the theory of the product life cycle when planning an advertising campaign is determined by the fact that in order to increase the effectiveness of an advertising campaign, advertising should not be the same at all stages of the life cycle. This can be illustrated simple example: When a new product appears, say photocopiers, it is unreasonable to advertise them with the slogan “Buy Copiers.” The buyer simply does not know what it is and whether he needs it. Such advertising will not be accepted by buyers; they are not ready for it. First, the advertisement must tell (sometimes in detail) what the new product is, who its manufacturer is, and what advantages it has over previous models. After all potential buyers have learned about the new product (or new properties of the old product), everyone knows what the advertised product (copier) is and many of its characteristics. It is pointless to continue to focus advertising on its new consumer properties, since the buyer already knows what the advertisement provides him and such an advertisement will no longer be as effective as an advertisement that touches on any new aspects of the product or one that is designed in mainly on the memorability of the product and the name of the manufacturer. The main emphasis in advertising is shifting from informing about consumer properties goods on the formation in the minds of the buyer of preference for the brand of goods, the creation of a stable image of the product and the company. Further advertising is designed to ensure that the consumer not only knows about the properties of the product, but also has an image of this product and the company imprinted in his memory. The purpose of this advertising is to not let the buyer forget what he already knows about the product and the company. Advertising must constantly remind the buyer of their existence.

Another important The concept of the product life cycle is that it helps to adjust prices over time. At each stage of the life cycle, pricing issues must be resolved differently.

The modern economy suffers not from deficits, but from surpluses. If all products or services on the market are the same, no company will achieve complete victory. Many modern firms suffer from convergence of strategies - simply put, their strategies are undifferentiated. The company should strive for meaningful and significant positioning and distinctive feature. Behind every company or market offering there must be some way of communicating a special message to the target market; Every company must come up with new features, services, guarantees, incentives for loyal consumers, new amenities and pleasures.

Based on an analysis of the product life cycle, the sales volume of new products is planned. Sales volume consists of the estimated volumes of primary sales, replacement sales and repeat sales of the product. The choice of sales valuation method depends on which category it belongs to. this product- for one-time purchased goods (for example, a wedding ring), for rarely purchased goods or for goods that are purchased regularly. For one-time purchased goods, sales initially (when they appear on the market) increase, then reach a peak value, and then, as the number of potential buyers decreases, decreases to zero (Fig. 2, a).

Figure 2 - Life cycle curves for three types of goods

Rarely purchased items - such as cars, toasters, and industrial equipment- usually require periodic replacement, the need for which is dictated by either physical or moral wear and tear of the product, changes in fashion, appearance and functional qualities of the product. When forecasting the sales of goods in this category, it is necessary to conduct a separate assessment of the volume of primary and replacement sales (Fig. 2, b).

An approximate life cycle curve for frequently purchased items, such as consumer goods and non-durable industrial products, is shown in Fig. 4, c. At the first stage of release, the number of primary buyers increases, and then, as fewer and fewer of them remain (provided that the population is constant), it decreases. But if some buyers are satisfied with the quality of the product, repeat purchases begin. Gradually, the sales curve reaches a constant level, reflecting a stable volume of repeat purchases; by this time the product is no longer new.

The life cycle of a product also affects its competitiveness. The study of the competitiveness of a product should be carried out continuously and systematically in close connection with the phases of its life cycle in order to promptly determine the moment when competitiveness indicators begin to decline and make appropriate proactive decisions (for example, remove the product from production, modernize it, transfer it to another market sector). At the same time, it is based on the fact that the release of a new product by an enterprise before the old one has exhausted the possibilities of maintaining its competitiveness is usually not economically feasible.

At the same time, any product, after entering the market, begins to gradually consume its competitiveness potential. This process can be slowed down and even temporarily delayed, but it is impossible to stop. Therefore, a new product is designed according to a schedule that ensures it enters the market by the time the previous product loses significant competitiveness.

Each product, regardless of the field of production, has a certain life cycle. Each stage determines the profit received and the company's sales volume. The product cycle ends when it becomes obsolete - a cheaper or improved product appears. Life cycle theory is universal in marketing. And knowledge of the characteristics of a particular product helps to develop strategies that bring the greatest benefit to the manufacturer.

What is life cycle

The life cycle of a product (LPC) is characterized by the duration of its circulation on the market. It starts from the moment of the first sale and ends with the complete cessation of sales.

The stages of the life cycle are:

• Market introduction stage.
• Sales growth stage.
• Market saturation stage.
• Sales decline stage.

The product life cycle does not coincide with the production cycle, which includes 5 stages. The first of these is development (R&D, research and other developments at the stage of technology implementation).

Product life cycle concept

The concept of the product life cycle is used constantly in marketing. Is fundamental theory, built on the basis of research into various products and consumer psychology.

Theodore Levitt, an American economist, first spoke about the concept. He formalized the concept of natural replacement of goods (old with new) and proposed a rationale for this process. The basis of the theory was the thesis that any product, no matter how popular it may be, will eventually leave the market.

New customer needs will force manufacturers to improve the product or abandon production altogether (competitors, low profits, market oversaturation, uselessness of the product). That is, each product is limited by the sales time frame. The only exceptions are “eternal” goods, the production technology of which has not changed for centuries (monopolistic industries).

The main postulates of the theory are:

• The lifespan of a product is limited by its relevance at each time period.
• VCT is characterized by different stages, for which different promotion strategies are applied.
• Each stage is characterized by separate dynamics of profit and sales volume (life cycle curves).

Modern marketers have refined the theory and presented the life cycle cycles of various products:

• Life cycle of a large class of products. Has a long maturity stage (machines, equipment, soft drinks).
• Life cycle of a product type. Depends on the industry and the specific manufacturer (any class of product taken separately).
• Life cycle of ways to use products. Short in time. Once the last possible use for the product is found, sales will decline.
• Life cycle of product brands. The most durable product is the one that enjoys the trust of the buyer.

Leviticus's concept was continued by the economist Raymond Vernon. He formalized the idea of ​​international trade into his life cycle theory (new product adoption, maturity and standardization). Using theory, he explained how foreign trade impacts U.S. profits and how innovation can provide segment leadership.

Product life cycle stages

Market introduction - placement

The stage implies the start of sales with an uncertain result. The launch of sales of mass goods is unsuccessful in 35-45% of cases, industrial - 20-35%, services - 15-18%. At this stage, the consumer is not yet familiar with the product. And the expected profit is calculated based on the expectations of marketers (manufacturers).

Stage of growth and development

The growth stage occurs after a sufficiently long period of regular sales. This means that the consumer has recognized the product or is satisfied with the quality. The manufacturer, in turn, expands the range and nomenclature if necessary. In other cases, assessing the quality of products and services is sufficient. At this stage, a strategy is built to completely capture the market to obtain the maximum possible profit.

Stage of maturity - saturation

The maturity stage involves supplying the product to the majority of customers in the target group. The manufacturer is looking for new sales channels. This is possible thanks to lower prices, access to adjacent markets (partnerships), and the search for new applications for products from other target audience or using technology to produce another product.

Sales volume is stable due to the high quality of the product. It is resold by intermediaries and individual entrepreneurs. But sales are gradually declining. Here it is important to identify the stage of peak sales and the subsequent decline stage, so that production costs are recouped, and the products are purchased until the market is completely saturated and does not stagnate in warehouses.

Decline stage

The decline stage is typically characterized by a slow decline in sales. Income comes from newly received applications (purchases, transactions) and new sales segments. Constant sales volume stabilizes. This is especially true for everyday goods and essential goods.

To make a profit at this stage, enterprises decide whether to fight for a place in the sun (improve the product, release new products in the same category) or move to another industry and diversify production. For goods of periodic demand (equipment, one-time services, entertainment), the decline stage may mean a complete cessation of activity.

The dynamics of profit and sales volume will help you distinguish one stage from another:

• Growth phase: profit margin is increased, sales volume is progressive.
• Maturity phase: profit margins and sales volume correspond to intra-industry (average) ones.
• Decline phase: indicators decrease in comparison with industry average and intra-company indicators of previous periods.

Characteristics of the stages of the product life cycle

Product life cycle model: disadvantages

• Despite the fundamental nature of the concept and the possibility of its application in any field, taking into account innovation, the product life cycle cannot be determined by mathematical modeling. Nobody knows how the consumer will behave tomorrow.
• The life cycle theory is not used in business management. Not taken into account when planning and forecasting. It is not a fulcrum in decision making.
• It is used as a retrospective analysis of the company’s activities (sales and profits over time).
• It is difficult to determine the period of onset of the phase. Life cycle curves (graphs in the “sales-period” coordinate system) do not characterize the exact direction of sales – “up-down” – on a specific date.

Product life cycle model: application

• Forecasting the dynamics of sales of a new product. It is used when planning general marketing tasks in conjunction with market and competitor analysis.
• Used in the analysis of similar products of competitors. Allows you to compare sales and profit rates, identify advantages and weak sides activities.
• Assortment management. It is used to make a decision about the need to expand the range or replace it with another product.
• Inventory management. Allows you to manage warehouse capacity and calculate the volumes of production and inventory required for each stage.
• New product development management. Allows you to predict the period in which it is necessary to develop a substitute product, an analogue with new functions (saturation stage).

5 basic life cycle curves

The traditional product life cycle curve characterizes sales and profits over a certain period of time, including all stages of sales. To build it, you need enterprise statistics on the product.

There is also additional types curves that characterize the demand for a product depending on the promotion strategy or other management decisions (innovation, competitive fight, price collapse).
The most common are the following models.

"BOOM" curve

Describes high demand for a product over a long period of time. Sales and profits are stable. Characterizes a popular type of product. Such a product does not enter the stage of maturity and decline in the medium term. Examples include Apple products and the carbonated drink Coca-Cola.

Plateau curve or growth-decline curve

This curve is characterized by rapid growth and rapid decline in demand, but sales continue continuously into the maturity stage. The graph characterizes a quality product that has received the trust of the buyer. The influence is also considered fashion trends. At the maturity stage, the product is used by conservators or buyers who have available funds for purchase. An example can be given Sunglasses Ray-ban, Adidas clothing, tablets and other gadgets.

Seasonal curve or repeating cycle curve

The curve characterizes renewable demand at certain intervals. To the greatest extent characterizes seasonal goods, as well as goods of periodic demand. During the maturity and decline stages, the curve deviates up and down, forming a repeat cycle. The demand for such goods is provoked by fashion (nostalgia for the old days) or the season. Examples include retro clothing, sunscreen, rubber boots or personal protection during constant fires.

Scallop curve or new rise curve

Describes the wave-like growth of demand in the maturity stage. Characterizes a quality product that is being purchased by an increasing number of consumers. They are satisfied with the quality and service. This means that the company evaluates the results of its activities, modernizes its product range, and produces modifications, thereby extending the maturity stage.

An example is the BMW car consortium. New buyers buy cars because of reliability and modern design and tuning. Another example is a hosiery factory that is able to increase sales through frequent purchases that increase by winter period. These products have a scalloped curve, describing the peak and decline of sales, but growing in dynamics.

Failure Curve

Characterizes an unsuccessful product, which, after the start of sales, was no longer purchased. Such a product does not have a stage of growth and maturity. The curve suggests that purchases were made for testing purposes in small quantities. The buyer was not satisfied with the quality or property of the product. Therefore, repeat purchases were not made, and sales dropped sharply. As an example they give medicines, which have cheaper or more effective analogues.

How to extend the life cycle of a product

Extending the product life cycle is possible at any stage. It is carried out at the discretion of the company’s management if there are objective reasons. The exception is the implementation stage. The stage is delayed until the initial developments are used in the future (concept, product range, substitutes, loyalty programs, partners).

The growth stage is extended by changing the design, completeness and characteristics, properties, and functions of the product. That is, they use production levers and opportunities.
At the saturation stage, the cycle is extended by upgrading and modifying the product.
At the maturity stage, a marketing program, development commercial offers for customers and creating a new product.

The main ways to prolong life cycle are:

• Product modification (unique functions, ergonomics, practicality, combination of parameters).
• New design or packaging (subject to wide choice sometimes become decisive when purchasing).
• Support for a large-scale event (creating the image of a general sponsor).
• Holding your own events (shows, sports relay races, attractions, exhibitions, free screenings).
• Intensification of activities during a crisis, during environmental disasters or product shortages.
• A new service or additional product (gifts, services in addition to the main product).
• New commercial and slogan (video broadcast on screens and TV).
• Launching a new advertising campaign (audio, video or through a marketing service).
• Release of a new product of the same brand.
• Price changes in accordance with the relevance of the offer.
• Improving product quality, reducing the percentage of defects.
• Service maintenance.
• Non-price stimulation of demand.

Product life cycle analysis (examples)

IPhone phones (USA)

• 2007 – start of sales: strict design, absence of buttons and joystick, prototype of all today’s phones from other brands.
• 2007-2013 – growth stage: adding new functions and capabilities; expansion of the range of color scheme; increasing the display diagonal; annual design change.
• 2013-2018 – saturation stage: stereo sound, powerful battery, water protection, flexible body, fingerprint scanner.

The apple brand is in demand all over the world. Without a flexible pricing policy, the company earns prestige. Every year, long lines line up to buy new items. The recession phase, judging by sales volumes, will not come soon.

Chocolate Roshen (Ukraine)

• 2000 – implementation stage: development of an assortment based on the existing product range under a new brand.
• 2000–2002: growth phase: opening branches abroad, searching for retailers (more than 100 worldwide), emergence of new products (cakes, waffles, marshmallows, cookies, etc.).
• 2002–2018: saturation phase: high rating (TOP-20), development of fillings (with orange nougat, cognac, cranberry, extra milk, extra black, etc.), improvement of Swiss manufacturing technology.

Production is constantly expanding, despite the closure of the Lipetsk branch. Sales volumes have been set at the same level for several years ($800 million). By maintaining quality at the proper level, the company is able to grow into an entire empire and maintain sales volume at a constant level.

Akbar tea (Sri Lanka)

• 1860–1907 – implementation stage: purchase of plantations and harvesting of the first harvests.
• 1907–1979: – growth stage: development of corporate design, formation of two sales directions (Ceylon black and Chinese green tea); entering the global market, the emergence of packaging partners in America, Canada and European countries.
• 1978–2018 – saturation stage: leadership in global production (22%), the world's first sale of bagged tea, creation of more than 300 blends, appearance in the assortment of granulated coffee and tea in pyramids.

Akbar has a leading position in the market. The formation of the enterprise occurred before the actual monopolization of the industry. High-quality raw materials from Ceylon make the product in demand. A high quality(leaves from the highlands) allows us to sell tea in more than 80 countries around the world on an ongoing basis. Therefore, a period of decline in production will occur only if the mass consumer switches to other drinks.

Book “I explore the world” by AST publishing house (Russia)

• 1997–1998 – implementation stage: introducing the reader to the children's encyclopedia; development of new series in a language that is understandable and exciting for children, with illustrations and a search index.
• 1999–2005 – growth stage: sales to children's libraries and schools, single sales; development of new programs that may be of interest to children.
• 2005–2009 – saturation stage: almost every family has children’s volumes.
• 2009–2014 – stage of decline: decrease in sales, reduction in circulation, stop of series production, sales by order through online stores.

Book publications in volumes are characterized by a uniform life cycle, unlike textbooks (nostalgia curve) and reprinting of old or rare books (boom). Any book has a limited period of popularity. Therefore, it cannot be classified as “eternal” goods, with the exception of collected works and multi-volume works on art (almanacs, albums, collector’s editions). The decline stage of the “I explore the world” anthology is largely due to the development of the Internet and the emergence of other worthy analogues.

Relationship between the theory of life cycle and other marketing methods

Generally accepted typology of goods

Classification of goods according to various properties and functions directly affects the life cycle. Depending on the relevance and need of the buyer various goods will have different life cycle curves. In marketing, a constant analysis of consumer demand and the dependencies of the manufacturer’s supply is carried out. For each product, specific promotion strategies are proposed that work at each stage of the life cycle.

Brand Extension Strategies

A brand expansion strategy is understood as increasing the range of products (linear expansion) or creating a new product (categorical expansion). Depending on the stage of life cycle, one or another concept is used. At the same time, they do not forget about the cannibalization effect, when a new product can bring down the sales of the previous one. This happens at the stage of product decline.

For steadily growing industries, a linear expansion strategy is used. Product modifications do not replace each other due to the uniqueness of their purpose. That is, they serve as a mechanism for attracting new customers. In the case of a categorical expansion (partner brand, transition to another product category), the brand risks losing its own image and concept, becoming dependent on partners and more developed competitors.

The concept of the product life cycle is fundamental. But its use is difficult due to the variety of goods sold and their range. Promotion strategies complement the theoretical basis of the life cycle and link a specific stage of the cycle with a specific marketing policy.

The concept of the Product Life Cycle is the time a product spends on the market, from its release to its final disposal.

The concept of a product life cycle is the inevitable replacement of an existing product by a more advanced one. The life cycle characterizes the dynamics of sales volumes and profits from the moment a new product is introduced to the market until it leaves the market.

Peculiarities:

• - the concept of life cycle is based on the fact that any product is sooner or later forced out of the market by another, more advanced product;
• - the duration of the life cycle as a whole and its individual phases depends both on the product itself and on the specific market;
• - an idea of ​​the life cycle allows the manufacturer to take specific measures regarding the product and plan its activities for the future;
• - with the help of marketing means, life cycle in the target market can be extended or reduced.

Product life cycle stages:

The launch phase is a period of slow growth in sales as the product enters the market. Slow sales growth is due to the following reasons:

• - delays caused by the development of production capacity;
• - technical problems;
• - delays in bringing goods to consumers, especially in retail trade;
• - reluctance of buyers to abandon familiar analogue products.

At this stage, the enterprise either incurs losses or makes a small profit due to insignificant sales and high costs for distribution of goods and sales promotion. Prices are usually higher.

The sales growth stage begins after the product is recognized by buyers and with a rapid increase in demand for it. At this stage, there is an increase in profits, since sales promotion costs fall on a larger volume of sales while simultaneously reducing production costs.

To extend this stage, the company takes the following actions:

• - improves the quality of new products, improves the properties of the product, and releases new models;
• - penetrates into new market segments;
• - reduces prices in a timely manner;
• - directs advertising from advertising the properties of a product to advertising about the need to purchase it;
• - uses new distribution channels.

The maturity stage occurs during a period of slowdown in the rate of sales of a product when the market is saturated (when further demand for the product is satisfied through substitution). Manufacturers accumulate stocks of unsold goods, competition intensifies, prices decrease, while advertising costs increase, the number of preferential deals increases and, as a result, profits decrease, and weak competitors drop out of the fight. In such conditions, ways to modify the market, product and marketing mix are sought.

Market modification involves increasing the consumption of a product by finding new market segments, ways to stimulate growth in the intensity of consumption of the product by customers, and repositioning the product to increase its attractiveness.

Modification of a product is aimed at improving its quality, increasing useful properties and improving external design. Improving the quality of a product consists of increasing durability, trouble-free operation, maintainability, or increasing, improving speed, taste, etc. This approach is effective in cases where the product can be improved (buyers want to believe and believe statements about improved quality). The strategy of increasing the useful properties of a product is aimed at finding means that make the product more versatile, safer, and more convenient. Improving the external design is another way to attract buyers to the product.

The marketing mix is ​​modified to acquire new customers as follows:

• - price reduction;
• - more effective advertising;
• - active sales promotion (concluding preferential deals with sellers, holding competitions, distributing souvenirs, providing customers with new or improving existing services, etc.).

The decline stage is the last stage of the product life cycle. The decline in sales may be slow or rapid, falling to zero or remaining low for many years. The enterprise's task is to identify obsolete goods and make a decision either to continue production or to exclude the product from production.

The decision to prolong the release of products is sometimes made in the hope of competitors leaving the market.

The decision to dramatically reduce costs production equipment, MTS, advertising, R&D, sales staff, etc.), but a company may decide not to curtail production in the hope of some sales and making a profit. By upgrading the product, reducing the price, changing the FOS, STIs, it is often possible to prevent a complete drop in demand and even return the product to the maturity stage, but then, as a rule, a deeper decline occurs and the product is withdrawn from production and the market.

The Life Cycle of a Product is basic parameter complex product strategy, which determines the planning processes of the product range and the policy for its renewal. Represents a sequence of phases (introduction, growth, maturity, decline).

Each of these stages uses various instruments marketing that pursue specific goals:

• - reduce the introduction of goods to the market,
• - extend the period of growth and stabilization,
• - remove goods from production in a timely manner.

Innovators (development and implementation stage) - have a fairly high economic status, use information from various sources, and act under the influence of their own intuition.

Early followers (growth) - are leaders in other groups, have high level income, pay attention to information in the media.

Early majority (maturity) - focus on the behavior of early adopters, socio-economic status is above average, when obtaining information they prefer to use the opinion of sellers.

Late adopters (maturity) - slightly below average socioeconomic status, prefer to see the product in action, sensitive to price changes.

Conservatives (recession) - have a negative attitude towards changes in life, the socio-economic level is not high.

When dividing the growth/market share matrix into sectors, four product types can be distinguished:

• 1. "Stars". Rapidly developing areas of activity (products in the growth phase of their life cycle) with a large market share. They usually require heavy investment to support their rapid growth. Over time, their growth slows down and they turn into “cash cows”.
• 2. "Cash cows." Business lines or products with low growth rates and large market shares (products that have reached the maturity phase). These sustainable and successful products require less investment to maintain their market share. At the same time, they generate high income, which the company can use to support other areas that require investment.
• 3. “Dark horses” - products that are in the initial phase of the life cycle. They promise high growth rates but have a small market share. Therefore, managers try to achieve an increase in market share through offensive strategies and large investments. Support for these products is necessary because in the future we need products that bring more profit. It must be borne in mind that these areas of activity often require much more financial costs than they bring in profit. They demand large quantity funds even to maintain its market share, not to mention increasing it. Management should carefully consider which “dark horses” they should try to turn into “stars” and which ones they should phase out.
• 4. "Dogs" refers to the phase of saturation and degeneration. They do not have a large market share or high growth rates. They may generate enough income to support themselves, but do not promise to become more serious sources of income. As long as they make a profit, it is recommended to invest it in “dark horses” or “stars”. If there is a danger that these goods will fall into the loss zone, they should be removed from production.