Case analysis of product life cycle theory

Case analysis of product life cycle theory

Case 1: Logistics Demand and Countermeasures Based on Product Life Cycle Theory [1]

First, the strategic objectives of different product life cycle stages.

In the whole life cycle of a product from entering the market to its final decline and exit, enterprises or entrepreneurs will set different strategic goals for their products at each stage. In the introduction period, the main purpose is to attract customers, in the growth period, to occupy the market, in the maturity period, to build corporate brands, and in the recession period, the strategic purpose is to develop new products. In terms of sales, under the guidance of this goal, enterprises should rationally arrange manpower and financial resources to form an effective marketing strategy to create profits. We know that in the marketing mode with HI as the core, the change of channels restricts the choice of logistics demand mode of enterprises, so the change of marketing mode will change the logistics demand of enterprises. In addition, from the supply point of view, the strategic objectives of different product life cycle stages also have a great impact on supplier selection, enterprise procurement decision-making, inventory management and so on. That is to say, from the perspective of the whole product supply chain, different strategic objectives of different product life cycles need different supply chain strategies to match them, and enterprises should choose their own logistics operation mode from this perspective with a dynamic eye.

Second, the logistics needs and countermeasures of products in different life cycle stages

1. Introduction period

In the introduction stage of products, new products are put into the market. At this point, the customer does not understand the product. Except for a few customers who pursue novelty, almost no one really buys products. The marginal profit of products is high, but the potential demand is uncertain. At this time, the strategic goal of the enterprise is mainly focused on the stage of "attracting customers". Enterprises spend a lot of time and energy on terminal promotion, and the advertising investment is very large. In terms of logistics demand, because the initial goal of launching new products is to gain a firm foothold in the market, it is very important to satisfy customers that they can get inventory at any time. Moreover, the customer's purchase reflects small batch, high frequency and timely delivery. Once there is a shortage, it may offset the achievements of marketing strategy. Therefore, at this stage, the choice of logistics mode needs a high degree of product availability and flexibility. When making the logistics support plan for new products, it must be considered that manufacturers should have the ability to provide product replenishment quickly and accurately.

In addition, because it is a market development stage, it is difficult to accurately predict the actual market demand, so it is fatal for enterprises to keep a large amount of inventory and inventory for customers' small batch and unstable procurement. Therefore, in the stage of new product introduction, how to balance and fully meet customer needs and avoid high-cost logistics support is an urgent problem for managers.

When it first enters the market, retailers may only agree to stock new products under the condition of providing sales subsidies. The frequency of ordering is unstable, and the shortage of goods will greatly offset the promotion efforts, and the proportion of products that are not recognized by the market is high. At this time, when designing the supply chain, raw materials and spare parts should be purchased in small batches to minimize the company's own inventory, but at the same time, it is necessary to keep information with suppliers and deliver goods quickly and in time. For enterprise production logistics, it is also necessary to reduce the inventory of finished products and even be able to produce flexibly according to orders. In terms of sales logistics, it is necessary to improve the distribution channels and simplify the traditional channel model of "manufacturer-distributor-retailer", because the more intermediate links, the longer the delivery cycle, or even the worse the delivery, and it is difficult to form scale effect in small-batch commodity distribution. The more intermediate links, the greater the logistics cost.

2. Growth period

In the growth stage of the product life cycle, the product has gained a certain degree of market recognition and the demand forecast is more accurate. The strategic task of enterprises at this stage is to seize the market and expand market share. Of course, during this period, it is also necessary to start to recover the initial costs and expenses invested by enterprises during the introduction period. The focus of logistics activities has changed from providing needed services at any cost to more balanced services and cost-effectiveness. At this point, the key of the enterprise is to achieve balanced sales as much as possible, and then expand the market coverage.

In the growth stage, the challenge faced by marketing is to sell at the speed of demand growth. In order to meet the matching of supply chain management strategy and competitive strategy, enterprises in this growth cycle began to change the original flexible supply chain design and turn to profitable supply chain, pursuing scale effect to the greatest extent and reducing costs. At this stage, enterprises have the greatest opportunity to design logistics operations to obtain profits, and logistics activities have really become the "third profit source" of enterprises.

At this stage, the countermeasures of logistics demand are as follows:

(1) Purchase raw materials and deliver them in large quantities. Because the biggest goal in the growth stage is to maximize market share and expand product visibility. Therefore, in order to meet the needs of customers and save the corresponding costs, we can purchase and deliver goods in large quantities, which will produce scale effect, create greater sales growth points, and also put pressure on new competitors and consolidate the market position of enterprises themselves.

(2) Establish an extensive and intensive distribution logistics system. In the growth stage, in order to expand market share and consolidate market position, enterprises will establish an extensive and dense product distribution network, and the construction of this network cannot be separated from the support of a strong logistics network. At this stage, logistics decision-making lies in choosing the right distributor to stabilize its sales network, establishing a supply chain partnership with distributors, and allowing distributors to feedback customer demand information in time to improve the existing problems of products.

(3) Change the design of supply chain, and let logistics create "profit". The large purchase and delivery brought about by the increase in sales make full use of the logistics system of enterprises, and the labor productivity and equipment utilization rate of logistics functions such as transportation, distribution processing and loading and unloading have also been greatly improved. The supply chain of an enterprise has become a real "value chain" by changing the design of the supply chain and reasonably arranging the logistics operation.

Step 3: mature

After the growth period, with the increase of the number of people buying products, the market demand tends to be saturated, the products enter a mature stage, the marginal profit of products decreases, and the uncertainty of potential demand becomes smaller. In this period, the strategic goal of enterprises is to establish brands and extend the product life cycle with product brands. The saturated mature stage is characterized by fierce competition, because the success of a product often leads to various alternative competitions. In response, adjusting prices and services has become a standard strategic measure for enterprises. Faced with fierce competition and low marginal revenue, enterprises must improve customer loyalty and provide more value-added services if they want to build their own brands, a large part of which is completed by the logistics department. Improving logistics service level has become the core of logistics demand in this period. Generally speaking, there are two kinds of logistics decisions for enterprises at this stage: (1) establishing a large distribution center, covering all sales networks, and improving modern value-added logistics services. Because the demand is stable at this stage, the demand of each sales outlet and the delivery volume of the distribution center can be controlled, and how much is needed and how much is out of stock can also get timely feedback. Because enterprises have established broad sales channels in the growth period, the distribution route scheme at this stage is quite clear, and enterprises need to focus on the location of distribution centers and the choice of distribution methods. Under normal circumstances, in the mature and saturated period of products, because customers are more sensitive to the price of products, enterprises will expand sales by reducing prices in marketing, which greatly reduces the marginal income of products, so the cost of making direct terminal distribution plans is too high. Therefore, except for large-scale core customers, the distribution destinations of enterprises generally stop at the warehouses of wholesalers and retailers, so that customers can pick up the goods themselves. The location of the distribution center depends on the demand of each outlet.

(2) Logistics outsourcing, using third-party logistics companies to reduce logistics costs and improve value-added services. For the first countermeasure, the establishment of large-scale automatic distribution center requires enterprises to put forward higher requirements in logistics information system, loading and unloading, vehicle transportation and so on, which requires a lot of capital investment, which is difficult for small and medium-sized enterprises to achieve. In addition, because the goal of enterprises at this stage is to build brands, that is, to build the core competitiveness of enterprises, the promotion of logistics services is to enhance the competitiveness of enterprises, not to become the core competitiveness of enterprises. In this way, enterprises should prioritize the logistics needs at this stage and hand them over to third-party logistics companies to complete. This can not only reduce the logistics cost, but also enjoy the specialized services provided by specialized logistics companies.

Step 4 step back

With the development of science and technology, the appearance of new products and substitutes, and the change of consumption habits, the sales volume and profit of products are declining, and products are in a recession. The demand and sales of products have dropped rapidly, and at the same time, substitutes and new products have appeared on the market, which has changed the consumption habits of customers. At this time, enterprises with higher costs will stop production one after another because they are unprofitable, and the life cycle of such products will end one after another and eventually withdraw from the market completely. When a product is about to die out, the management department of an enterprise is faced with a balanced choice between giving up selling the product or continuing to distribute it. Therefore, on the one hand, the logistics activities of enterprises must be positioned to continue to maintain the corresponding distribution business; On the other hand, if the product is rejected, it will not take too much risk. At this time, as an enterprise's goal, how to minimize risks is more important than minimizing the cost of logistics activities.

The strategic goal of enterprises at this stage is to develop new products. For $%&; Invest more, and the logistics investment in the original products will be reduced to zero. Enterprises no longer need to purchase a large number of raw materials and spare parts, or even only need to deal with the backlog of inventory. Even if there is occasional customer demand to buy, it is completely unnecessary to maintain a high safety stock for logistics demand with low demand and short response time in recession, and it is most suitable for making to order. Therefore, the appropriate logistics demand countermeasure is to store the products in the manufacturer and deliver them to customers through direct delivery or in-transit merger.

To sum up, although the product life cycle is mostly used to describe the marketing strategy of an enterprise, for the basic logistics strategy, it shows the scope that can be adjusted at any time according to the service demand. For logistics activities, like other elements of marketing mix, it is necessary to make appropriate adjustments in strategy according to market competition. The service level and nature supported by logistics activities will change with the life cycle. Generally speaking, new products need high-level logistics activities and flexibility in the introduction stage to adapt to the rapid changes in the logistics volume plan; In the growth period and saturated maturity period of life cycle, the focus will shift to the rationalization of service and cost; In the recession stage, manufacturers need to position logistics activities to minimize risks.

Case 2: Research on the development of music culture industry based on product life cycle theory [2]

The free download and infringing download of digital music have affected the sustainable development of the music industry, which has aroused great concern. Some studies believe that this phenomenon will seriously hit the enthusiasm of producers and creators, thus affecting the sustainable production of high-quality music products. People in the industry engaged in traditional record production are even more worried, and some even feel helpless in the face of major technological changes in the industry.

1. Music product types based on product life cycle theory

The forms of music products are records, songs, music, actors, performances and so on. But judging from people's appreciation and consumption habits, to some extent, it can be said that singers are the most important form of music products. Music products mainly refer to actors, and songs, records and performances are also discussed in specific issues. Some researchers believe that the trend of music products or modes of production can be divided into three types: original trend, network trend and draft trend. Based on the existing research results, four types of music products are put forward according to the production characteristics: enterprise brokerage, network pop, draft trend and public cultural undertakings.

Enterprise brokerage refers to the actors trained and promoted by brokerage companies or record companies through certain market investment; Internet popularity means that artists download and listen to music online for free, and then promote the singer's popularity through song circulation; The trend of talent show refers to the singer who quickly became popular in TV talent show. There is also a very important type of music life in China, which is the trend of mass cultural undertakings, that is, actors trained by public institutions to serve the mass cultural undertakings.

Product life cycle is the process of product life cycle from entering the market to exiting the market. Entering and exiting the market marks the beginning and end of the cycle. The product life cycle can be divided into four stages: leading period, growth period, maturity period and decline period. The lead-in period refers to the trial sale period when new products just enter the market, which is a period of slow sales growth; The growth period is a period when products are quickly accepted by the market and profits are greatly improved; Maturity is a period when products have been accepted by most potential buyers and sales slow down. The increasingly fierce competition leads to stable or even declining profits. Recession refers to the period when sales are declining and profits are decreasing (see the figure below). Strictly speaking, the development period before the product is put into the market is also an important stage that producers must consider. For cultural and creative products, the planning of development stage is particularly important for the success of the products.

Image: product life cycle diagram.

The concept of product life cycle was originally used to analyze mass-produced industrial products, which is not suitable for analyzing artistic creation. However, under the circumstances that the industrial production characteristics of music are becoming more and more obvious and the market operation is becoming more and more important, the application of this concept has certain enlightening significance for the investment, production and marketing strategies of music products.

For the singer, a special music product, the development period is a process of positioning the singer's style content, creating works, making music and designing image packaging. The lead-in period refers to the singer's media appearance, network hit list, small-scale performance and single trial release; Growth refers to the process of accelerating media publicity, market distribution, record distribution and sales, and holding concerts; Maturity is the main period when record distribution, sales and concerts produce market value; During the economic recession, singers may gradually fade out of the market, or bring forth new ideas, or even completely transform to attract listeners and audiences. Different types of music products will have different characteristics at different stages of the life cycle, which are analyzed one by one below.

Second, the artistic characteristics and production characteristics of all kinds of music products

(A) the type of enterprise brokerage

In the production mode of music market dominated by record companies, singers usually cooperate with brokerage companies or record companies, and these powerful enterprises plan, package and promote them, thus winning certain influence and market share in the market. This kind of singers generally have good musical quality, or unique musical talent and characteristics, and their music works generally have high professional artistic level, which has the potential of market promotion, sustainable development and management.

Under the background of active and prosperous music market, fierce competition and cross-competition of cultural and entertainment products, it is important for singers and songs to win market recognition as music products, but in the introduction and growth period of products, continuous market investment and multi-channel and multi-form continuous publicity are very important, and it is far from enough for singers to complete the leap from good works to good products by their own strength. Excellent orchestration, recording, mastering, exquisite printing and packaging, meticulous media publicity and planning, and mature record distribution channels all require the strong investment of brokerage companies. Holding a large-scale concert involves a series of work, such as performance approval and declaration, venue leasing, security, beauty design and construction, ticket promotion and sales, band rehearsal performance, performance site reception and scheduling. This requires huge manpower, material resources and financial resources. Without the support of the agency, many singers can't afford to participate in large-scale competitions. Therefore, only singers represented by enterprises can enter the mature stage of the art market and obtain considerable market performance in the introduction period and growth period with large investment and small return.

In order to stand out in the market competition, brokerage companies generally have to make careful plans, including market analysis, artist positioning, modeling design and so on. This kind of unrewarded development stage work has laid a good foundation for the success of the product and provided a good mechanism for improving the artistic level. Although brokerage companies also have a certain tendency to cater to the market demand, excellent music producers and excellent music production companies will have their own artistic pursuits and styles, which can promote artistic creation in leading the market fashion.

The aesthetic taste of the audience will change with the times. When a singer's style no longer meets the market demand, successful transformation planning will turn the decline stage of the product life cycle into a transformation stage, thus prolonging the artist's artistic life.

Popularity of the internet

The biggest feature of online songs is that they are easy to understand and suitable for the entertainment tastes of netizens. The digital communication mode of free audition and download makes online songs, especially ordinary singers who have not yet become famous, earn little. Download rate and click rate are the main purposes of this kind of songs. Of course, "popular culture" is not the same as "vulgar culture", but compared with the music carefully planned and carefully crafted by professional companies, the songs created to cater to most people are generally of low artistic value, especially the technical indicators such as orchestration and recording that need financial support.

Most of these music products are difficult to develop further during the introduction period, and it is difficult for individuals to have sustained investment without income. As a self-devoted singer, it is often difficult to continue to develop in the music industry. The network is more of a platform for artists and amateurs to show their interest in music, and it also provides more choices for minority music listeners. Only a few online songs and singers can gain a certain scale influence and enter the professional cooperation platform for development.

(c) Draft trend patterns

In 2005, TV music talent show unexpectedly became popular, which provided new types for the music industry and new opportunities for singers. Poor originality and uneven professional standards are the main characteristics of this kind of music products. Generally speaking, music is only part of the success of singers who participate in the draft, and artistry is only part of the draft music. Non-musical elements such as the singer's personality, the interaction between the judges and the audience and even the cooperation with the media are all important.

Only a few of these singers can enter the growth period and maturity period, and even when they enter the maturity period, they will soon enter the recession period. The talent show mobilized a large number of professionals, especially non-professional enthusiasts. Entertainment activities and media activities are not so much music activities, which have little effect on improving the level of music, but they are a force for the development of the music industry and constitute the link between music products and other media communication to the market.

Public cultural undertakings

Music products of public cultural undertakings occupy a very important position in China's music life. Since the founding of New China, professional music groups and colleges have been the main producers of Chinese music culture. Actors trained by public institutions mainly serve public cultural undertakings, and music, like other cultural products, undertakes the function of national ideological propaganda. In this system, products that spread national culture and embody music professional culture are produced at the same time. When the national will, national spirit and artists' understanding are organically integrated, the system will train a large number of outstanding artists and create a large number of outstanding works of art.

Generally speaking, the production cycle of such actors and music is relatively long.

Judging from the introduction period, it often takes a long time for a country to train an excellent actor. As a special talent, he often entered a professional group or college in his youth, and gradually grew up in the systematic and strict training and performance opportunities given by the state until he matured. Because of abundant institutional resources and large market demand, the music products produced are not only large in quantity, but also high in quality.

Since ancient times, music has assumed certain functions of public cultural undertakings. "Music" is an important part of "ceremony", which has the function of educating people and cultivating folk customs, and is the embodiment of the cultural function of ancient music. Whether in Europe with a long tradition of public cultural system or in North America with a developed commercial system, modern music is also an important part of public culture.

The government not only invests in elegant arts or national cultural institutions, but also invests in building rehearsal venues for local young musicians to create public value. These public spaces are free rehearsal places for young musicians to interact and exchange ideas. Some universities and communities in the United States also have artist centers, which are open to artists at a very low cost and provide places for artists to communicate and create.

On the surface, the prevalence of digital music and online music provides unlimited opportunities for all music creators and music producers. However, with the increasingly fierce competition in the music market, there are more and more related cultural and entertainment substitute products, and most music products will not be able to get out of the introduction period of the product life cycle and enter the growth period and maturity period. Enterprise brokerage is the music development mode when the market economy is relatively mature, and so is the digital music era. Shortening the lead-in period of products, accelerating the pace of development in the growth period and extending the market operation in the mature period are the best strategies for securities companies. The charm of music lies in the vividness of live performances to a great extent, and a large part of the market revenue potential lies in this, especially in the background that the record market is impacted by free digital downloading.

Enterprise brokerage music products and public cultural undertakings have strong sustainable development ability. Under the background that the national cultural industry planning has been promulgated and the support will be further strengthened, music producers who are good at market planning and operation will bring more artistic enjoyment to the audience and greater opportunities for industrial development for themselves.

From the perspective of national industrial policy, we should strengthen market construction, reduce the restrictions on the access policy of private music enterprises, increase reasonable international music exchanges, increase the basic support for artists under various systems, and support more music products to enter the market introduction period from the development period.

In the introduction period, immature products with weak market risk tolerance need the support of the state in rehearsal, exchange, performance venues, support funds, etc., so as to reduce various restrictions on the distribution of artistic works and promote more singers to enter the growth period as soon as possible.

In the growth period and maturity period, products and their related enterprises enter the stage of market return, so the state should strengthen the crackdown on music piracy and safeguard the legitimate interests of music producers. Only when the interests are guaranteed can they be promoted to produce more and better music products and enter the track of virtuous circle development. In addition, strengthening music quality education, improving the artistic quality of the whole people, and cultivating music art consumption groups are also important links and effective ways for the country to promote the development of music culture and creative industries. After all, the development of industry is not a completely natural evolution process, so it is particularly important for the state to vigorously promote the guiding role of policies during the industrial transformation period.