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Marketing 101: Product Life Cycle
Categories: Marketing 101

As a product or brand moves through its life cycle, the company that markets it shifts its marketing-mix strategies.

Product Life Cycle

At this stage, companies invest in advertising to make consumers aware of a product. Because sales are low while advertising and other costs are high, the company tends to lose money during this stage.
In the graph above, the portion till point (a) refers to the introduction phase. Till this point, Star Wars was released in halls, and was just gaining traction with audiences.

As the company focuses on building sales, which are increasing rapidly at this stage, its advertising costs will go up. With sales going up and costs going down, the product becomes more profitable.
In the graph, the portion from point (a) to point (b) represents the growth phase. Word of mouth, coupled with growing PR activities (like cast interviews), helped push ticket sales.

Normally, if a product survives the growth stage, it will probably remain in the maturity stage for a long time. Sales still grow, though at a decreasing rate, and will eventually stabilize. Advertising will be used to differentiate the product from competition.
However, such is the fickle nature of the movie industry, the life cycle of a movie is dominated by the introduction and growth stages. Maturity phase is brief, and the staying power of a movie is generally determined by the length of its decline phase.
The portion between point (b) and point (c) represents the maturity phase for Star Wars.

Demand declines as more innovative products absorb the attention of the audience. Price competition becomes more intense, and profits are harder to come by.
In the case of Star Wars, the portion between points (c) and (d) shows the decline phase. As stated earlier, the length of the decline phase in the movie industry determines the longevity of the movie. Star Wars has a longer than usual decline phase (around 6 months).

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