1. The concept of product economic life cycle

Product economic life cycle is usually called product life cycle theory (also known as product cycle theory, referred to as "PLC" theory) and is an important part of marketing theory. content. Products, like living organisms and organisms, have their own processes of production, development and decline. This process occurs with market changes and is called the "market life" or "economic life" of the product. The product life cycle can be understood as the process in which a product is produced, developed, and eliminated in the market.

2. Division of product life cycle stages and marketing strategies

The product life cycle process can be represented by a curve, which we call the product life cycle curve (Figure 8-1) . This is a typical curve. According to the characteristics of this curve, the product life cycle can be divided into four stages, namely the introduction stage, growth stage, maturity stage and decline stage. Products at different stages have different market conditions and marketing strategies.

Figure 8-1 Product life cycle curve

Introduction stage

The introduction stage refers to the product from design and production until it is put into the market and enters the testing stage. At this stage, customers are not familiar with the product, so the market situation has the following characteristics:

(1) Production is unstable and production batches are small;

(2) Cost comparison High, the enterprise has a heavy burden (usually no profit or even loss);

(3) People have not yet accepted the product, and sales growth is slow;

(4) There are few product varieties;

(5) There is little market competition.

In this case, the focus of the company should be to establish the popularity of the new product, widely publicize it, vigorously promote it, attract the attention and trial of potential customers, and strive to open up distribution channels and occupy the market. At this stage, the focus of corporate marketing strategy should highlight the word "fast", that is, try to get the product into the growth stage in the shortest time and fastest speed. The specific strategies mainly include:

(1) Establish visibility. A large amount of advertising should be done to expand the publicity of the product and establish product credibility. At this stage, companies have to bear heavy advertising costs.

(2) Brand promotion. Use existing products to assist development and use brand-name products to support new products.

(3) Guided trial. Use more trial methods to make consumers understand new products.

(4) Incentivize middlemen. Increase discounts for wholesale, retail or other types of subsequent distribution companies that operate products to stimulate middlemen to actively promote sales.

Growth stage

The growth stage means that the new product has achieved good results through trial marketing, buyers gradually accept the product, and the product has gained a foothold in the market and opened up sales. The characteristics of this stage are:

(1) Mass production and operation, cost reduction, and rapid increase in corporate profits;

(2) Sales volume increases rapidly, and generally prices also increase. Improvement;

(3) Competitors producing similar products begin to intervene.

At this stage, sales volume grows rapidly, the company begins to make more profits, and competition gradually intensifies. In this case, enterprises must maintain good product quality and service quality. In order to promote the growth of the market, the focus of corporate marketing strategies should highlight the word "good". Specifically, the following strategies can be adopted:

(1) Improve product quality. According to customer needs, continuously improve product performance, improve product quality, increase varieties, models, and styles, and strive to create new features;

(2) Expand target markets and actively develop new market segments;< /p>

(3) Shift the focus of advertising. Shift the focus of advertising from building product awareness to promoting brands and trademarks, so that people will have a good impression and preference for the product;

(4) Add new distribution channels or strengthen distribution channels.

Mature stage

The mature stage refers to the stage when products enter mass production and enter the market for sales stably, and product demand tends to be saturated.

The main characteristics of this stage are:

(1) There are generally more buyers;

(2) Products are popularized and increasingly standardized;

(3) Sales volume is relatively stable;

(4) Low cost and large output;

(5) There are differences in product quality, color, variety, specification, packaging, and cost between companies that produce similar products Competition in services and services has intensified.

At this stage, enterprises should not be content with maintaining vested interests and status, but should be proactive, strive for stable market share, and extend the market life of their products. The focus of corporate marketing strategy is "reform", that is, improving the original product market and marketing mix. The specific strategies mainly include:

(1) Do everything possible to stabilize the target market, retain the original consumers, and at the same time make consumers "loyal" to a certain product;

(2) Increase Product series, diversify products, increase colors, specifications, grades, expand target markets, at least maintain the original market share (coverage), and change the focus of advertising and service measures;

( 3) Focus on promoting the credibility of the company. At the same time, after-sales service work must be strengthened. Another important task at this stage is to develop second-generation products to prepare for product upgrades. Once this product fails to recover, new products will come out immediately.

Decline stage

The decline stage refers to the phase when a product becomes obsolete. At this time, the product has aged in the market and cannot meet the market demand. There are already other new products on the market with better performance and cheaper price, which are enough to meet the needs of consumers. The market situation at this time is:

(1) Product sales and profits have dropped sharply;

(2) Product prices have dropped significantly.

At this stage, for most companies, they should make a decisive decision, abandon the old and pursue the new, and update their products in a timely manner.

At this stage, the company's strategy focuses on the word "turn", that is, turning to the research and development of new products or entering new markets.