3 Introducing the product life cycle and describing product features
The next activity introduces the concept of product life cycles, considers why some products fail and others succeed, and examines tangible and intangible product characteristics.
Activity 2 Introducing the project life cycle and describing product features
Read the following section, a(Dibb and Simkin), from the section ‘Product life cycles’ up to the end of the section entitled ‘Summary’. After having read the passage, do Tasks B and C.
List the tangible and intangible attributes of a spiral notebook. Compare the benefits of the spiral notebook with those of an intangible product such as life insurance.
The tangible characteristics of a spiral notebook are those features that can be touched or seen before purchase. This might include the strength of the metal spiral, the weight of the book, the texture of the cover and the quality of the paper. Of course, if the notebook is heavily wrapped, these elements may not be visible and will therefore become intangible. This is because the customer will be unable at the time of purchase to judge the spiral notebook’s features.
Life insurance is similarly intangible because at the point of purchase the customer does not actually know whether the company will pay out when it is supposed to. The customer is buying a ‘promise’, which may or may not be fulfilled.
What is the relationship between the concepts of the product mix and the product life cycle?
The product mix is defined as the ‘composite group of products that a company makes available to customers’. The example given in Dibb and Simkin relates to Procter & Gamble’s product mix for personal care products and laundry detergents. The product life cycle shows how products go through a cycle that starts off with the introduction of a product, moves to a growth in sales, and progresses through maturity where sales and profits plateau and then reduce, before finally entering a decline stage.
As a product progresses through these stages, there are marketing and financial implications for the organisation. For example, the introduction stage is associated with relatively high levels of investment during which time the firm is often making losses. On the other hand, products in the later stages of growth are generally maximising their profits. As you will probably realise, this process has clear implications for firms. Organisations with all of their products in the introduction stage face a severe drain on their financial resources. Those with all of their products in the growth stage may be enjoying the profits now, but will not have a pipeline of products to replace these offerings when they begin to decline.
You have probably already realised that a good solution is for firms to have a mix of products at different stages of the product life cycle. This allows products needing investment to achieve their future potential to be funded by those which are currently profitable.