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INDUSTRIAL

MARKETING

PRODUCT LIFE CYCLE


OF A COMPACT DISC

SUBMITTED TO SUBMITTED BY

PROF. MAYANK CHAUBISA TWINKLE GODHWANI

IIPM-SS-09/11

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Product Life Cycle of Compact Disk
Industrial Product Life-Cycles

The product life-


cycle is a series of different stages a product goes through, beginning
from its introduction into the market and ending at its discontinuation
and unavailability. These stages are commonly represented through the
sales and profit history of the product itself, although there can be
many other variables that affect the lifespan of a product line.
Between the initial growth and concluding maturity stages, the profit
curve usually reaches its peak. During the maturity phase of the life-
cycle, sales volumes for an established product tend to remain steady,
or at least do not suffer from major declines, but the rate of profit
drops.

In most cases, the trajectory and behavior of the product life-cycle is


determined by a set of factors over which manufacturers and
marketers have little control, forcing them to react to changing
circumstances in order to keep their product development strategy

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Product Life Cycle of Compact Disk
viable. These external factors include shifting consumer requirements,
industry-wide technological advances, and an evolving state of
competition with a company’s market rivals. The fluctuating patterns of
a life-cycle indicate that a different marketing and product
development approach may be needed for each stage of the cycle.
Understanding life-cycle concepts can aid in long-term planning for a
new product, as well as raising awareness of the competitive landscape
and estimating the impact that changing conditions can have on
profitability.

The Life-Cycle Curve

Industrial products usually follow an S-shaped life-cycle curve when


sales and profits are plotted over time. However, certain products,
such as high-tech goods and commodities, may follow a different life-
cycle pattern. High-tech products often require longer development
times and higher costs, making their growth stages long and their
decline stages short, while commodities, such as steel, tend to have
relatively static demand with sales that do not appreciably decline
from an absence of competition. Sales would drop, though, from an
increase in competing products.

Under most life-cycle conditions, profits typically peak before sales


do, with profits reaching their peak level during the early growth
stages and sales reaching their peak in the maturity stages.
Competition tends to be lower at the beginning of the life-cycle, but as
competing companies start to offer lower prices, newer services, or
more appealing promotions in the maturity phase, the initial product
must be made more attractive. This often results in comparable price
drops or increased spending on advertising and promotions, as well as
greater investment in distribution and modifications to the existing
product. The initiatives improve sales, but drive up costs and lower
profits.

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Product Life Cycle of Compact Disk
The Introductory Stage

After being introduced into the market, a new industrial product will
yield varying degrees of acceptance. Some products may find
acceptance soon after release, while others may take longer to develop
a customer base. One of the reasons for this disparity involves the skill
set required to make full use of a new product. Goods that need
relatively little training and do not obligate users to learn new skills or
refine existing ones typically find market share more rapidly than
complex products. A company that introduces a product requiring a
high degree of learning and expects a relatively low rate of acceptance
can focus on market development strategies to help build consumer
appeal. Conversely, products with a low learning curve and a quick route
toward acceptance may need a marketing strategy designed to offset
rival products, as competition at these levels tends to be higher.

The Growth Stage

When an industrial product enters a period of higher sales and profit


growth, the marketing plan often shifts to focus on improvements to
the design and any added features or benefits that can expand its
market share. Increasing the efficiency of distribution methods can
help improve product availability by reaching more customers, and some
degree of price reductions, particularly for large-scale operations, can
be introduced to make the product more appealing for purchase.
Maintaining the higher price set at the introductory stage increases
the risk of competitors entering the market due to the wider
profitability margin. Similarly, without stronger distribution efforts
the product may have limited availability, which encourages rival
companies to encroach on market share.

The Maturity Stage

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Product Life Cycle of Compact Disk
The maturity stage of a life-cycle is characterized by an increase in
the number of market competitors and a corresponding decline in
profit growth as a percentage of sales. To compensate for the level of
saturation that occurs during this phase, the product development
strategy revolves around entering new markets, often through exports.
It may also be helpful to increase efforts to satisfy existing
customers in order to preserve the customer base. Reducing spending
on marketing and production can help maintain profit margins.

The Decline Stage

In the decline stage, the competition for product pricing tends to


escalate, while profits and sales generally decrease. When working with
industrial products, marketers sometime opt to discontinue a product
when it has reached this level or introduce a replacement product that
renders the previous version obsolete. Marketing and production
budgets are typically scaled back to save on costs, and resources may
be shifted to newer products under development. Product decline
usually proceeds more quickly among industries that rely on rapidly
changing technologies, with newer advances periodically driving existing
goods out of the market.

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Product Life Cycle of Compact Disk
Technology Adoption Lifecycle

>
The impact of this adoption process and the manufacturing economies
of scale are significant determinant of technology product prices.

Here is a grossly over-simplified discussion of how this works: When


the innovators buy a product, they essentially are paying for all of the
R&D costs, and other development expenses. You paid 365 labor units
for a VCR in 1972 because they were a limited production, custom
product that was practically hand made. When a PC cost 465 labor
units, chip fabs were nowhere near as plentiful as today -- and the
biggest cost in early PCs were the exorbitant chipsets contained in
them.

The early adopters pay less than the innovators, as factories get built
to mass produce chips or tape transport mechanisms or cell phone
keypads. What was a nearly custom made product becomes a merely
limited-production, high-end one. Where the innovators paid for the
R&D, the early adopters paid for the fabs and factories to be built.

The early majority doesn't get the use of the product for the first
few years, but they get a big price benefit of manufacturing economies
of scale. Mass production of components bring prices down; successful
products attract competition to the space, and soon more
manufacturers are cranking out more units. Through competition,

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Product Life Cycle of Compact Disk
prices begin dropping faster and faster. The late majority gets even
cheaper prices. Consider the laggards and the VCR today -- they cost
about $29 each.

None of this has any relevancy to problems of wealth distribution and


inequality in America.

To understand the serious issue of relative inequality, you would not


look at technological toys (unless you were idiots). Rather, you would
consider the consumption of necessities -- Shelter, food, medical care,
clothing, education, transportation. Not only that, but you would not
simply review the quantity, but also the quality of the products that
get consumed.

Compare the top and bottom quintiles: Who is consuming fatty, high
carb foods, and who is eating lots of protein, fresh fruits and
vegetables? What about medical care? Do they have reliable access to
any sort of family physician, regular check ups, doctor visits, ongoing
treatments, preventative care -- or is their medical consumption on an
emergency room basis? What is the quality of their housing like --
safe neighborhoods, with access to good schools? Or something less
desirable?

If we are going to use consumption as a measure of economic equality,


then look at the quality of essentials; measuring toys ain't the way to
go . . .

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Product Life Cycle of Compact Disk
PRODUCT LIFE CYCLE OF COMPACT DISK

Introduction
Compact disc technology is one of the fastest growing industries of all time. Compact
discs became popular in the early 80’s due to its ability to offer increased audio performance
over traditional magnetic recording media. In 1983 over 30,000 players and 800,000 discs were
sold. By 1990, this number had grown to a staggering 9.2 million players in the U. S., and close
to 1 billion discs worldwide. In 2004, the annual worldwide sales of CD-Audio, CD-ROM, and
CD-R reached about 30 billion. Today, Sony DADC is the leader in the industry and produces
about 410 CDs per day and ships up to 6.4 million discs daily.
Compact disks are majority used for storing music. The study concentrated on life cycle
of Music CDs from the perspective of manufacturing process needed.

3.1 Product life cycle model description for C D


All products and services have certain life cycles. The life cycle refers to the period from
the product’s first launch into the market until its final withdrawal and it is split up in phases.
During this period significant changes are made in the way that the product is behaving into the
market i.e. its reflection in respect of sales to the company that introduced it into the market.

The unit sales of all the memory devices used to store the music are plotted in graph
shown in Figure 1. From the figure we can identify that a development of new product is threat
for existence of the present products from history it is clear the product growth of castes
vanished Vinyl storage devices. Then cassettes where replaced by compact disks.

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Product Life Cycle of Compact Disk
Product life cycle of C.D

Product life cycle of Cassettes

Product life cycle of Vinyl

Figure 1 U S Music sales in Vinyl, cassettes and CD during 1975-2005 [2]

3.2 Product Life cycle stages in Compact disk

The compact disk product life or any products life contains five major stages. They are
1. Product development
2. Product introduction
3. Product growth
4. Product maturity
5. Product decline

Introduction Phase
The introduction phase of a product includes the product launch with its requirements to
getting it launch in such a way so that it will have maximum impact at the moment of sale.

Growth Phase
The growth phase offers the satisfaction of seeing the product take-off in the marketplace.
This is the appropriate timing to focus on increasing the market share

Maturity Phase
When the market becomes saturated with variations of the basic product, and all
competitors are represented in terms of an alternative product, the maturity phase arrives

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Product Life Cycle of Compact Disk
Decline Phase
The compact disk presently is in Decline stage. In this stage market will see drastically
down words change in the unit sales. This happens due to new product entry, obsolete of
technology and cost factors. In music storable compact disk industry is in decline phase. The
existence of product will be for very less amount of period .The product is phasing rivalry in its
market with the other storage devices.
• DVD
Digital video disk whish has same size as compact disk but can store 5 time more then
compact disks. Product life is more but ir requires a special devices to read like DVD
player which is now stored as standard features in most of the laptops , desktops and
music systems.
• Pen drives
Pen drives are USB accessed small devices which have capacity same from 1 GB
16GB.Very easy to carry. But the disadvantage is cost in the market is 125/GB of
memory which is huge. The device can be written and erased n number of times.
• USB hard disk
Huge capacity device from 120 to 320 GB accessed through computers. Cost is more and
need of USB protocol is must in Music system. Which is introduced in market recently.
• IPods
Music storage devices as well as music players the capacity is choice.
• Internet (Direct download from)
Music can be downloaded directly from the web sites.

Figure 2 Competitions to Compact disks

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Product Life Cycle of Compact Disk
3.3 BCG matrix for different storing devices
The BCG matrix is a chart that had been created by Bruce Henderson for the Boston
Consulting Group in 1970 to help corporations with analyzing their business units or product
lines. This helps the company allocate resources and is used as an analytical tool in brand
marketing, product management, strategic management, and portfolio analysis.[2.3] Attributes of
BCG are
• Relative market share
• Versus market growth rate

Products/Attributes Market share Business growth


Compact disk 10 8
Digital video disk 25 16
Pen drives 30 30
Mobile phones 35 35
Usb Hard disk 8 17
Internet downloading 15 38
Table 1 Market share and product business growth

Data source: From the news articles from websites. (In Indian context)

Figure 3 The BCG matrix music storing devices

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Product Life Cycle of Compact Disk
3.3.1 BCG analysis result
Based on data from Table 1 a BCG matrix is obtained as shown in Figure 3. From the
available result BCG matrix shows different products are in different stages. Products fall in
following categories

Dog Business
In this category business low market share ,slow-growing industry. The product are may be in
introduction or decline stage. They depress a profitable company's return on assets ratio, used by
many investors to judge how well a company is being managed. The best way to manage is to
sell of or to employee harvesting strategy. The business products fall in this category are
• USB hard disk
• Compact Disk

Cash Cows

In this category business are with high market share in a slow-growing industry. These units
typically generate cash in excess of the amount of cash needed to maintain the business. The
business products fall in this category are
Digital video disk

Question marks
These product businesses are growing rapidly and thus consume large amounts of cash, but
because they have low market shares they do not generate much cash. The result is a large net
cash consumption. By investing and marketing the products can be moved to star category. The
business products fall in this category are
• Internet downloading

Stars
The business with a high market share in a fast-growing industry. The hope is that stars become
the next cash cows. The business products fall in this category are
• Pen drives

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Product Life Cycle of Compact Disk
• Mobiles
3.4 Manufacturing system

3.4.1 Construction of Compact disk

A compact disc is basically a piece of polycarbonate plastic with a thickness of around


1.2 mm and diameter of around 120 mm and consists of 15 mm hole right at the center for
locating propose. Figure 4 shows cross sectional details of CD and figure 5 shows bottom view
of a CD.

F
i g
u r
e 4

Cross section of CD[5]

Figure 5 Bottom view of Compact disk

3.4.2 Manufacturing process


Replicated CDs are mass-produced initially using a hydraulic press. Small granules of
raw polycarbonate plastic are fed into the press while under heat. A screw forces the liquefied
plastic into the mold cavity. The mold closes with a metal stamper in contact with the disc
surface. The plastic is allowed to cool and harden. Once opened, the disc substrate is removed
from the mold by a robotic arm, and a 15 mm diameter center hole (called a stacking ring) is
removed. The cycle time, the time it takes to "stamp" one CD, is usually 2–3 seconds.
This method produces the clear plastic blank part of the disc. After a metallic reflecting
layer (usually aluminum, but sometimes gold or other metals) is applied to the clear blank
substrate, the disc goes under a UV light for curing and it is ready to go to press. To prepare to
press a CD, a glass master is made, using a high-powered laser on a device similar to a CD

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Product Life Cycle of Compact Disk
writer. The glass master is a positive image of the desired CD surface (with the desired
microscopic pits and lands). After testing, it is used to make a die by pressing it against a metal
disc.
The die is a negative image of the glass master: several are typically made, depending on
the number of pressing mills that are to be making the CD. The die then goes into a press and the
physical image is imposed onto the blank CD, leaving a final positive image on the disc. A small
amount of lacquer is then applied as a ring around the center of the disc, and fast spinning
spreads it evenly over the surface. Edge protection lacquer is also applied before the disc is
finished. The disc can then be printed and packed.
Manufactured CDs that are sold in stores are sealed via a process called "polywrapping"
or shrink wrapping[2.4 ]

Figure 6 Compact disk manufacturing process [5]

3.4.3 Suitable manufacturing systems


Due to the high demand of compact discs, the volume of CD’s manufactured has become
one of the most pressing issues. One of the major concerns is speed. Speed is a major concern
because CD manufacturing industries must be able to meet the demands. That is, they must be
able to produce CDs at astronomical rates to satisfy the multiple tastes of CD consumers and the
large number of artists in the music industry [2.5].
To reach this performance level, the system applies a high speed assembly-line type
process. It is necessary to maintain a production system which allows shifting back and forth

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Product Life Cycle of Compact Disk
from the production of one disc to another to accommodate the vast number of artists, albums,
and rapid and increased variation of the consumer’s taste.
The other major concern is cost. Because a compact disc is a consumer’s product, prices
must be kept low to stimulate demand. Therefore, it is necessary to avoid costly, exotic, and
inefficient production practices. The Standard Stamper Injection Molding process is the method
which is used most commonly used in the production of the compact disc. There are specific
industrial concerns regarding energy used and solid wastes generated from this process as well as
the manufacturing of polycarbonate.
Due to change in customer expectations and new products growth in the industry, by t
analyze the similarities between CD and DVD it is necessary to setup High speed line type
flexible production system. Flexibility must for the input of materials keeping the
manufacturing methods same.CD and DVD manufacturing process can be standardized the only
flexibility is coating material the production system must be capable of fulfilling this flexibility
issues.Figure 7 is symbolic representation of required production systems.

DVD material flow

CD material flow

M M
Product Flow

M= Flexible Machines

Figure 7 Flexible multi product production system for compact disk

3.5 Conclusion
Every product has its own life cycle. To attain the profits it is very necessary to setup the
manufacturing setup based on the future needs. The compact disk study shows these conclusions
 Compact disk is in decline stage in product life cycle.
 Compact disk is in dog business in BCG matrix.

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Product Life Cycle of Compact Disk
 Flexibility in manufacturing system is of great need. Manufacturing more than one
similar product can bring cost to equilibrium.

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Product Life Cycle of Compact Disk
Referencing

1. Thomas Gale., Compact Disc, http://www.madehow.com/Volume-1/Compact-Disc.html,


Retrieved on 26 Feb 2009

2. http://www.swivel.com/graphs/image/20067394%20width= , Retrieved on 26 Feb 2009

3. http://en.wikipedia.org/wiki/Growth-share_matrix , Retrieved on 26 Feb 2009

4. http://en.wikipedia.org/wiki/Compact_disc , Retrieved on 26 Feb 2009

5. Vickie S. Durrah,” Life Cycle Assessment of Emissions for Compact Discs”, Parkman
Elementary School, Chicago,2006

6. LeMaster, E.A. Compact Disc Manufacturing: Procedures and Processes, University of


Washington, 1994, Retrieved on 26 Feb 2009

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Product Life Cycle of Compact Disk