After launching new products and services management wants it to enjoy a long and happy life, although it does not expect the product to sell forever. The product life cycle (PLC) is the course that products and service sales and profits take over their lifetime. It has four stages. The four stages from an S shaped curve are usually described as introduction, growth, maturity and decline. Each stage has a number of particular features in terms of cost, sales profit and competition.
1. introduction This stage is characterized by low level of sales and losses, as development cost build up. Sales are generally made to ‘early adopters’ in the market place. 2. growth The products and services get known more widely. There are a few competitors and profit margins tend to be good 3. maturity Sales are maximized. If the product has mass market appeal, this is when the bulk of potential customers will buy. Competition increases and profit margins tend to fall. 4. decline This is the stage where the product starts to ‘show it’s age’. New and better competitive products emerge in the market. Sales fall and profits dip sharply.
Product Life Cycle Diagram
Regardless of whether the product or service is new to the bank or to the market, the foremost challenge is to maximize the new product or service. At the introductory stage the bank should seek to build awareness of the new products and services and also develop a market for them. At this stage the manager should consider, the products and services, their pricing distribution and promotion. Here the marketing manager could employ a rapid-skimming strategy where the bank will target the “cream” of consumers that is consumers with high income so the price of the new products and services is set high. To attract people rapidly the manager should also involve in heavy promotion of the products and services.
In the growth stage, the bank should seek to build brand preference and increase...
Please join StudyMode to read the full document