Product Life Cycle Theory - Assignment Example

 Table of Contents Introduction………………………………………………………………………………………..3 Applicability in the International Watch Market………………………………………………….4 Product Life Cycle of Swiss Watch Industry……………………………………………………...6 Phase of Development…………………………………………………………………….6 Phase of Introduction……………………………………………………………………...6 Phase of Growth…………………………………………………………………………...7 Phase of Maturity………………………………………………………………………….7 Phase of Decline…………………………………………………………………………..7 The Rebirth………………………………………………………………………………………..8 Conclusion…………………………………………………………………………………….......9 Reference………………………………………………………………………………………...10 Introduction The product from its introduction in the respective market comes across different experiences and challenges. If the product then becomes successful to overcome these challenges and gains a promising outlook, the product starts incurring a growth in its market value and share. Steadily the product achieves its optimum phase of growth from where the product begins to fall or decline and finally result in losses of market share. At this stage it becomes essential to redesign the product and take relative measures to enhance its sustainability in future market. Based on this belief, economists related the fact of ‘Product Life Cycle’ with that of a ‘Human Life Cycle’. Notably, in the history of marketing there are numerous products which disappeared from the market because it could not face the challenge in its life cycle. As such, life cycle of a product can be differentiated into various phases, such as, the Introduction phase, Growth phase, Maturity phase, and Decline phase. Another phase was introduced later, called the Development phase. Relatively, with watch industry the matter happens to be slightly different. From the early birth stage of watches, it has been termed to be the only product reflecting dignity, pride and luxury in the world market. Not every person had the right to hang a watch in his wrist or chain. But slowly it gained its mixed reputation to be a necessity and luxury as well. This makes the context even more complicated because if the watch is termed to be a luxury product, then the industry is strongly influenced by the product life cycle. But certainly if it is termed as a necessity, as done by most of the low-income group, the industry is likely to be somewhat unaffected by the theory. To this context, the most appropriate example shall be the Swiss Watch Industry which is rooted in the 1600s, facing all the phases of the product life cycle theory and making watch a necessary item for all groups of customers irrespective of their viewpoint. (NetMBA, “The Product Life Cycle”). Applicability in the International Watch Market From the dawn of its invention, watches have been reflecting the status, personality, and lifestyle of a person. Over time, watches have gone through transformation and have gained privilege as more of a luxury product than an item of need. Even in the 21st century, a watch is used to highlight the class and pride of the user. Therefore, similar to any other fashion product, watches also include itself in the Product Life Cycle model in the international market. With the relative growth and opportunities present in the watch making industry, many large entrepreneurs entered the market making it more competitive to survive for any other marketer. As such, each and every marketer has strategies to differentiate their products in the market. A number of the companies are marketing it as a luxury item, while a few are marketing it as fashionable accessory; some even market it as a gift item to be presented in any occasions. Consequently, watch marketers are set to seize any opportunity the market offers and cater the product accordingly. The Swiss Watch Industry, from the stage of its commencement faced a number of challenges. At times it faced exponential growth and at other times it had to conquer the hardships of the global market. However, people all around the globe desire for Swiss watches because of the extra manufacturing effort and glamour in the manufactured piece. The journey of Swiss Watch Industry started from 1601, when it was at its developing stage. All watches manufactured then were mechanical but simultaneously the reliability and accuracy were a matter of pride for the industry which is continued till date. The next stage started from 1686 when the number of watch makers increased rapidly in the parts of Geneva and France. This phase of boom or growth continued till 1839 when the first factory was set up. In the year 1842 many new watch manufacturers came into existence leading the industry to the period of maturity. In 1945, Swiss watch industry accounted for 80% of the global industry with its hands on the US market as well. Steadily it realized the starting of decline from the 1950’s with the entry of US watch maker and Japanese watch makers, eventually leading to a fall during the mid of 1970’s caused by the change in technologies. In 1980, the Swiss manufacturers experienced a near death phenomenon but by focusing on the restructure it twisted from the stage of death to rebirth. People all around the globe once again started feeling the prestige that Swiss watches molded in them. Despite such effort certain brands like Quartz LED failed to run well in the market when it was launched by Hattori Seiko in 1970. On the contrary, another brand Quartz LCD designed by the same person achieved its success and became a leading name in the world market in terms of technology for a couple of years. The scenario related to these two brands reflects the fact that although the industry had proved to be one of the most triumphant manufacturers in the life cycle, most of its brands failed in the journey. However, if the life cycle of Swiss watch industry from 1600’s to 1980’s is considered then the entire model seems to match the scenario. Graphically, Life Cycle of Swiss Watch Industry Product Life Cycle of Swiss Watch Industry Phase of Development The innovation of watches happened to take place in Swiss market, during 1541, when John Calvin introduced new reforms for jewelry makers and forced them to turn up to a new market. Until the end of the century in 1601 watches from Geneva marked their presence with a reputation they earned by serving high quality watches to the royal class. During this phase, the main strategy that they adapted to suit the market was the quality factor. Certainly, the opportunity of that period was that there was almost no competition in the watch market and they earned a monopoly market. But, their forecast to come across a sheer competition was true which they faced brilliantly with their strategy to maintain the quality label in their manufactured watches. Phase of Introduction The introduction phase started by 1686 when the market of Geneva was overflowing with watch manufacturers. This tended towards high competition. At that point of time the early manufacturers and a few of the new manufacturers selected the strategy to change the market from Geneva to the Jura Mountains, an approachable region. During this transformation Daniel Jeanrichard started taking interest in the watch making industry as it was earning fair revenue, and hence introduced the labor section for the first time in watch manufacturing industry. This resulted in an impressive approach indeed. During 1790, the market started exporting more than 60,000 watches every year, and entered the growth period. Phase of Growth From this phase the industry had begun witnessing new changes in the world watch market. In 1842, pendent-winding watches were invented by Adrien Philippe, one of the founders of Patek Phillippe Watch Co. Therefore, the Swiss Watch industry was at a stage of facing a growing competitive market. At this period many new innovations were taking place in the industry and thus, were making the market more complex and competitive. Various special features were added in the watches, such as, chronographs, perpetual calendar. Therefore, the strategy that the watch industry adapted during its phase of Growth was to differentiate its product from the other manufacturers and marketers. Phase of Maturity The industry reached the stage of maturity during the mid 20th century. The productivity, standardization and involvement of new technologies were considered to create a differentiation policy, but of course without neglecting the fact of accuracy and quality. This strategy, led the Swiss watch to its optimum supremacy. At this period it enjoyed the emotional attachment it had with its loyal customers and therefore sustained in the market for a long period. Introduction of new technologies like LED and LCD led about the changes to decline phase. The industry moreover took up the expansion strategy in this stage. It established a Collector’s Club internationally for its worldwide followers as well as launched a journal named the Swatch World and as a result the demand increased to such a height that it overlapped the supply quantity. Even the shopkeepers at that stage avoided storing the presented brands by Swatch Group because of their vast number of models and endless demands. Worth mentioning, that this was a reason which brought the industry to its declining phase. Phase of Decline Since, the later 90s the Swiss Watch Group started declining. This was probably due to the reason that many new innovators were entering the market of USA, Japanese and other countries of UK and also because of the volatile economic situation of Europe at that time. The First World War brought about a great change in the production line and marketing of watches as there was a fall in the numbers of labors and raw materials to keep pace with the growing demand. And accordingly, the number of companies also decreased with a high rate. The Rebirth In its rebirth, i.e. a new introduction to the Swiss Watch manufacturers widely came to be known as Swatch Group Limited. At its phase of decline it faced a critical situation to hold its market share but in order to overcome the scenario the group put up a more interesting and strong strategy in order to regain its reputation, like the research and development strategy. The early history and supremacy for sure played a vital role in this regaining of power in the global watch industry. Today the group acquires more than 19 brands in the world market which are specially known for its accuracy and richness all over the world. Conclusion From the above analysis of Swiss watch industry or that of the Swatch Group Ltd. it can be fairly concluded that watches do follow the Product Life Cycle model. The industry followed a sharp growth at its boom period but gradually started declining until the strategists restructured the product from using new technologies and mechanism without disturbing the reliability and accuracy of the product. This is one of the reasons that at present people are in the same way passionate about Swiss watches as they were during the 90’s. Thus, product life cycle helped Swiss watch industry to understand its position in the world market and maintain its strategy accordingly. Conclusively, it can be said that product life cycle is an appropriate concept to explain the growth and decline of watch manufacturing industry despite the drawbacks it possess. Reference Richard Ivey School of Business. Swatch and the Global Watch Industry lvey Management Services, 1999. Read More