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UNIVERSITY OF MUMBAI

A PROJECT ON
PRODUCT LIFE CYCLE
MASTER OF COMMERCE PART I
SEMESTER - II
2013-2014
SUBMITTED BY
VISMAYA RAMESH RAUT
PROJECT GUIDE
PROF GATTING KOLI

ST JOSEPH COLLEGE OF ARTS & COMMERCE
VIRAR (West)


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VISMAYA RAMESH RAUT student of M.COM-I (Semester-II).ST
JOSEPH COLLEGE OF ARTS & COMMERCE hereby declare that we have
completed this project PRODUCT LIFE CYCLE in the academic year 2013-
2014.
I declared that the project report is my original work and it has not
been submitted by me in part or full to any other university/institution/statutory
body for the award of any degree/diploma/certificate.


Name Of Candidate Sign.

Place: Date:

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This is certify that VISMAYA RAMESH RAUT has completed the project titled
PRODUCT LIFE CYCLE under the guidance of PROF GATTING KOLI in
practical fulfillment of the requirement for the award of Master of Commerce
part-I studies degree for academic period 2013-2014


PROJECTGUIDE PRINCIPAL



EXTERNAL GUIDE CO-ORDINATOR

Date:
PLACE:
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ACKNOWLEDGEMENT
Although, I am responsible for the execution of my project, it would truly
unjustified on my part to.
Acknowledge the valuable help provided by the under mentioned at various stages
of my work.
I hereby acknowledge with deep gratitude to our Principal Name Prof. SUBHASH
DSOUZA SIR And for the constant guidance I would to express my gratitude to
PROF GATTING KOLI my guide, for him valuable guidance and constant
encouragement throughout the course of the project work.
I would also like to thanks other M.COM teachers of my college who have helped
me at times and the library staff also for the reference material.
I would like to extend sincere thanks to those people who have helped majority in
this project and who spared their valuable time in answering the questionnaire.
Lastly, I want to thank my family and friends who have been supporting me
morally and financially.






ADOPTED BY
MARKETING SRATEGIES AND PLANS
PRODUCT LIFE CYCLE

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Index
Sr. No. Content Pg. NO.
1 Introduction 6
2 Definition of 'Product Life Cycle' 7
3 Product Life Cycle Stages 8
4 Objectives of the Product Life Cycle 12
5 Phases of product lifecycle and corresponding technologies 15
6 Advantages 23
7 Limitations Of The PLC Model 27
8
Extending the product life cycle
A Kellogg's case study
28
9 Bibliography 34










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Introduction
The product life cycle is a marketing theory cycle or succession of strategies experienced by
every product which begins with a products introduction, sometimes referenced as research and
development, followed by its sales growth, then maturity and finally market saturation and
decline.

The product life cycle parallels and is analogous with that of human beings and animals, i.e.
from birth to growth to maturity to decline and eventually to death. For products this involves
many disciplines, skills, tools and processes as the product goes through market forces involving
raw materials, parts, various business processes, costs, distribution to markets and sales.

















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Definition of 'Product Life Cycle'

The period of time over which an item is developed, brought to market and eventually removed
from the market. First, the idea for a product undergoes research and development. If the idea is
determined to be feasible and potentially profitable, the product will be produced, marketed and
rolled out. Assuming the product becomes successful, its production will grow until the product
becomes widely available. Eventually, demand for the product will decline and it will become
obsolete.



















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Product Life Cycle Stages
As consumers, we buy millions of products every year. And just like us, these products have a
life cycle. Older, long-established products eventually become less popular, while in contrast, the
demand for new, more modern goods usually increases quite rapidly after they are launched.

Because most companies understand the different product life cycle stages, and that the products
they sell all have a limited lifespan, the majority of them will invest heavily in new product
development in order to make sure that their businesses continue to grow.


The Introduction Stage of the Product Lifecycle
This introduction stage relates to new products being launched on the market for the first time.
The most important element here is to correctly define your target audience and determine how
you are going to effectively reach them with your message and product. You essentially want to
connect with the early adopters to generate early market penetration. These early adopters are
most likely to provide you with considerable and constructive feedback that will be invaluable
going forward with your product.
At product introduction stage it is typical for sales and marketing costs to be high with turnover
low. In many cases products are not profitable at a market introduction stage due to low market
adoption.
You may find distributors or third party re-sellers are reluctant to take on your new product as it
is yet to be a proven seller so the strategic targeting of key distributors or even a direct sales
approach may work best at this stage. Your pricing strategy also needs to be carefully
considered.
The pricing strategy might be that of Price Skimming where the highest amount possible is
charged initially and then slowly reduced. Or the price strategy might be Penetration Pricing,
where the lowest possible price is charged and then gradually increased. Both are strategies that
focus on increasing market share quickly.
In summary, the main objective of the product introduction stage is to achieve early market
adoption while showing and demonstrating a positive trend of sales and distribution growth
which will lead to profitability.

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The Growth Stage of the Product Lifecycle
Youll find during this stage that while youre steadily growing sales your competitors are now
tagging along for the ride. Your product has been accepted by your target market and cash flow
is positive. Youre selling well so your manufacturing costs are lessened youre enjoying
economies of scale and youre starting to make profits.
The strategy during this growth stage might include investing in advertising to promote brand
awareness to a wider target audience (Early Majority). Ideally youre looking to penetrate the
market taking your competitors customers, encouraging non users to start buying your product
and maybe convincing current customers to buy more of your product.
Distribution growth is normally a key driver of sales growth at this stage so you may wish to
broaden the number and type of channels used (eg a combination of traditional and online sales).
You will also need to continue educating and keep your product at the forefront of your target
audiences mind so this means continued promotional spending.
The growth stage is also the ideal phase in which to make improvements to your product. If you
are selling software for example maybe you could add on new features or improve the interface
to give the product a fresh look, all the while offering current customers added value.


The Maturity Stage of the Product Lifecycle
During the maturity stage sales will typically be flat, and the profit margins of your products
will begin to decline. This is typically caused by a number of factors including market saturation
or the displacement of your product with other alternative solutions or technologies. In this stage
the nature of competition is often very price driven.
Mature markets can often present opportunities for companies however if an innovative outlook
is taken. Do other markets exist where your current product or technology can find growth (eg
international markets)? Fiat Tractors is an outstanding example of a company that changed their
sales channels and market and even their brand in order to remain competitive back in the
1960s.



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When the western world wanted new hi-tech tractors Fiat found themselves with a stock of
traditional basic models that their target market no longer wanted. Having carried out much
research the company began selling these traditional tractors in countries like Turkey at a price
point suitable to the market. Seeing instant success Fiat secured a licensing agreement with
Turkish company Tmosan to manufacture the tractors in the home country and even changed
the brand name to Turk Fiat to align themselves more closely with the country and its culture.
The maturity stage is also the time to start planning and researching for a next generation product
or technology dont wait until your product enters the decline stage. Invest in market research
therefore.

The Decline Stage of the Product Lifecycle
During this decline stage you will most certainly notice a decline in sales. Your market is now
either saturated and/or overrun by competitors. You will see a decline in profits and cash flow
will become somewhat weaker.
So what are the potential strategies during the decline stage of the product lifecycle?
You could choose to harvest cash from your cash cow product and invest these funds in a more
promising brand. If you have done your research in the maturity stage for a next generation
product or new product introduction you will be able to invest more time and resources into this.
According to Paretos Law for product lines typically 80% of profits or sales come from 20% of
products. What hes really saying here is that companies continuously add products to their
product line and fund each addition, focusing on the entire portfolio. Why not look at product
line rationalization and focus resources on growing your cash cows and products that are
yielding that 80% of profits.
All products in the product lifecycle should have an exit strategy. How you remove the product
from market in the most professional and manageable manner is vitally important to the
companys reputation. An exit strategy would normally coincide with the introduction of a next
generation product or new product introduction. It is vital that advanced communication to
channel partners, customers, in fact all stakeholders is clear, concise and understandable. Dont
let the removal of your product be a surprise to your stakeholders.




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Product Life Cycle Examples
Its possible to provide examples of various products to illustrate the different stages of the
product life cycle more clearly. Here is the example of watching recorded television and the
various stages of each method:

Introduction - 3D TVs
Growth - Blueray discs/DVR
Maturity - DVD
Decline - Video cassette
The idea of the product life cycle has been around for some time, and it is an important principle
manufacturers need to understand in order to make a profit and stay in business.

However, the key to successful manufacturing is not just understanding this life cycle, but also
proactively managing products throughout their lifetime, applying the appropriate resources and
sales and marketing strategies, depending on what stage products are at in the cycle.












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Objectives of the Product Life Cycle
Just as human beings have a definitive life cycle that starts at birth and ends at death, the
products they consume also have a life cycle. For products, the life cycle consists of introduction,
growth, maturity and decline. A manufacturer's marketing objectives for a product often depend
upon what stage of the life cycle the product has entered.

Creating a Market
When a company introduces a new product to the marketplace, its primary objective is to create
a market for it. During its preliminary market research, the company identifies what it believes
will be the suitable market for the product and uses devices such as advertising and special
pricing to reach the desired target market. The company also attempts to build brand awareness
and show how the product differs from those offered by competitors in the same category.

Increasing Market Share
After the successful introduction of a product, the company then tries to increase its market
share, which is its percentage of sales volume compared to competitors in the same category.
The company focuses on additional promotional and distribution efforts to reach as many
potential end users as possible. During this growth phase, pricing typically remains stable unless
the competition is able to deter the product's growth by implementing marketing techniques of its
own. If this occurs, the company may be forced to lower the price.

Maximizing Profitability
As demand levels off and the product matures, the company attempts to maximize its profits.
Less money may be spent on advertising and promotion as brand awareness is firmly entrenched
and the product is well-established in the marketplace. Instead of increasing market share, a
primary objective at this point in the life cycle is to maintain current market share. Promotional
efforts are geared toward building brand loyalty with existing users, although some attempt is
made to entice users of competitors' products to switch.



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Prolonging Life
As product sales begin to decline, the company attempts to reap profits for as long as possible
while making a decision regarding its ultimate fate. The company may attempt to revive the
product by creating new uses or lowering prices in an effort to maintain market share for as long
as possible. If the product has become obsolete or the company has developed a replacement
product, it may discontinue manufacturing it altogether and liquidate existing inventory.

Introduction to development process
The core of PLM (product lifecycle management) is in the creation and central management of
all product data and the technology used to access this information and knowledge. PLM as a
discipline emerged from tools such as CAD, CAM and PDM, but can be viewed as the
integration of these tools with methods, people and the processes through all stages of a
products life. It is not just about software technology but is also a business strategy.

For simplicity the stages described are shown in a traditional sequential engineering workflow.
The exact order of event and tasks will vary according to the product and industry in
question but the main processes are:
Conceive
Specification
Concept design
Design
Detailed design
Validation and analysis (simulation)
Tool design
Realize
Plan manufacturing
Manufacture
Build/Assemble
Test (quality check)
Service
Sell and deliver
Use
Maintain and support
Dispose
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The major key point events are:
Order
Idea
Kickoff
Design freeze
Launch

The reality is however more complex, people and departments cannot perform their tasks in
isolation and one activity cannot simply finish and the next activity start. Design is an iterative
process, often designs need to be modified due to manufacturing constraints or conflicting
requirements. Where a customer order fits into the time line depends on the industry type and
whether the products are for example, built to order, engineered to order, or assembled to order.
















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Phases of product lifecycle and corresponding technologies
Many software solutions have developed to organize and integrate the different phases of a
products lifecycle. PLM should not be seen as a single software product but a collection of
software tools and working methods integrated together to address either single stages of the
lifecycle or connect different tasks or manage the whole process. Some software providers cover
the whole PLM range while others single niche application. Some applications can span many
fields of PLM with different modules within the same data model. An overview of the fields
within PLM is covered here. It should be noted however that the simple classifications do not
always fit exactly, many areas overlap and many software products cover more than one area or
do not fit easily into one category. It should also not be forgotten that one of the main goals of
PLM is to collect knowledge that can be reused for other projects and to coordinate simultaneous
concurrent development of many products. It is about business processes, people and methods as
much as software application solutions. Although PLM is mainly associated with engineering
tasks it also involves marketing activities such as product portfolio management (PPM),
particularly with regards to new product development (NPD). There are several life-cycle models
in industry to consider, but most are rather similar. What follows below is one possible life-cycle
model; while it emphasizes hardware-oriented products, similar phases would describe any form
of product or service, including non-technical or software-based products:

Phase 1: Conceive
Imagine, specify, plan, innovation
The first stage is the definition of the product requirements based on customer, company, market
and regulatory bodies viewpoints. From this specification, the product's major technical
parameters can be defined. In parallel, the initial concept design work is performed defining the
aesthetics of the product together with its main functional aspects. Many different media are used
for these processes, from pencil and paper to clay models to 3D CAID computer-aided industrial
design software.
In some concepts, the investment of resources into research or analysis-of-options may be
included in the conception phase e.g. bringing the technology to a level of maturity sufficient
to move to the next phase. However, life-cycle engineering is iterative. It is always possible that
something doesn't work well in any phase enough to back up into a prior phase perhaps all the
way back to conception or research. There are many examples to draw from.


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Phase 2: Design
Describe, define, develop, test, analyze and validate
This is where the detailed design and development of the products form starts, progressing to
prototype testing, through pilot release to full product launch. It can also involve redesign and
ramp for improvement to existing products as well as planned obsolescence. The main tool used
for design and development is CAD. This can be simple 2D drawing / drafting or 3D parametric
feature based solid/surface modeling. Such software includes technology such as Hybrid
Modeling, Reverse Engineering, KBE (knowledge-based engineering), NDT (Nondestructive
testing), Assembly construction.

This step covers many engineering disciplines including: mechanical, electrical, electronic,
software (embedded), and domain-specific, such as architectural, aerospace, automotive, ...
Along with the actual creation of geometry there is the analysis of the components and product
assemblies. Simulation, validation and optimization tasks are carried out using CAE (computer-
aided engineering) software either integrated in the CAD package or stand-alone. These are used
to perform tasks such as:- Stress analysis, FEA (finite element analysis); kinematics;
computational fluid dynamics (CFD); and mechanical event simulation (MES). CAQ (computer-
aided quality) is used for tasks such as Dimensional tolerance (engineering) analysis. Another
task performed at this stage is the sourcing of bought out components, possibly with the aid of
procurement systems.

Phase 3: Realize
Manufacture, make, build, procure, produce, sell and deliver
Once the design of the products components is complete the method of manufacturing is
defined. This includes CAD tasks such as tool design; creation of CNC Machining instructions
for the products parts as well as tools to manufacture those parts, using integrated or separate
CAM computer-aided manufacturing software. This will also involve analysis tools for process
simulation for operations such as casting, molding, and die press forming. Once the
manufacturing method has been identified CPM comes into play. This involves CAPE
(computer-aided production engineering) or CAP/CAPP (production planning) tools for
carrying out factory, plant and facility layout and production simulation. For example: press-line
simulation; and industrial ergonomics; as well as tool selection management. Once components
are manufactured their geometrical form and size can be checked against the original CAD data
with the use of computer-aided inspection equipment and software.
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Parallel to the engineering tasks, sales product configuration and marketing documentation work
take place. This could include transferring engineering data (geometry and part list data) to a web
based sales configurator and other desktop publishing systems.

Phase 4: Service
Use, operate, maintain, support, sustain, phase-out, retire, recycle and disposal
The final phase of the lifecycle involves managing of in service information. Providing
customers and service engineers with support information for repair and maintenance, as well as
waste management/recycling information. This involves using tools such as Maintenance, Repair
and Operations Management (MRO) software.
There is an end-of-life to every product. Whether it be disposal or destruction of material objects
or information, this needs to be considered since it may not be free from ramifications.

All phases: product lifecycle
Communicate, manage and collaborate
None of the above phases can be seen in isolation. In reality a project does not run sequentially
or in isolation of other product development projects. Information is flowing between different
people and systems. A major part of PLM is the co-ordination and management of product
definition data. This includes managing engineering changes and release status of components;
configuration product variations; document management; planning project resources and
timescale and risk assessment.

For these tasks graphical, text and metadata such as product bills of materials (BOMs) needs to
be managed. At the engineering departments level this is the domain of PDM (product data
management) software, at the corporate level EDM (enterprise data management) software, these
two definitions tend to blur however but it is typical to see two or more data management
systems within an organization. These systems are also linked to other corporate systems such as
SCM, CRM, and ERP. Associated with these system are project management Systems for
project/program planning.

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This central role is covered by numerous collaborative product development tools which run
throughout the whole lifecycle and across organizations. This requires many technology tools in
the areas of conferencing, data sharing and data translation. The field being product visualization
which includes technologies such as DMU (digital mock-up), immersive virtual digital
prototyping (virtual reality), and photo-realistic imaging.

User skills
The broad array of solutions that make up the tools used within a PLM solution-set (e.g., CAD,
CAM, CAx...) were initially used by dedicated practitioners who invested time and effort to gain
the required skills. Designers and engineers worked wonders with CAD systems, manufacturing
engineers became highly skilled CAM users while analysts, administrators and managers fully
mastered their support technologies. However, achieving the full advantages of PLM requires the
participation of many people of various skills from throughout an extended enterprise, each
requiring the ability to access and operate on the inputs and output of other participants.

Despite the increased ease of use of PLM tools, cross-training all personnel on the entire PLM
tool-set has not proven to be practical. Now, however, advances are being made to address ease
of use for all participants within the PLM arena. One such advance is the availability of "role"
specific user interfaces. Through tailorable UIs, the commands that are presented to users are
appropriate to their function and expertise.









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These techniques include:-
Concurrent engineering workflow
Industrial design
Bottomup design
Topdown design
Front-loading design workflow
Design in context
Modular design
NPD new product development
DFSS design for Six Sigma
DFMA design for manufacture / assembly
Digital simulation engineering
Requirement-driven design
Specification-managed validation
Configuration management
Concurrent engineering workflow

Concurrent engineering (British English: simultaneous engineering) is a workflow that, instead
of working sequentially through stages, carries out a number of tasks in parallel. For example:
starting tool design as soon as the detailed design has started, and before the detailed designs of
the product are finished; or starting on detail design solid models before the concept design
surfaces models are complete. Although this does not necessarily reduce the amount of
manpower required for a project, as more changes are required due to the incomplete and
changing information, it does drastically reduce lead times and thus time to market.

Feature-based CAD systems have for many years allowed the simultaneous work on 3D solid
model and the 2D drawing by means of two separate files, with the drawing looking at the data
in the model; when the model changes the drawing will associatively update. Some CAD
packages also allow associative copying of geometry between files. This allows, for example, the
copying of a part design into the files used by the tooling designer. The manufacturing engineer
can then start work on tools before the final design freeze; when a design changes size or shape
the tool geometry will then update. Concurrent engineering also has the added benefit of
providing better and more immediate communication between departments, reducing the chance
of costly, late design changes. It adopts a problem prevention method as compared to the
problem solving and re-designing method of traditional sequential engineering.
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Bottomup design
Bottomup design (CAD-centric) occurs where the definition of 3D models of a product starts
with the construction of individual components. These are then virtually brought together in sub-
assemblies of more than one level until the full product is digitally defined. This is sometimes
known as the review structure showing what the product will look like. The BOM contains all of
the physical (solid) components; it may (but not also) contain other items required for the final
product BOM such as paint, glue, oil and other materials commonly described as 'bulk items'.
Bulk items typically have mass and quantities but are not usually modelled with geometry.

Bottomup design tends to focus on the capabilities of available real-world physical technology,
implementing those solutions which this technology is most suited to. When these bottomup
solutions have real-world value, bottomup design can be much more efficient than topdown
design. The risk of bottomup design is that it very efficiently provides solutions to low-value
problems. The focus of bottomup design is "what can we most efficiently do with this
technology?" rather than the focus of topdown which is "What is the most valuable thing to
do?"

Topdown design
Topdown design is focused on high-level functional requirements, with relatively less focus on
existing implementation technology. A top level spec is decomposed into lower and lower level
structures and specifications, until the physical implementation layer is reached. The risk of a
topdown design is that it will not take advantage of the most efficient applications of current
physical technology, especially with respect to hardware implementation. Topdown design
sometimes results in excessive layers of lower-level abstraction and inefficient performance
when the Topdown model has followed an abstraction path which does not efficiently fit
available physical-level technology. The positive value of topdown design is that it preserves a
focus on the optimum solution requirements.

A part-centric topdown design may eliminate some of the risks of topdown design. This starts
with a layout model, often a simple 2D sketch defining basic sizes and some major defining
parameters. Industrial design brings creative ideas to product development. Geometry from this
is associatively copied down to the next level, which represents different subsystems of the
product. The geometry in the sub-systems is then used to define more detail in levels below.
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Depending on the complexity of the product, a number of levels of this assembly are created
until the basic definition of components can be identified, such as position and principal
dimensions. This information is then associatively copied to component files. In these files the
components are detailed; this is where the classic bottomup assembly starts.

The topdown assembly is sometime known as a control structure. If a single file is used to
define the layout and parameters for the review structure it is often known as a skeleton file.

Defense engineering traditionally develops the product structure from the top down. The system
engineering process prescribes a functional decomposition of requirements and then physical
allocation of product structure to the functions. This top down approach would normally have
lower levels of the product structure developed from CAD data as a bottomup structure or
design.

Both-ends-against-the-middle design
Both-ends-against-the-middle (BEATM) design is a design process that endeavors to combine
the best features of topdown design, and bottomup design into one process. A BEATM design
process flow may begin with an emergent technology which suggests solutions which may have
value, or it may begin with a topdown view of an important problem which needs a solution. In
either case the key attribute of BEATM design methodology is to immediately focus at both ends
of the design process flow: a topdown view of the solution requirements, and a bottomup view
of the available technology which may offer promise of an efficient solution. The BEATM
design process proceeds from both ends in search of an optimum merging somewhere between
the topdown requirements, and bottomup efficient implementation. In this fashion, BEATM
has been shown to genuinely offer the best of both methodologies. Indeed some of the best
success stories from either topdown or bottomup have been successful because of an intuitive,
yet unconscious use of the BEATM methodology. When employed consciously, BEATM offers
even more powerful advantages.




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Front loading design and workflow
Front loading is taking topdown design to the next stage. The complete control structure and
review structure, as well as downstream data such as drawings, tooling development and CAM
models, are constructed before the product has been defined or a project kick-off has been
authorized. These assemblies of files constitute a template from which a family of products can
be constructed. When the decision has been made to go with a new product, the parameters of
the product are entered into the template model and all the associated data is updated. Obviously
predefined associative models will not be able to predict all possibilities and will require
additional work. The main principle is that a lot of the experimental/investigative work has
already been completed. A lot of knowledge is built into these templates to be reused on new
products. This does require additional resources "up front" but can drastically reduce the time
between project kick-off and launch. Such methods do however require organizational changes,
as considerable engineering efforts are moved into "offline" development departments. It can be
seen as an analogy to creating a concept car to test new technology for future products, but in
this case the work is directly used for the next product generation.

Design in context
Individual components cannot be constructed in isolation. CAD and CaiD models of components
are designed within the context of part or all of the product being developed. This is achieved
using assembly modelling techniques. Other components geometry can be seen and referenced
within the CAD tool being used. The other components within the sub-assembly may or may not
have been constructed in the same system, their geometry being translated from other
collaborative product development (CPD) formats. Some assembly checking such as DMU is
also carried out using product visualization software.







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Advantages
Business is often associated with the dryer side of dullness, and many of us frequently refer with
some distaste to "getting round to the business side of things". But over the years some very
useful methods and techniques have emerged from the "other-side", many of which can be
beneficial to all of us. After all, while we may consider much of what we do as a labour of love,
we are nonetheless trying to make some money out of the whole thing as well! A good place to
start is with the concept of the product life cycle.

Like most things, the sales (and demand) for your software conform to some sort of pattern. The
advantages of the product life cycle concept is that it provides a basic structure that allows you to
see where you are, and what lies ahead. There are four components to the cycle; introduction,
growth, maturity and decline.

Introduce Your Product To The Market
The first component is fairly self-explanatory; when a new product is introduced, market gain
tends to be very slight, and it is almost impossible to spot any kind of emerging patterns in
demand. Depending on how you launch the software, marketing costs may be high, and it is
unlikely that there are any profits as such. After the creation and subsequent release of your
software, this often boils down to gritting your teeth and waiting. If this stage doesn't lead into
the next, then it may be time to jump ship.

The growth stage exhibits a rapid increase in both sales and profits, and this is the time to try and
increase your product's market share. By now you should be seeing where your demand is
coming from, and which of your efforts are worth spending time and energy on. With a little bit
of luck, you might even have knocked some of the competition out of the way too!

The growth stage is closely followed by the maturity stage, often seen as the "most common"
stage for all products. Competition becomes more fierce and marketing becomes the key to your
software's success. During this time, any attempt to increase your market share will probably be
expensive; growth at this stage is more likely to be down to external factors beyond your control.

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Decline Doesn't Equal Death
The final stage in the life cycle is the decline. This doesn't necessarily mean that it's time to
abandon your product altogether, but rather that the introduction of new strategies might be in
order. These could include new versions, new distribution methods, price reductions, in short
anything that will inject a little life into the cycle.

Each of the four stages have their own characteristics, and each are open to different strategies
being implemented. However, for many this stage will prove to be the critical one; many wait
until this period before acting, and it is the only stage where some sort of action is critical. Two
situations are frequently confused with a declining product. The product life cycle graphic below
demonstrates the point.

Theoretically the product life-cycle is a smooth and elegant curve; in reality there are constant
short-term fluctuations due to external factors. The first common mistake is to assume that any
reduction in sales signals the onset of the decline phase. The area between points 1 and 2 may at
first appear to be decline, but in fact are part of the growth stage. Similarly, the area between
points 3 and 4 may at first be read as a new growth phase; in fact it is little more than a
temporary increase that has no real significance.

Remember The External Factors
The advantages of the product life cycle concept speak for themselves. Once you've applied this
model to your software, there are an unlimited number of options and strategies that may be
implemented, according to the specifics of your software and its' current stage in the life cycle.
For example, you may wish to considering product life cycle acceleration strategies, or at the
very least recognise where you are, and what lies ahead. Before responding to any of the stage
characteristics, don't forget to consider the external factors, particularly in response to the decline
phase. My own favourite for analysing external factors is the PEST analysis; Political,
Economic, Social and Technological - between them they pretty well cover the whole lot. Take
all of this information into account before jumping to any conclusions.



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As with all business ideas and theories, keep an open mind, be honest with yourself, and never
rule out any option before thoroughly chewing it over. Professionalism and management
techniques are not the sole prerogative of the big-boys; we can do far worse than picking-up a
few of their better habits. The software industry is seen as amateur and unprofessional by far too
many people; don't start believing it yourself. Be seen, be sold.

Importance of Product Life Cycle
A company or product's life cycle has a significant impact on decisions related to the use of
media. Savvy business owners make different marketing decisions at every stage in a product's
life, beginning with the need to generate awareness for new products and ending with the ability
to maintain that awareness.

New Product Entrants
When a new product is introduced, or a new company opens its doors, the business owner's
challenge is to generate awareness for that product or service. In these very early stages of
market introduction the use of traditional print and broadcast media is a proven way to create
demand.

Establishing Preference
Once a product has gained market awareness, advertisers begin creating product preferences
among target customers. Establishing that preference over other available offerings requires
telling the product's story through various media. At this point, mass media use gives way to
more targeted media, including social media, which allows more information to be shared.






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Competing in a Crowded Market
Competing in a crowded market occurs during a product's mid-life stage. Marketers begin to rely
on word-of-mouth generated not only through satisfied customers, but also through the public
relations efforts of third-party endorsements. What advertisers say about their own products and
services will always be viewed by consumers with a certain amount of skepticism. What they
hear from others, including the media, has more impact at this stage in the product life cycle.

Maintaining Awareness
Once a product is established (think CocaCola or Chevrolet), the advertiser's challenge is to
maintain that awareness. At this stage, mass media becomes important in maintaining a general
level of awareness for the product. Mass media also raises awareness among new market
entrants, and even established product marketers know that there are always opportunities to
attract new customers.

Backing Off and Starting Over
Products and services eventually reach a point of diminishing returns. When this happens, media
use declines unless the marketer is able to introduce a brand extension or an entirely new
product. Then the cycle begins again. At every stage in a product's life cycle, the marketer will
be concerned about choices related to generating awareness, preference, demand and, ultimately,
a purchase decision.









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Limitations Of The PLC Model
It is difficult to foresee transitions in PLC stages since the key indicator are sales, which are
always calculated with some lag. Therefore, the realization a stage transition has occurred is
nearly always in retrospect. In addition, fluctuations in sales will produce erroneous conclusions,
so slowing sales do not necessary mean the product has reached the Decline phase and the
resulting conclusion to retire the product and divert resources is wrong. Products, companies and
markets are different, so not all products or services go through every stage of the PLC. There
have been many cases where products have gone straight from introduction to decline, usually
because of bad marketing, misconceived features, lack of value to the consumer or simply a lack
of need for such a product.
However, even if products would go through every stage of the PLC, not all products/services
spend the same length of time at each stage. This adds another level of complexity in
determining which PLC stage the product is in and consequently, which strategy to apply.
Finally, the PLC model is inefficient when dealing with Brands or Services. Brands are not
products but do have a life cycle of their own, and products belonging to a certain brand will
experience a very different life cycle than the brand itself. For example, Dell and Mercedes-Benz
are very strong brands whose life cycle is marginally affected by the failure of any of the
products, which they hold. Apple Computers Lisa, Newton (market failures) and iMac (market
success) are proof that brands and products have different PLCs although they are closely
related










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Extending the product life cycle
A Kellogg's case study
Introduction
Businesses need to set themselves clear aims and objectives if they are going to succeed. The
Kellogg Company is the world's leading producer of breakfast cereals and convenience foods,
such as cereal bars, and aims to maintain that position.
In 2006, Kellogg's had total worldwide sales of almost $11 billion (5.5 billion). In 2007, it was
Britain's biggest selling grocery brand, with sales of more than 550 million. Product lines
include ready-to-eat cereals (i.e. not hot cereals like porridge) and nutritious snacks, such as
cereal bars.
Kellogg's brands are household names around the world and include Rice Krispies, Special K
and Nutri-Grain, whilst some of its brand characters, like Snap, Crackle and Pop, are amongst
the most well-known in the world.
Kellogg's has achieved this position, not only through great brands and great brand value, but
through a strong commitment to corporate social responsibility. This means that all of Kellogg's
business aims are set within a particular context or set of ideals. Central to this is Kelloggs
passion for the business, the brands and the food, demonstrated through the promotion of healthy
living.
The market
The company divides its market into six key segments. Kellogg's Corn Flakes has been on
breakfast tables for over 100 years and represents the 'Tasty Start' cereals that people eat to start
their day. Other segments include 'Simply Wholesome' products that are good for you, such as
Kashi Muesli, 'Shape Management' products, such as Special K and 'Inner Health' lines, such as
All-Bran. Children will be most familiar with the 'Kid Preferred' brands, such as Frosties, whilst
'Mum Approved' brands like Raisin Wheats are recognised by parents as being good for their
children.
Each brand has to hold its own in a competitive market. Brand managers monitor the success of
brands in terms of market share, growth and performance against the competition. Key decisions
have to be made about the future of any brand that is not succeeding.
This case study is about Nutri-Grain. It shows how Kellogg's recognised there was a problem
with the brand and used business tools to reach a solution. The overall aim was to re-launch the
brand and return it to growth in its market.

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The product life cycle
Each product has its own life cycle. It will be 'born', it will 'develop', it will 'grow old' and,
eventually, it will 'die'. Some products, like Kellogg's Corn Flakes, have retained their market
position for a long time. Others may have their success undermined by falling market share or by
competitors.
The product life cycle shows how sales of a product change over time. The five typical stages of
the life cycle are shown on the graph. Not all products follow these stages precisely and time
periods for each stage will vary widely. Growth, for example, may take place over a few months
or, as in the case of Nutri-Grain, over several years.
However, perhaps the most important stage of a product life cycle happens before this graph
starts, namely the research and development (R&D) stage. Here the company designs a product
to meet a need in the market. The costs of market research - to identify a gap in the market and of
product development to ensure that the product meets the needs of that gap - are called 'sunk' or
start-up costs.
Nutri-Grain was originally designed to meet the needs of busy people who had missed breakfast.
It aimed to provide a healthy cereal breakfast in a portable and convenient format.
1. Launch - Many products do well when they are first brought out and Nutri-Grain was no
exception. From launch (the first stage on the diagram) in 1997 it was immediately successful,
gaining almost 50% share of the growing cereal bar market in just two years.
2. Growth - Nutri-Grain's sales steadily increased as the product was promoted and became well
known. It maintained growth in sales until 2002 through expanding the original product with
new developments of flavour and format. This is good for the business, as it does not have to
spend money on new machines or equipment for production. The market position of Nutri-Grain
also subtly changed from a missed breakfast product to an 'all-day' healthy snack.
3. Maturity - Successful products attract other competitor businesses to start selling similar
products. This indicates the third stage of the life cycle - maturity. This is the time of maximum
profitability, when profits can be used to continue to build the brand. However, competitor
brands from both Kellogg's itself (e.g. All Bran bars) and other manufacturers (e.g. Alpen bars)
offered the same benefits and this slowed down sales and chipped away at Nutri-Grain's market
position. Kellogg's continued to support the development of the brand but some products (such
as Minis and Twists), struggled in a crowded market. Although Elevenses continued to succeed,
this was not enough to offset the overall sales decline.


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4. Saturation- This is the fourth stage of the life cycle and the point when the market is 'full'.
Most people have the product and there are other, better or cheaper competitor products. This is
called market saturation and is when sales start to fall. By mid-2004 Nutri-Grain found its sales
declining whilst the market continued to grow at a rate of 15%.
5. Decline - Clearly, at this point, Kellogg's had to make a key business decision. Sales were
falling, the product was in decline and losing its position. Should Kellogg's let the product 'die',
i.e. withdraw it from the market, or should it try to extend its life?

Strategic use of the product life cycle
When a company recognises that a product has gone into decline or is not performing as well as
it should, it has to decide what to do. The decision needs to be made within the context of the
overall aims of the business.
Strategically, Kellogg's had a strong position in the market for both healthy foods and
convenience foods. Nutri-Grain fitted well with its main aims and objectives and therefore was a
product and a brand worth rescuing. Kellogg's aims included the development of great brands,
great brand value and the promotion of healthy living.
Kellogg's decided to try to extend the life of the product rather than withdraw it from the market.
This meant developing an extension strategy for the product.
Ansoff's matrix is a tool that helps analyse which strategy is appropriate. It shows both market-
orientated and product-orientated possibilities.

Extending the Nutri-Grain cycle - identifying the problem
Kellogg's had to decide whether the problem with Nutri-Grain was the market, the product or
both. The market had grown by over 15% and competitors' market share had increased whilst
Nutri-Grain sales in 2003 had declined.
The market in terms of customer tastes had also changed more people missed breakfast and
therefore there was an increased need for such a snack product.




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Extension strategies
The choice of extension strategy indicated by the matrix was either product development or
diversification. Diversification carries much higher costs and risks.
Kellogg's decided that it needed to focus on changing the product to meet the changing market
needs. Research showed that there were several issues to address:
The brand message was not strong enough in the face of competition. Consumers were not
impressed enough by the product to choose it over competitors.
Some of the other Kellogg's products (e.g. Minis) had taken the focus away from the core
business.
The core products of Nutri-Grain Soft Bake and Elevenses between them represented over 80%
of sales but received a small proportion of advertising and promotion budgets. Those sales that
were taking place were being driven by promotional pricing (i.e discounted pricing) rather than
the underlying strength of the brand.

Implementing the extension strategy for Nutri-Grain
Having recognised the problems, Kellogg's then developed solutions to re-brand and re-launch
the product in 2005.
Fundamental to the re-launch was the renewal of the brand image. Kellogg's looked at the core
features that made the brand different and modelled the new brand image on these. Nutri-Grain is
unique as it is the only product of this kind that is baked. This provided two benefits:
the healthy grains were soft rather than gritty
the eating experience is closer to the more indulgent foods that people could be eating (cakes and
biscuits, for example)
The unique selling point, hence the focus of the brand, needed to be the 'soft bake'.
Researchers also found that a key part of the market was a group termed 'realistic snackers'.
These are people who want to snack on healthy foods, but still crave a great tasting snack. The
re-launched Nutri-Grain product needed to help this key group fulfil both of these desires.
Kellogg's decided to re-focus investment on the core products of Soft Bake Bars and Elevenses
as these had maintained their growth (accounting for 61% of Soft Bake Bar sales). Three existing
Soft Bake Bar products were improved, three new ranges introduced and poorly performing
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ranges (such as Minis) were withdrawn. New packaging was introduced to unify the brand
image. An improved pricing structure for stores and supermarkets was developed.
The marketing mix
Using this information, the re-launch focused on the four parts of the marketing mix:
Product improvements to the recipe and a wider range of flavours, repositioning the brand as
'healthy and tasty', not a substitute for a missed breakfast
Promotion a new and clearer brand image to cover all the products in the range along with
advertising and point-of-sale materials
Place better offers and materials to stores that sold the product
Price new price levels were agreed that did not rely on promotional pricing. This improved
revenue for both Kellogg's and the stores
As a result Soft Bake Bar year-on-year sales went from a decline to substantial growth, with
Elevenses sales increasing by almost 50%.
The Nutri-Grain brand achieved a retail sales growth rate of almost three times that of the market
and most importantly, growth was maintained after the initial re-launch.












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Conclusion
Successful businesses use all the tools at their disposal to stay at the top of their chosen market.
Kellogg's was able to use a number of business tools in order to successfully re-launch the Nutri-
Grain brand. These tools included the product life cycle, Ansoffs matrix and the marketing mix.
Such tools are useful when used properly.
Kellogg's was able to see that although Nutri-Grain fitted its strategic profile a healthy,
convenient cereal product it was underperforming in the market. This information was used,
along with the aims and objectives of the business, to develop a strategy for continuing success.
Finally, when Kellogg's checked the growth of the re-launched product against its own
objectives, it had met all its aims to:
re-position the brand through the use of the marketing mix
return the brand to growth
improve the frequency of purchase
introduce new customers to the brand.
Nutri-Grain remains a growing brand and product within the Kellogg's product family.












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Bibliography :
WWW.google.com
http://www.wikipedia.org/