Characteristics of product life cycle

The major characteristics of life-cycle concept are as follows:

1) The products have finite live and pass by the cycle of development introduction growth maturity decline and deletion at varying speeds.

2) Product cost revenue and profit patterns tend to follow predictable courses by the product life cycle. Profits first appear during the growth phase and after stabilizing during the maturity phase refuse thereafter to the point of deletion.

3) Profit per unit varies as products move by their life cycles.

4) Each phase of the product life-cycle poses dissimilar threats and opportunities that give increase to different strategic actions.

5) Products require different functional emphasis in every phase-such as an R&D emphasis in the development phase and a cost control emphasis in the refuse phase.

6) Finding new uses or new users or getting the present uses to enhance their consumption this may extend the life of the product.

7) Product differentiation getting blunted: as technologies get standardized, differentiation between firm on the basis of the product is going to get blunted. More products and brands will transcend to a commodity situation. This is not a healthy sign as commodities are always subject to price fluctuation and price wars. For at this stage the only way to differentiate among brands is the price.

8) Inter firm rivalry: the intensity in inter firm rivalry enhance as the entry and exit barriers in the industry are lowered. With an enhance in this rivalry we find that a firm s cost of operation also enhance as it now has to send more money to lure customers and middlemen. It has to also invest money in new product development.

9) Mature products and markets: when the products enter the maturity stage and the markets are also mature the only way to distinguish the various offers is on the basis of augmented service or price cuts.

10) Customer's value perception: another factor contributing to the significance of pricing decisions is the customer's perception of the product current and potential value. To a customer price always represents the product value many a time the customer perception of the product value may not of necessity be in line with its price. There are instances in which the product is overpriced when its value perception is lower than the price tag on it and vice versa. For a marketer it is significant that products are priced at the right level.

11) Inflation in the economy: pricing decision become important in the inflationary economy. Inflation affects pricing in two way:                  

12) The firm now finds itself in a dilemma if it passes the increase in input costs to the customer in the form of a price enhance and there are equally attractive alternatives at lower prices available to him the firm may lose the customer. And if it doesn't increase the price it incurs a loss. The challenge of price management is also higher when the firm realizes that there are other firms in the industry that operate at a more efficient level in an inflationary economy.