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6) Match words with their definitions.

1. product

a) after-sales support

2. logistics/SC product

b) centre of focus in logistics system

3. intangible part of a product

c) one for which buyers are willing to expand effort and wait for a long time to acquire

4. consumer product

d) characteristics that a logistician manipulates

5. specialty product

e) one directed to ultimate consumers

Part 2. Product Life Cycle.

Another traditional concept familiar to marketers is that of the product life cycle. Products do not generate their maximum sales volume immediately after being introduced, nor do they maintain their peak sales volume indefinitely. Products follow a sales volume pattern over time, going through 4 stages: introduction, growth, maturity, and decline. The physical distribution strategy differs for each stage.

The introductory stage occurs just after a new product is introduced into the marketplace. Sales are not at a high level because there is not yet wide acceptance of the product. The typical physical distribution strategy is a cautious one, with stocking restricted to relatively few locations. Product availability is limited.

If a product receives market acceptance, sales are likely to increase rapidly. Physical distribution planning is particularly difficult at this stage. Distribution is frequently under managerial judgment and control during this expansion stage. However, product availability is also increasing rapidly over a wide geographic area in support of the growing customer interest in the product.

The growth stage may be fairly short, followed by a longer stage called maturity. Sales growth is slow or stabilized at a peak level. The product volume is no longer undergoing rapid change and, therefore, can be assimilated into the distribution patterns of similar, existing products. At this time, the product has its widest distribution. Many stocking points are used with good control over product availability throughout the marketplace.

Eventually, the sales volume declines for most products as a result of technological change, competition, or waning consumer interest. To maintain efficient distribution, patterns of product movement and inventory deployment may have to be adjusted. The number of stocking points is likely to be decreased and the product stocking reduced to fewer, more centralized locations.

The product life cycle phenomenon has an influence on distribution strategy. The logistician needs to be continually aware of a product’s life cycle stage so that distribution patterns may be adjusted for maximum efficiency in that stage. The lifecycle phenomenon in products allows the logistician to anticipate distribution needs and plan for them well in advance. A firm’s different products are typically in different stages of their life cycles.

Exercises.

  1. Answer the questions.

1. Do products generate their maximum sales volume immediately after being introduced?

2. What is a product’s life cycle?

3. How many stages are there in a product’s life cycle?

4. Is the physical distribution strategy the same for each stage?

5. Why is the life cycle important for a logistician?