In which phase does marketing begin?

Product life cycle

Products, brands, industries, etc. often have a typical life cycle. This cycle is divided into 5 phases (this course focuses on the Product life cycle):

1. Product development: At this stage the product is not yet on the market, but is still being developed. The phase begins with the product idea and ends with the market launch (even if, of course, further developments can be made to the product after the market launch). The product does not yet generate any revenue, but it causes costs that can be very high depending on the product.

2. Launch: The product is launched. Sales are still growing quite slowly and the costs are high. This phase is represented in the model by a degressively increasing curve.

3. Growth phase: The product is becoming well known, sales are increasing disproportionately. In the model there is a progressively rising curve.

4. Maturity phase: The market is more and more saturated, growth is slowing down. The marketing effort increases again to drive sales. The curve peaks.

5th decline: Sales continue to decline and profits fall. Companies should try to avoid this phase, for example by modifying the product. In this phase, the product is often withdrawn from the market and replaced with a new one.

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The product life cycle represents the change in sales and profit of a product as a function of time. The terms in the basic model of the product life cycle are also as follows:

  • Introductory phase
  • Growth phase
  • Maturity phase
  • Saturation phase
  • Degeneration phase (decline)
  • if necessary, there is also talk of a follow-up phase.

The following graphic illustrates the relationship.

Five phases of the product life cycle
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What are win, win rate and win?

In cost and performance accounting, the Profit the difference between revenue or services and costs.
The formula for calculating the profit shown here (i.e. analogous to the cost and performance calculation) is

$ G = E-K $

with G = profit; E = revenue (sales) and K = costs.

The sales indicates the sum of all sold products and services in a period. Sales are calculated using the amount of products or services multiplied by the price per item.

The Win rate is a key figure within the profitability calculation of a company that expresses the relationship between operating profit and operating income. The income is understood as a gross quantity and results from sales ± inventory changes. The win rate then indicates how big the profit made for a unit of income.

Product life cycle according to Meffert

Meffert also names 5 phases, but with a slightly different division:

  • introduction
  • Growth phase
  • Maturity phase
  • Market saturation
  • degeneration

His model only begins with the market launch, not with the product development.

One problem with these models is the fact that although the course is often similar, it is not possible to predict how long the individual phases will last, how they are to be delimited or how pronounced they are.

Sources: Meffert (2004), Kotler (2003)