The product life cycle
The product lifecycle shows the period of time over which customers will want to buy a product. It goes through different stages depending on the level of sales. ASOS is the UK's market leader in online fashion retailing. It has more than 22,000 product items on its website and introduces up to 1,000 new ones each week. ASOS has to be aware of the product lifecycle to ensure that the products it is offering continue to meet the needs of its customers. ASOS introduces new styles all the time because customers want the most up-to-date fashions. By understanding the product lifecycle ASOS can determine how long products are likely to continue to sell for and can plan ahead for future ranges.
Businesses can use extension strategies to prolong the lifecycle of its products. Following a trend started by Apple, mobile phone suppliers now provide apps (short for applications) to extend the possible lifecycle of its products. Apps are mini-programs which can be downloaded by the mobile phone user, often for free. Last week, Starbucks released an app which shows users their nearest outlet and the nutritional values of its drinks. U2 has also introduced an app. The U2 Mobile Album app provides the group's latest news. (The Sunday Times 27th September 2009).
By providing these additional features, more customers may be encouraged to buy the handsets that support them. Some products will have relatively short product lifecycles whereas other products may continue to sell for years. As ASOS is in the fashion industry, the lifecycles of its ranges will be limited, although there are techniques it can use extend them, for example, using its newsletter facility to remind customers about certain styles. Technology also changes rapidly and the mobile phone industry is no exception. The introduction of apps means that the same handsets will continue to sell, thereby extending the product lifecycle, but the users can personalise them with their own favourites.
- What are the different stages of the product lifecycle?
- Give an example of a product with a short lifecycle and an example of a product with a very long lifecycle
- Explain the different methods that a business like ASOS could adopt to extend the product lifecycle
- Discuss the extent to which businesses should concentrate on extending the lifecycle of their current products instead of looking to develop new products.
Answers to questions
What are the different stages of the product lifecycle?
- Research and development
- Maturity (plus extension strategies)
Give an example of a product with a short lifecycle and an example of a product with a very long lifecycle. Examples could be…
- Short product lifecycle – current number one CD single
- Long product lifecycle – Mars Bar
Using the case study, explain the different methods that a business like ASOS could adopt to extend the product lifecycle. Extension strategies could include:
- Updating the product
- Selling the product in different markets e.g. ASOS selling their products all over the world
- Encouraging different uses for the product e.g. Ugg Boots being sold as a festival accessory and not just winter wear
- Adding value e.g. offering free gifts
- Advertising to increase sales and find new users e.g. ASOS website features and newsletters
- Price reductions e.g. end of season sales
- Re-launching a product
Discuss the extent to which businesses should concentrate on extending the lifecycle of their current products instead of looking to develop new products. Arguments for concentrating on existing products:
- May be less expensive the researching and developing new products
- May already have a good customer base
- Supply chain is already in place
Arguments for developing new products:
- Spreads risk
- Gives competitive advantage
- May provide first mover advantage
It will depend on…
- the type of industry. Due to rapid changes in tastes and trends the fashion industry, for example, will continually need to introduce new products.
- what the competition are doing. Are they looking at introducing new products or not?