A new product progresses through a sequence of stages from introduction to growth, maturity and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation. The product life cycle has a major impact on marketing strategy and marketing mix.
(B) Growth Stage:
This is the stage of rapid growth in sales due to increase in awareness and number of consumers. By this stage, the market is aware of the product. If the product is good and satisfies the market, sales start rising rapidly.
- Sales: Sales starts rising at a faster rate during the growth stage because more and more customers become aware of the product.
- Costs: During the growth stage, cost per customer become average because of fast increases in sales. The cost per unit starts failing due to rise in production and no change in promotional expenditure.
- Profits: Due to rise in sales and decrease in cost of production during the growth stage, profits also starts rising rapidly
- Customers: As more and more customers become aware of the product and many new customers start buying the company’s product. These new customers who buy during the growth stage are known as early adopters.
- Competitors: Due to increase in sales and profits of the existing firms, new competitors realize the potentials and therefore numbers of competitors start increasing during the growth stage.
Strategies During Growth Stage
- The firm can improve quality of its product
- It can add new features and improve style
- It can come out with new variety in the same product
- It can enter into new segment and also expand the market coverage through new distribution channel
- It can shift advertising purpose from product awareness to product acceptance and product purchase
- It can decide the right time to reduce the prices for example by offering discounts, price reduction in particular months etc.