Product Lifecycle of a Personal

Product Lifecycle of a Personal Computer

Product Lifecycle Influences on the Marketing Mix of Personal Computers

The requirements of each phase of a product lifecycle for a personal computer from a marketing mix perspective vary significantly, and are analyzed and explained in this paper. The phases of product life cycle include the product introduction, early growth, late growth, maturity and decline or harvesting. While there are many definitions of the product life cycle concept, the five phases defined here are commonly considered the most prevalent and applicable across industries. The PC industry is known for rapid product lifecycles due to speed of technological innovation of microprocessors (Deltas, Zacharias 2006). The influence of key components on increasing the velocity of product lifecycles has also been thoroughly evaluated, showing the speed of underlying technologies having a direct impact on the brevity of PC product lifecycles (Bayus 1998). The implications on how the components of the marketing mix need to be balanced and aligned with the specific needs of each stage of the product lifecycle create a formidable challenge for every PC manufacturer. Hewlett-Packard has created a methodology to assist their product management teams in aligning marketing mix strategies to each stage of the HP PC product life cycles (Burruss, Kuettner 2002). This paper will describe how PC manufacturers align the components of their marketing mix to the specific stages or phases of the product life cycle.

Marketing Mix Implications by Phase of the Product Lifecycle

Creating awareness for a new product, attracting entirely new prospects and customers, often defining entirely new distribution channels, all predicated on either an entirely new product or product line extensions to further an existing products' life, the Introduction phase of the product lifecycle is often the most expensive for companies to complete. Product introductions or product launches require synchronization across product, price, promotion, and distribution strategies, all executed to a specific launch date or as it is called in some PC companies, first customer ship (FCS). Leading up to the Introduction Phase of the product life cycle there are often entire series of cross-functional meetings that coordinate engineering, supply chain, services, production, quality management, sales and marketing efforts to ensure that the launch strategies are as effective as possible in attaining the Introduction phase objectives. In Toshiba's Computer Products Division the cross-functional teams include development groups in Japan and a large Marketing organization in Irvine, CA. Looking to optimize the marketing mix for major product introductions, Toshiba consistently relied on product-related messaging over and above any other. Sony on the other hand, created a marketing mix-based strategy during the introductions of their laptops that concentrated on transitioning from product-oriented to services and operations concentration with relative fluidity throughout the duration of the product life cycle (Rao, Perkins 2004). The key take-away from evaluating how PC manufacturers manage their marketing mixes during the Introduction phase is the concentration on synchronization across departments and functional areas to ensure a coordinated product launch. Depending on the broader or longer-term strategic objectives that a given PC manufacturer may have, a given product introduction may focus more on distribution strategy over innovative product messaging. Overall however the Introduction phase of the product lifecycle concentrates on all four areas of the marketing mix with equal intensity to ensure an effective product introduction.

The early growth phase of the product lifecycle for PC manufacturers is where distribution channels are grown quickly based on the technological differentiation of the systems being offered, in addition to experimentation with bundling to drive sales volume. In addition, this phase of the product lifecycle is also where allocation of very popular PCs and laptops are used as incentives to top distributors in exchange for gaining shelf space and access to their dealers and distributors. For many PC manufacturers this growth stage can last anywhere from three to nine months depending on the depth of innovative differentiation in the company's systems and laptops. In the case of HP, Dell, Sony and other PC manufacturers with a global distribution strategy often use this phase of their product lifecycles to capitalize on the uniqueness and highly differentiated value of their systems to gain channel dominance (Gabrielsson, Kirpalani, and Luostarinen 2002).

The late growth phase of the product lifecycle for PC manufacturers is marked by intensified competition on price/performance with several competitors competing head to head, using bundling lessons learned from earlier in a product's life to sustain pricing, while at the same time looking for partnerships and alliances with software companies to deliver greater differentiation for less cost. For second-tier PC manufacturers this is the phase of the product lifecycle where pricing becomes the competitive weapon of choice, and in many cases, the other aspects of the marketing mix are ignored. Pricing as the only differentiator used during this phase often impacts the largest, most capital-intensive vendors the greatest. Prior to their acquisition by HP, Compaq was well-known for having one of the highest cost structures in the industry, which inevitably lead Compaq to offer price protection on inventories that are obsoleted due to lack of sales through distribution channels (Lee, Padmanabhan, Taylor, and Whang 2000).

The next phase of the product lifecycle is typically called the maturity phase. For products that have been successfully launched and nurtured through their lifecycles, this is the phase where sales are at their peak, the cost per customer is low, and as costs of the products' development have been covered in previous phases, profitability is high. As a result, the marketing mix concentrates on maximizing profits while looking to diversify product lines through either product line extensions or the introduction of entirely next generation products. This is also the phase where pricing becomes the most dominantly used competitive differentiator as by this point many other PC manufacturers have been able to either develop or acquire feature-based technologies and functionality. Price wars are common during this phase of a PCs' product life cycle, and advertising often shifts from purely concentrating on the product's benefits to focusing more on the entire brands' value and its trustworthiness and service reputation. An example of this is Dell's reliance on brand messaging in their enterprise-oriented and large-business oriented laptop and PC systems marketing strategies.