Modern market The production of goods is characterized by exceptional dynamism, which is explained by the ever-increasing variety of products, the emergence of new materials and production technologies. Therefore, each company, applying certain management strategies, seeks to understand as fully as possible the state of such business components as the Product, the market and competitors.

Among these strategies The concept of the life cycle of goods is used almost constantly, because the object of its research - the product - is constantly changing, and with it, within the framework of a separate company, the promotion strategy is also changing.

The concept of a product and its life cycle

A product is a material thing of an industrial nature that can be sold on the free market for use or consumption, to satisfy certain needs.
Any product made by a manufacturer enters the market as a good or service. Every product exists on the market certain time, since "eternal" goods are the exception rather than the rule.
Over time, other more advanced products appear on the market and the old ones are forced out. In this regard, the concept of the product life cycle appeared in the theory of goods.
The life cycle of a product is the period that begins with the initial appearance on the market of a product or service and ends with the termination of their sale in this market.
The life cycle of a product consists of stages, each of which differs from the previous one in changes in sales and profits over time.

Product lifecycle concept

The Product Life Cycle Concept (PLC) was first described by American economist Theodore Levitt in 1965. Levitt rightly argues that over time any product leaves the market and gives an explanation of the reasons why this happens:

1. The life of the goods is limited, because. over time, it loses its relevance and is replaced by a more perfect product.
2. The life cycle includes several periods, each of which has its own tasks, problems and ways to solve them.
3. At different stages of the life cycle, the profit from the sale of goods is different.
4. For each period of the life cycle, there are strategies in the field of marketing, finance, production and personnel management.

ZhTs is not time, ZhTs is a construct (more or less abstract), that is, a Model, if you like - "A model for the emergence, development, behavior of a product on the market until it disappears."

Therefore, it would be better to add - according to the presentation of Professor V.V. Ershov (St. Petersburg, INGECON) - essential features, especially the stages of developing a product and bringing it to the market, as well as communication with CASH-FLOW for the sale of this product.

Product cycles

1) Concept- the development stage, when the product as such does not yet exist, there is only the idea of ​​​​creating it and sufficient funding for

conducting marketing research, expertise, launching a production line and other preparations.
2) Market introduction. The initial stage of sales of the finished product. The "children's" stage is characterized by a slight increase in sales. This stage is characterized by losses, because in order to create a product, it is necessary to invest significant funds and resources in marketing strategies, development of production, and so on. And the income is still low.
3) Growth Stage. The period when all investments invested in products begin to return with a profit:
- production becomes profitable,
- sales volume grows along with profit,
- the product receives consumer recognition, the trademark or brand becomes recognizable,
- advertising costs are reduced.
4) Stage of Maturity.
- prices for the product stabilize, they are constant, in no case grow, and even fall a little.
- sales volume is slowing down, but predictable,
- conquering their own sales niche, mass buyers are turning into regular consumers. The product has already been purchased at least once, tested, evaluated and, accordingly, either it is accepted or rejected.
- there is an increase in competition. Even if the product was created as unique and innovative, everyone who could afford it had already copied the business idea. In this case, there are two options: increase marketing costs and extend the Maturity stage. Or upgrade the product, expand/change market segments. In this case, you can count on a return to the Growth stage (new consumer, new interest).
- there is a decrease in prices, the company is developing a discount policy, promotions in order to maintain the interest of consumers, but profits are reduced accordingly.
5) Recession stage. When there is a sharp decline in sales and profits. In this case, in order to maintain a position in the market, the situation can be saved by upgrading the product, lowering prices, and increasing advertising costs.

Product Life Cycle Features

1) Different marketing strategies are used at different stages of the life cycle.
2) For most classes, types, brands of different products, the shape of the life cycle curve can be predicted, especially if the product is not innovative.
3) The transition from one stage to the next is quite smooth, even imperceptibly, each stage has a different duration, so the task of the marketing service is to closely monitor changes in sales and profits in order to respond in time and make changes to the marketing program.

Goals and marketing strategies for each stage of the life cycle

As for the characteristics, goals and strategies of Marketing, they are closely related to each of the stages of the life cycle. For each stage, specific goals are set and certain strategies are applied. Their choice depends on many reasons, such as the attractiveness of the industry and the competitiveness of the company.

The table below shows the level of sales, costs, profits, presence of competitors and marketing objectives for each period of the life cycle

Characteristics / Stages of the ZhCP	Implementation	Growth	Maturity	recession
Volume of sales	Low level	Rapid growth	Max Level	Falling down
Costs	High per consumer	Average per consumer	Low	Low per consumer
Profit	Missing	Profit Growth	high	Decreases
Competitors	Few or absent	The number of competitors is growing	Stable number with decreasing trend	The number of competitors is decreasing
Marketing Goals
	Informing the market about a new product and encouraging trial purchases	Market share maximization	Profit maximization and market share protection	Cost reduction and sales support

The duration of the LCP and its individual periods depends on many reasons: the product itself, the specific market, the economy of the country where this product is promoted, the level of inflation, etc.

Advantages and disadvantages of the LCP

The fundamental applicability of this Concept lies in the fact that the stages of the life cycle for any product have existed and exist regardless of changes in business practice.

ZhTZ concept helps interpret product and market dynamics and is successfully applied in the following areas of the company:

1. As a planning tool, it allows you to identify the main marketing tasks at each stage of the cycle and develop alternative marketing strategies.
2. Acting as a control tool, the LCP allows you to evaluate the results of the release of goods and compare them with the results of the release of similar goods.

But at the same time, critics of the concept point to its weak sides. So, it is not effective for forecasting, because the duration of the stages of the life cycle for each product is different, and manufacturers cannot always accurately determine at what stage of development a product is. Companies are advised to exercise caution in using the LCG Framework when reviewing their products.

The life cycle of an organization is similar to the life of a person. And it is not by chance that such stages as birth, childhood, adolescence, etc. are found in specialized literature. Just like people, organizations start, grow, succeed, weaken, and either renew and thrive or cease to exist. Few of them exist indefinitely (for example, the church), none of them live without changes. New organizations are born all the time. At the same time, hundreds of organizations are liquidated forever. The leader must know at what stage of development the organization is, and assess how the adopted leadership style corresponds to this stage.

The widespread notion of the life cycle of organizations makes it clear that there are distinct stages that organizations go through, and transitions from one stage to another are predictable, not random.

The life cycle is used to explain how a product (service) goes through the stages of birth or formation, growth, maturity and decline.

The periods lived by the enterprise within the same type of value systems and fixing, first of all, the specifics of organizational tasks in a certain period of the enterprise's operation are called stages; periods in which the enterprise fundamentally changes internal values ​​and orientations, ─ development cycles.

The life cycle of a company consists of six stages.

The first stage is the birth of the company. At the stage of birth, the organization is created, it takes the first steps in its development. As a rule, the founder is an entrepreneur who, alone or with several associates, performs all work tasks. Organization is informal and work tasks overlap.

As a rule, a newly created organization lacks a staff of professional specialists, rules and regulations, internal systems for planning, remuneration or coordination.

At this stage, the company's management sets itself the task of satisfying the interests of customers. The management team gathers a small group of associates: courageous, enterprising, believing in success, ready to take risks, working furiously. The result of the company's activity at this stage is the occupation of a free market niche. The managerial problem at the stage of the company's birth is the emerging contradiction between the creative rise of the management team and the crisis of management as a trend that occurs at this stage, when the management team clearly lacks professionalism in the field of management, business technologies and power.

The second stage is the childhood of the firm. At this stage, the number of employees working in the organization increases, the company specializes in the production of some successful product. The founder, as a rule, is no longer its sole owner. Several trusted persons take part in decision-making, but management is relatively centralized. There is a division of labor in management, departments are created, although internal systems remain informal. Certain rules are starting to take effect, but the number of technical and administrative staff is still small.

At this stage, as a rule, rapid growth of the company is ensured, which, however, often gives short-term success. This is due to the incommensurability of the goals set by the businessman's management team and the capabilities of the company itself. At this stage, up to 90% of firms fail. This is largely due to the fact that at this stage the inexperience and incompetence of the managers hired by the businessman are noticeably manifested. Moreover, at this stage there is a crisis in the management of the firm and its structures. In other words, the owner of the firm begins to feel the potential loss of control of the firm and does everything to keep any of his managers out of strict financial control.

The third stage is the youth of the firm. At this stage, the organization grows in size, occupies a stable position in the market. The company develops bureaucracy, the division of labor is extensive, the policy and distribution of responsibility are formalized. Rules and regulations are widely used in personnel management job descriptions. Professionals are employed in production and marketing. In departments and subdivisions, systems for managing the budget, accounting and salary. Top management delegates responsibility to functional departments, which can lead to reduced flexibility and innovation.

At this stage, the firm's success rate increases, provided that the firm's performance indicators are calculated and the risk justified. Despite this, conflict among managers continues to exist. The owner takes over the management of the company. This, in turn, leads to a crisis of control over the management of the firm, since one owner cannot physically control the entire enterprise. In this case, sooner or later, the problem of the redistribution of the company's management powers arises, which leads to a certain instability of the enterprise's work over a certain period of time.

The fourth stage is the Maturity of the firm. As a rule, a mature organization is characterized by large scale and mechanistic vertical structure. She has everything her heart desires: a large budget, management and control systems, rules, rights, a staff of engineers, accountants, financiers. Decision making is strictly centralized.

At this stage, the company's management comes to the idea of ​​diversification and begins to actively implement it. Diversification, as a rule, is introduced when it is necessary to expand the scope of the company's activities in case of unstable operation of the enterprise in the main types of manufactured goods (in difficult times, a new business will help keep the company afloat). With the introduction of diversification, the frequency of success of the company, as a rule, is continuous, consciously has the character of an arrhythmia. Diversification gives rise to managerial problems associated with the complication of the coordination of the company's activities, the crisis of its bureaucratic apparatus growing by leaps and bounds.

Fifth stage- Firm aging. At this stage, the threat of stagnation and decay of the organization increases significantly. In order to resist a rigid vertical hierarchy, it is necessary to intensify the innovation process, eliminate the "walls" separating departments, decentralize the decision-making process, create teams, special groups. As the main "medicine" many companies have chosen reengineering. The consequences of his "acceptance" include a reduction in the size of the company (planned reduction of positions, functions, hierarchical levels or business units).

At this stage, the firm's business is going from bad to worse. Therefore, the main management problem is the problem of the survival of the firm. At the enterprise, such managerial diseases as rejection of the new, cumbersome management structures, and the triumph of bureaucracy are observed. The crisis of psychological saturation of its indispensability, unsinkability in a whole group of managers is clearly manifested in the company.

The sixth stage - The revival of the company or bankruptcy. This stage is characterized by the arrival of a new team at the initiative of the businessman and the internal restructuring of the company.

At every stage of the life cycle, an organization strives to succeed. But in order to decide whether success has been achieved or what is needed to achieve success, we must define what success is. If you ask what organizations can be considered successful, most people will start listing the names of well-known giant enterprises. But size and profitability may not always be considered criteria for success. Organizations exist to achieve specific goals. And if achieving huge size is not one of its goals, then a small business can, in its own way, be considered as successful as a large organization.

Some organizations plan to dissolve themselves after they have achieved a number of predetermined goals. But, although it is not often recorded in writing, survival, ability to exist as long as possible is the first priority of most organizations. This can go on indefinitely because organizations have the potential to exist indefinitely. The record is currently held by the Roman Catholic Church, which has been in continuous operation for nearly 2,000 years. History records the existence of some government organizations over the centuries. Some organizations in business also live for long years. However, in order to stay strong and survive, most organizations have to periodically change their goals, choosing them according to the changing needs of the outside world. The English monarchy, for example, survived as an institution because it eventually accepted a significant reduction in its power and influence in response to social pressures for democratization. Almost all organizations that exist for the sake of business periodically develop new types of products or services for their customers.

To be successful over time, to survive and achieve its goals, an organization must be efficient, so productive. According to popular researcher Peter Drucker, performance is the result of “doing the right things.” And efficiency is a consequence of the fact that "these things are created correctly" (doingthingsright). Both the first and the second are equally important.

We can cite the example of companies that have achieved significant success because they did the “right thing” by choosing a goal that corresponded to some important need that exists in the world. In the case of Federal Express, it was fast and reliable delivery of parcels. Apple provided an inexpensive, user-friendly computer. "McDonald's" organized the production of "fast food". In addition, these organizations did "their things right." Federal Express management has determined how to deliver parcels efficiently. McDonald's has defined how to make hamburgers to ensure low cost and consistent high quality.

On the basis of ongoing research and generalization of the accumulated experience, the stages of the life cycle of an organization can be presented in the following form (Table 2.2.1).

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The relevance of this topic lies in the fact that in the face of constantly changing customer demands, technologies and a competitive environment, the survival of an enterprise depends on how successfully it develops and introduces new products to the market. However, even after a new product is on the market, it cannot be left to itself. You need to be able to apply the right marketing strategies to it as it goes through the stages of its life cycle.

The essence of the life cycle theory is of particular strategic importance, which lies in the fact that each unique stage has its own strategies, specific goals, its own marketing mix, and this theory is well described in the already academic literature.

The fact that the life cycle of each product consists of various stages gives rise to two problems. First, since the sale of any product sooner or later experiences a decline, obsolete products must be replaced with new ones. . Secondly, the enterprise must understand how its products become obsolete and be able to adapt their actions to different stages of their life cycle. .

Thanks to the product life cycle, we can tell what phase of development our product is in. This very convenient scheme helps manufacturers to see what needs to be done with the product on the market and how long it still has to exist. Today, all firms and companies that manufacture products have their own life cycle scheme for each product. This is the reason for the choice of the topic of the course work.

Life cycle analysis is a widely used tool to justify strategic choices aimed at the regular emergence of new products and the development of promising types of business. Therefore, it was this method that was used in this course work, since elegance and simplicity make this method one of the tools actively used in strategic management, marketing, financial management, the art of pricing, economic analysis, and apparatus substantiation of the viability of innovative projects. Also in this work, to study consumers, such research methods were carried out as: analytical, economic and statistical, the method of expert assessments, tests and surveys.

The purpose of the course work is to develop proposals for product policy based on the analysis of the life cycle of goods for the company OOO "Portnyazhka". In connection with the goal, it is necessary to solve the following tasks:

1. consider the essence of the concept of the product life cycle;

2. consider methods for assessing the life cycle of a product;

3. consider marketing strategies based on the life cycle of products;

4. study a brief organizational and legal description of Portnyazhka LLC;

5. to analyze the stages of the life cycle of the goods of LLC "Portnyazhka";

6. to propose product strategies for the LLC "Portnyazhka" enterprise, based on the analysis of the product life cycle.

The object of study of this course work is the company LLC "Portnyazhka", the subject of study - the life cycle of the product.

To study this topic, the information base was the work of leading scientists on the topic of research, the results of marketing research.

The volumes and duration of production of a particular product change cyclically over time. This phenomenon is called the product life cycle.

Product life cycle(Eng. Life cycle product) - this is the time the product exists on the market, the period of time from the concept of the product to its removal from production and sale.

The concept of the product life cycle describes the product's sales, profit, competitors and marketing strategy from the moment a product enters the market until it is withdrawn from the market. It was first published by Theodore Levitt in 1965. The concept proceeds from the fact that any product is sooner or later forced out of the market by another, more perfect or cheaper product. There is no permanent product!

The concept of product life cycle applies to both product classes (TVs) and subclasses (color TVs) and even to a particular model or brand (Samsung color TVs). denying the existence of a life cycle for classes and subclasses of goods.) A specific product model follows the traditional product life cycle more clearly.

The life cycle of a product can be represented as a certain sequence of stages of its existence on the market, which has certain limits. The dynamics of the life of a product shows the volume of sales at each specific time of the existence of demand for it.

The life cycles of goods are very diverse, but it is almost always possible to distinguish the main phases. In the classical product life cycle, five stages or phases can be distinguished:

1. Introduction or market entry. This is the phase in which a new product enters the market. Sometimes in the form of test sales. It starts from the moment the product is distributed and it goes on sale. At this stage, the product is still new. The technology is not well developed yet. Manufacturer undecided production process. There are no product modifications. Prices for goods are usually slightly increased. The volume of sales is very small and increases slowly. Distribution networks are cautious in relation to the product. The growth rate of sales is also low, trade is often unprofitable, and competition is limited. Only substitute products can compete in this phase. The goal of all marketing activities is to create a market for a new product. The firm incurs large costs, since production costs are high in this phase, and sales promotion costs usually reach the highest level. Consumers here are innovators who are willing to take risks in trying out new products. There is a very high degree of uncertainty in this phase. Moreover: the more revolutionary the innovation, the higher the uncertainty.

2.growth phase. If the product is required in the market, then sales will begin to grow significantly. At this stage, the recognition of the goods by buyers usually occurs and rapid increase demand for it. Market coverage is increasing. New product information is passed on to new customers. The number of product modifications is increasing. Competing firms pay attention to this product and offer their own similar ones. Profits are quite high as the market acquires a significant number of products and competition is very limited. Through intensive sales promotion activities, the market capacity is greatly increased. Prices are slightly reduced as the manufacturer produces a large volume of products with proven technology. Marketing expenses are allocated to the increased volume of production. Consumers at this stage are people who recognize novelty. The number of repeated and repeated purchases is growing.

3. Maturity phase. It is characterized by the fact that the majority of buyers have already purchased the product. Sales growth is falling. The product goes into the category of traditional. There are a large number of modifications and new brands. The quality of the goods and the smoothness of production are increasing. The service is being improved. Achieve maximum sales volume. The company's profit is decreasing. Profit grows slowly. There are stocks of goods in the warehouse, competition intensifies. Price competition. Sales at reduced prices. Weak competitors leave the market. Sales promotion activities achieve maximum efficiency. The consumers here are slowly recognizing people and conservatives. This stage is the longest in time.

4. saturation phase. Sales growth stops. The price is greatly reduced. But, despite the price reduction and the use of other measures to influence buyers, sales growth stops. The market coverage is very high. Companies seek to increase their sector in the market. The sales network is also no longer growing. The technology is one. At this stage, there is a high probability of repeated technological improvement of the product and technology. Often this stage is combined with the stage of maturity for the reason that there is no clear distinction between them.

5. Recession. A recession is a period of sharp decline in sales and profits. Sales may drop to zero or remain at a very low level. The main reason: the emergence of a new, better product or a change in consumer preferences. Many firms are leaving the market. Sales promotion allocations are reduced or completely eliminated. Consumers lose interest in the product, and their number is reduced. The bulk of consumers are conservatives with low solvency. At this stage, it is advisable to remove the product from production in order to avoid large financial losses.

The transition from stage to stage occurs without sharp jumps. The duration of the cycle and its individual phases depends on the product itself and the specific market. The life cycle is also affected external factors such as the overall economy, inflation rate, consumer lifestyle, etc.