PRODUCT LIFE CYCLE STAGES, CHARACTERISTICS AND LAGGARDS

The stages through which products develop over time is commonly known as the "Product Life Cycle". The Product Life cycle is the fundamental concept for planning, strategy, product development, marketing, and manufacturing.
The product life cycle has 4 very clearly defined stages, each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products. The four major life cycles a product undergoes are:
•Introduction stage

•Growth stage
•Maturity stage
•Decline stage.

The life cycle concept may apply to a brand or to a category of product. Its duration may be as short as a few months for a fad item or a century or more for product categories such as the gasoline-powered automobile.
Product development is the incubation stage of the product life cycle. There are no sales and the firm prepares to introduce the product. As the product progresses through its life cycle, changes in the marketing mix usually are required in order to adjust to the evolving challenges and opportunities. (Internet Center for Management and Business Administration, Inc, Copyright © 2002-2010 NetMBA.com)

INTRODUCTION STAGE
This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector.(Living Better Media,2011)
Some characteristics of this stage as described in an article adopted from Philip Kotler’s book Marketing Management, 9th Ed. p. 345 are:
•Sales generally are low and somewhat slow to take off. Customers are characterized as 'innovators.'
•Production costs tend to be high on a per unit basis because the firm has yet to experience any significant scale economies
•Marketing costs required for creating customer awareness, interest, and trial and for introducing the product into distribution channels are high.
•Profits, because of low sales and high unit costs, tend to be negative or very low.
•Competitors tend to be few in number, indeed there may be only one major player in the marketplace -- the innovating firm.

THE GROWTH STAGE
The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.
Also at this stage of the cycle as stated by Philip Kotler (Marketing Management, 9th Ed. Pg. 345) are:
•Sales increase rapidly during the growth phase. This increase is due to: (1) consumers rapidly spreading positive word-of-mouth (WOM) about the product; (2) an increasing number of competitors enter the market with their own versions of the product; (3) and a "promotion effect" which is the result of individual firms employing, advertising and other forms of promotion to create market awareness, stimulate interest in the product, and encourage trial.
•Cost are declining on a per unit basis because increased sales lead to longer production runs and, therefore, scale economies in production. Similarly firms may experience experience curve effects which help to lower unit variable costs.
•Because sales are increasing and, at the same time, unit costs are declining, profits rise significantly and rapidly during this stage.
•Customers are mainly early adopters and early majority. It is the early adopter, specifically, that is responsible for stimulating the WOM effect. During the latter part of growth, the first major segment of the mass market, called the early majority, enters the market. This category of consumers is somewhat more price sensitive and lower on the socio-economic spectrum. As a result, these consumers are somewhat more risk averse and, therefore, somewhat more hesitant to adopt the product.
•Competition continues to grow throughout this stage. As competitors recognize profit potential in the market, they enter the market with their own versions of the product. As competition intensifies, strategies turn to those that will best aid in differentiating the brand from those of competitors. Attempts are made to differentiate and find sources of competitive advantage. In addition, firms identify ways in which the market can be segmented and may develop focused marketing strategies for individual segments

THE MATURITY STAGE
During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.
Characteristics of this stage are:
•Sales continue to grow during the early part of maturity, but at a much slower rate than experienced during the growth phase. At some point, sales peak. This peak may last for extended periods of time. In fact, the maturity phase of the life cycle is the longest phase for most products. As a result, most products at any given point in time probably are at maturity. And, most decisions made by marketing managers will be decisions about managing the mature product.(ibid)
•Costs continue to rise during maturity because of market saturation and continually intensifying competition. When this slowing of sales is combined with the increasing costs associated with this stage, the result is that profits will have reached their highest level and must, from this point on, decline.
•The only remaining customers to enter the market will be the late majority and the laggards. These customer groups are by far the most risk averse and most hesitant to adopt new products. These customers are quite price sensitive and, as a result, will not buy products until prices have seen significant declines. Many laggards, the last group to adopt, often do not do so until the product is virtually obsolete and in danger of being displaced by new technologies.
•Competition is most intense during this stage. The intensity of competitive in-fighting drives the changes in costs and profitability.

THE DECLINE STAGE
Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.
Some characteristics that can be observed at this stage are:
•Sales continue to deteriorate through decline. And, unless major change in strategy or market conditions occur, sales are not likely to be revived. Costs, because competition is still intense, continue to rise. Large sums are still spent on promotion, particularly sales promotions aimed at providing customers with price concessions.
•Profits, as expected, continue to erode during this stage with little hope of recovery.
•Customers, again, are primarily laggards.
•There generally are a significant number of competitors still in the industry at the beginning of decline. However, as decline progresses, marginal competitors will flee the market. As a result, competitors remaining through decline tend to be the larger more entrenched competitors with significant market shares (ibid)

According to Philip Kotler, with reference to an article he adopted which was published (Feb2002), the product life cycle can repeat. Some product categories apparently begin to transition into decline only to experience a substantial resurgence in sales leading to "re-growth." An excellent example is nylon. Additional new uses for nylon have been discovered by manufacturers since the product’s introduction, all of which have lead to substantial increases in sales and profits.
Fashion also tends to exhibit the recycle pattern. The stages in a fashion's life cycle have been given somewhat different nemeses stages are: the "distinctiveness stage," the "emulation stage," the "mass fashion stage," and the "decline stage." These stages still essentially are the introduction, growth, maturity and decline stages of the standard product life cycle. What is most different about the fashion life cycle is its recycle period. Fashions can be, and are, reintroduced. The ability of fashions to exhibit such cycle-recycle life cycles can be traced to their introduction and popularity with different generation.
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. .(Living Better Media,2011)


THE LAGGARDS
Laggards, contrasted with innovators, are generally defines as the last group of persons to adopt a product, service or an idea although contrasted with non-adopters they do adopt eventually. (Kenneth UHL, Roman Andrus and Lance Poulsen, Journal of Marketing Research 1970)
Everett M. Rogers also in his work Diffusion of Innovations divided the market into five different groups namely, innovators, early adaptors, early majority, late majority and laggards.

Each division has its own characteristics, attributes and companies have to focus on one consumer segment at the time as these consumers have different needs and desires. Mostly innovators and early adaptors are the important segments when launching a new product. While small, these segments are very vital as they act as the entry point to bigger share of the market.

According to Everett M. Rogers, early adaptors are technologies that can see the potential of the new product. This group is more willing to pay higher prices for immature technology, suffer more pain from product malfunctions and defects. Other research also found that early adaptors have exploratory consumer behavior seeking novelty while being characterized by tolerance to ambiguity and low dogmatism (Manning, Bearden &Madden, 1995).
However, laggards consist of a large segment to be ignored. They comprise of about 16% percent of the market(Everett M. Rogers,1995). Other calculations put laggards at 21.9% percent of the market (Mahajan, Muller & Srivastava, 1990).

Therefore it could be concluded that that while it is difficult to come up with an exact accurate number for laggards, the consensus is however that the percentage is not small, therefore the understanding of laggards and their behavior may help in gaining adoption by late majority, laggards and maybe those who are considered to be non-adaptors.

Demographically, laggards have been characterized with low level of education, low income status and low social mobility (Uhl, Andrus & Poulsen, 1970). The scarce financial resources force many people to wait for the product price to fall before they make a purchasethus making them LAGGARDS.

A study by Jacob Goldenberg and Shaul Oreg suggest that laggards do indeed become innovators in some cases (2006) hence marketers should identify and value this segment of the market and work hard at making this suggestion a reality for the growth of their products.



REFERENCES


•Philip Kotler, Marketing Management, 9th Ed.(Upper Saddle River, NJ: Prentice-Hall), p. 345.

•The Encyclopedia of POP Culture, by Jane and Michael Stern. Harper Perennial Press, 1992

•Thom Holland, Sales & Marketing (April 6th, 2011).

•(Internet Center for Management and Business Administration, Inc, Copyright © 2002-2010 NetMBA.com)

•(Kenneth UHL,Roman Andrus and Lance Poulsen, Journal of Marketing Research © 1970 American Marketing Association