Antoniapaz

Harvard Business School

9-579-072
Rev. August 16, 1985

Product Life Cycle

The product life cycle is one of the more pervasive concepts in marketing literature. In its fully articulated form this concept has practical relevance for the marketing manager in formulating product, pricing, distribution, and promotional strategies. The concept is also valuable for product portfolio analysisand setting strategic objectives.

“Product” in the Product Life Cycle
It is important to begin by defining “product,” which has four quite distinct meanings, each differing in level of aggregation.

Levels of Aggregation

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1. Category. At the highest level of aggregation, “product” refers to a product category: all products of all competing producers which, despite differencesin appearance and performance, essentially serve a set of functional needs in a roughly similar manner. A set of basic customer needs is often met by a number of product categories. Typically different product categories offer quite distinct customer benefits in satisfying common needs. Thus, for instance, passenger automobiles, bicycles, airplanes, railroads, ships, and motorcycles all provideconsumer transportation. Other examples of product categories are conveyor belts, computers, audiotapes, and cameras. 2. Subcategory. At a finer level of aggregation, “product” refers to a product subcategory: a homogeneous grouping of products from all competing producers that are more similar in how they are perceived and used by customers than items in a product category. For example, withinthe product category of automobiles are the subcategories of sports cars, luxury cars, compacts, and

Dr. Noel Capon, visiting lecturer, prepared this note as a basis for class discussion on marketing and corporate strategy. Copyright © 1978 by the President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard BusinessSchool Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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The product life cycle is typically presented as asales curve over time, from introduction to final withdrawal, divided into five stages (see Figure A). It is important because certain types of market behavior and patterns of marketing strategy are consistently found at similar life cycle stages—for instance, competitor entry and exit, evolution of product design, advertising-to-sales ratios, and advertising strategy.

This document isauthorized for use only by CAROLINA ONETO until October 2010. Copying or posting is an infringement of copyright. [email protected] or 617.783.7860.

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Product Life Cycle

3. Brand. “Product” also refers to a brand: all items produced by one organization in a product subcategory. Thus, Jaguar, Cadillac, and Pinto would be brands.

4. Model. Finally, “product”refers to an item or model produced by one organization. Thus, a 4-door Pinto station wagon would be a “product” in the most specific sense.

For both product category and subcategory, however, consistent patterns resembling Figure A are typically found across a wide variety of products. Both product category and subcategory thus satisfy a major condition for use in the product life cycle. Oftenanalysis at the category level will provide important insights. More likely, however, subcategory analysis will be most valuable, because marketing strategy is typically developed at that level. For a company wishing to enter the personal computer business, life cycle analysis of the computer product category is of little value, but analysis of the life cycle for personal computers would be more…

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