PPT 5_Product life cycle producton and operation mngement.pptx

Pom class notes about product life cycle

1. PRODUCT LIFE CYCLE By Jimmy Kenneth Opoka PhD (TAU), MBA (UMI), MCIPS (UK), BBA (MAK), CaLP (UK), ToT Email: [email protected] Cell phones: [phone]

2. Learning Objectives By the end of the presentation, students should be able to; Define Product Life Cycle (PLC) Draw the Product Life Cycle (PLC) Explain the various stages of the Product Life Cycle (features, objective & strategies) Explain why some products defy the PLC theory

3. Product life cycle The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline) and finally, it will be withdrawn. The Product Life Cycle refers to the successive stages a product goes through in its life (i.e. introduction, growth, maturity, decline, and withdrawal ). In theory, after a period of development, a product is introduced or launched into the market; it gains more and more customers as it grows; eventually, the market stabilizes and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn.

4. Product life cycle cont’d…. However, most products fail in the introduction phase. Others have cyclical maturity phases where during the decline stage, a product gets promoted to regain customers. A product is anything that can be offered to the market for attention, use, or consumption that might satisfy consumer needs and wants. A product can comprise of a physical object, service, place, person, ideas etc.

5. Product life cycle Once a product has been designed and commercially launched on the market, the company must manage it by changing tastes, technology and competition. Every product goes through a life cycle i.e. it grows, matures and eventually dies as newer products come along and serve the customers’ needs better. The Product Life Cycle (PLC) describes the stages a new product idea goes through from the beginning to the end. It is the course that a product’s sales and profits take over its lifetime. The PLC is divided into 5 major stages

6. Product life cycle

7. Stages of Product life cycle The product development stage begins when a company finds and develops a new idea. During this stage, sales are zero, and profits are negative. 1. Introduction stage: Is a stage in which the new product is first distributed and made available for purchase. Production costs are high, frequent design changes may occur, little or no competition for the new product. Low sales & negative profits. The operation’s objective should be to create product awareness and trial. Strategies Offer a basic product, use cost-plus price, and use heavy sales promotion to entice trial by customers, build selective distribution, and build product awareness among early adopters and dealers.

8. Stages of product life cycle cont’d… 2. Growth stage This stage is characterized by a rapid increase in volumes and the possibility of competitors entering the market. There will be increased sales, profits, an increase in customer acceptance, declining production costs resulting from process improvements, and standardization. Operations objective ; Maximize the market share. Strategies: Establish the product in the market as firmly as possible in order to secure future sales, Improve product quality and introduce new product features, Lower prices to penetrate the market, Build awareness and interest in the mass market, build extensive distribution, and reduce sales promotion to take advantage of heavy consumer demand.

9. 3. Maturity stage At this stage, competitive pressures will increase, and sales growth will slow down, it is characterized by peak sales, high profits, the number of competitors is stable and begins declining, high customer acceptance (low cost per customer), and middle majority customers. Operations objective: Maximize profits while defending market share. Strategies: Brand the product to differentiate it from competitors and set a competitive price. E.g. Airtel Uganda has practiced this since the acquisition of Warid Telecom

10. Design improvement to both the product and process, Increase advertising techniques to maintain interest and market share, minimize new investments, build more intensive distribution, diversify brands and models, and increase promotion to encourage brand switching. 4. Decline stage This is where the sales of a product decline or steadily reduce. Characteristics Declining sales, declining number of competitors, low cost per customer, declining profits.

11. Operations objective: Reduce expenditure and strengthen the brand. Strategies: Phase out weak products and items Reduce advertising to the level needed to retain hardcore loyal customers, reduce price, be selective in distribution and phase out unstable outlets, and reduce sales promotion to minimum levels.

12. 5. Withdrawal stage: The withdrawal stage, also referred to as the decline or end-of-life stage, marks the final phase of a product's lifecycle when the company decides to remove the product from the market. This occurs after a sustained period of declining sales and profitability due to various market factors.

13. Characteristics of the Withdrawal Stage Declining Sales and Demand The product no longer attracts significant customer interest due to market saturation, changing consumer preferences, technological obsolescence, or the introduction of superior alternatives. Example: Older smartphone models phased out due to advancements in technology.

14. Characteristics of the Withdrawal Stage Cont’d…. 2. Decreased Profit Margins Revenue dwindles, and fixed operational costs begin outweighing the profits generated from the product, making it less viable to continue production and distribution. 3. Increased Inventory Holding Unsold stock often builds up as demand falls, leading to potential losses and the need for clearance sales or discounts. 4. High Replacement Costs The product becomes expensive to maintain, especially if newer versions or technologies require production shifts.

15. Reasons for Withdrawing a Product Obsolete Technology: The product no longer meets market or technological standards. Market Saturation: Competitors capture most of the customer base, leaving limited potential. Changing Consumer Preferences: Shifts in consumer demand favor newer alternatives. Regulatory Issues: Updated legal or safety standards may render the product non-compliant.

16. Company Strategies During the Withdrawal Stage 1. Phasing Out Production Gradually scaling down manufacturing while fulfilling remaining demand to reduce waste and losses. Example: A car manufacturer stops production of an old model as a new one is launched. 2. Selling at Discounted Prices Offering clearance sales or bundling products to sell remaining inventory. Example: Retailers provide discounts on old seasonal clothing collections. 3. Recycling or Reuse Recovering components or materials from the product to minimize financial and environmental losses. Example: Electronics companies running buy-back or recycling programs for old devices.

17. Company Strategies During the Withdrawal Stage 4. Redirecting Resources Allocating manufacturing, marketing, and R&D efforts towards newer or more profitable products. 5. Communication with Customers Informing existing customers about the discontinuation, providing after-sales service or replacements where necessary. Example: Notifying users of a discontinued app and suggesting migration to a successor platform.

18. Examples of Product Withdrawal Electronics: Phasing out older laptop or smartphone models with outdated specifications (e.g., 3G phones after the rise of 5G). Fashion: Discontinuing last season’s collections to prepare for new arrivals. Vehicles: Retiring car models that do not meet updated emission standards.

19. Notes Wide variations exist in the length or time a particular product takes to pass through a given stage of the life cycle. Not all products go through these stages during their life cycle. Many products have been around for generations, and show no signs of decline or death. Their survival is a function of keen attention to brand identity(i.e. a set of marketing and communication methods) and equity. Companies that nurture consumers' impressions of the value the product delivers year after year can stave off indefinitely its demise.

20. Products That Defy the PLC Theory 1 . Essential Commodities Examples: Water, salt, rice, oil. Why They Defy the PLC Theory: These products have universal and perpetual demand. While branding and distribution may evolve, the products themselves remain indispensable. Result: They remain in the maturity stage indefinitely without showing signs of decline.

21. Products That Defy the PLC Theory 2. Luxury and Prestige Products Examples: Rolex watches, Louis Vuitton bags, Rolls-Royce cars. Why They Defy the PLC Theory: Luxury items rely on exclusivity, heritage, and perceived status, ensuring continued relevance. Branding and emotional appeal sustain their allure over generations. Result: Demand is stable or grows in niche markets, avoiding typical lifecycle patterns.

22. Products That Defy the PLC Theory 3. Nostalgic or Cultural Icons Examples: Coca-Cola, Levi's jeans, Monopoly board game. Why They Defy the PLC Theory: These products have become cultural staples and benefit from deep emotional and historical connections. Constant adaptation and marketing strategies (e.g., new packaging, product variants) maintain interest. Result: They experience revitalization cycles, preventing decline.

23. Products That Defy the PLC Theory 4. Technology Standards Examples: Operating systems (Windows, iOS), certain programming languages (C, Python). Why They Defy the PLC Theory: These products form the foundation for ecosystems that developers, businesses, and consumers rely on. Their constant updates and innovations prevent obsolescence. Result: They persist, often evolving to remain relevant.

24. Products That Defy the PLC Theory 5. Basic Apparel and Functional Goods Examples: White T-shirts, blue jeans, pens, paper clips. Why They Defy the PLC Theory: These items are timeless due to their simple utility and ubiquitous nature. Fashion cycles may bring certain products back into popularity without altering their core appeal. Result: They do not follow the standard decline stage.

25. Products That Defy the PLC Theory 6. Religious or Traditional Products Examples: Prayer beads, holy books (e.g., Bible, Quran), ceremonial clothing. Why They Defy the PLC Theory: Their significance transcends economic or market trends and remains tied to deeply rooted cultural or spiritual practices. Result: Their demand remains consistent over centuries.

26. Products That Defy the PLC Theory 7. Open-source or Community-Driven Products Examples: Linux operating system, Wikipedia. Why They Defy the PLC Theory: These products thrive on community involvement, ensuring continuous improvements and updates. They are not subjected to typical commercialization pressures. Result: They evolve indefinitely rather than declining.

27. Products That Defy the PLC Theory 8 . Certain Art and Media Examples: Classic literature, Beatles music, Star Wars franchise. Why They Defy the PLC Theory: These products maintain cultural relevance and enjoy frequent rediscovery by new audiences. Re-releases, adaptations, and merchandising expand their lifecycle. Result: They have extended or perpetual appeal.  

28. WHY DO SOME PRODUCTS DEFY THE PRODUCT LIFE CYCLE THEORY?

29. reasons why some products defy plc theory Some products defy the Product Life Cycle (PLC) theory because they exhibit unique characteristics, serve essential purposes, or maintain continuous relevance in ways that prevent them from following the traditional progression of introduction, growth, maturity, and decline.

30. reasons why some products defy plc theory 1. Perennial Demand The product meets a fundamental or universal need that remains constant over time (e.g., water, salt, basic food staples). These products sustain demand indefinitely, remaining in the maturity phase without experiencing significant decline. 2. Constant Adaptation and Innovation Companies update and improve products to meet evolving consumer needs or technological advancements (e.g., smartphones, operating systems). Continuous innovation prevents obsolescence and extends the lifecycle indefinitely

31. reasons why some products defy plc theory 3. Niche Markets or Prestige Appeal: High-end or luxury products cater to exclusive markets and retain their desirability due to perceived status (e.g., luxury cars, high-end fashion). The limited supply and enduring demand create stability, bypassing typical lifecycle stages. 4. Cultural or Emotional Significance: Products tied to cultural identity, heritage, or emotional connections (e.g., Coca-Cola, Rolex watches) transcend economic or market trends. They gain timeless appeal, often passing through revitalization cycles instead of entering decline.

32. reasons why some products defy plc theory 5. Evergreen Functional Utility: Products with essential functional purposes (e.g., pens, light bulbs) consistently satisfy practical needs, regardless of market changes. They remain relevant without a clear decline phase. 6. Community-driven or Open-Source Development Products supported by collaborative communities (e.g., Linux, Wikipedia) are not subject to the same market pressures as commercial products. Continuous involvement and evolution ensure indefinite viability.

33. reasons why some products defy plc theory 7. Historical or Religious Significance: Products or artifacts tied to religious practices or historical traditions (e.g., holy books, prayer beads) are inherently timeless due to their non-commercial nature. They persist for centuries with steady demand. 8. Reinvention and Rebranding: Brands frequently revamp or relaunch products to keep them appealing (e.g., classic toys like Barbie or LEGO). These strategies enable products to avoid the decline stage and reach new generations.

34. reasons why some products defy plc theory 9. Dependence on Ecosystems: Products forming part of larger systems or platforms (e.g., Windows operating systems, app ecosystems) are continuously maintained and integrated with other innovations. This integration ensures their relevance over time. 10. Government or Institutional Support Some products (e.g., vaccinations, postal services) remain essential due to government policies or societal infrastructure requirements. Such products may continue in the maturity phase due to mandated or institutionalized demand.