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by Laurus Nobilis
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Sales Force

Product Lifecycle Management (B)

 

Product Lifecycle Management

 

 

What is the purpose of product lifecycle management? What are the stages of product lifecycle management?

 

Posted: Aug 2009


The sales, revenue and profit of every company depends of cleverly balanced portfolio. This means that it would be difficult to survive in the market without optimized portfolio. Balanced portfolio of differentiated products with different target population seems to be a good approach.

Of course, the range of product within portfolio can not be the same all the time. The portfolio need to be refreshed with a new product launches, and probably some product delisting. So what makes path of the product from its launch to it's delisting?

During its lifecycle the product is passing different stages, that are primarily differentiated by different demand. Based on demand level there are four phases of average product lifecycle:

Product Lifecycle

Introduction phase is the initial phase when the product is still unknown to market and customers. Therefore advertising campaign is necessary. Management is usually trying to recuperate high initial development cost, hence they set up high initial price. Still in this phase the product distribution and sales are usually low, while the costs are high, therefore the profit is usually negative. Since the product is new, some customers are usually willing to pay the higher cost, in order to try the new product.

Growth phase is bringing the promotional activities, stabilization of market, although the number of customers is still increasing. The demand and supply are stabilizing. The price is even starting to decline slowly, due to competitor's imitations of original product. Overall, the profit is increasing due to increased product distribution and decrease of costs.

A proper product lifecycle management policy is the key of successful market performance of the company. With proper refreshments of portfolio through a new product launches and product delisting, company can build a suitable product lifecycle management approach.



Maturity/Saturation phase is bringing further decline of the product price. Now the price is almost even among all competitors. After achieving maximum sales and profit, the decline starts.

Decline phase is the last product lifecycle phase. The price is still going down, in order to attract remaining potential customers. There is low or no promo activity at all. Finally the product is being delisted from portfolio.

Of course the lifecycle model has some exception. Some product seem to have very long maturity stage that they seems not to go for decline. There are some classical examples, like Coca-Cola, the brands that have specific position in the market, thank to the product uniqueness or unique sales and marketing approach that always manages to refresh the demand for the product.

Still, not many products can become classic. Most of the product are doomed to go through all four phases of portfolio lifecycle management. In some cases the product obsolescence is caused by competition, while in some other situation the obsolescence occurs due to technological leaps.

Therefore, a proper product lifecycle management policy is the key of successful market performance of the company. With proper refreshments of portfolio through a new product launches and product delisting, company can build a suitable product lifecycle management approach.   

 

 

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