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Fads

Smith, Adam (2003). An Inquiry into the Nature and Causes of THE PRODUCT LIFE CYCLE
the Wealth of Nations. New York: Bantam Classic. The course that a product’s sales and profits take over its
Sraffa, Piero (1960). Production of Commodities by Means of lifetime is the product life cycle (PLC). Marketers know
Commodities. London: Cambridge University Press. that all products will have some type of life cycle, but the
shape and length is not known in advance. In the first
stage of the cycle, product development, an idea for a
Michael Brun
product is formulated and development of the product
begins. During this stage sales are zero, consumer research
begins, and promotion consists of public relations.
FADS The next stage, introduction, is characterized by a
period of slow sales growth, but no profits are made
The Hula Hoop, Pet Rock, and Cabbage Patch Kids were
because of the high initial investment and promotional
all crazes known as fads. These products, like most fads, costs. The company begins to inform consumers about
entered the market quickly, created a consumer obsession, the product through advertising, and distribution of the
sold millions of units in a short amount of time, and product is selective.
declined just as rapidly. Their special product life cycle of The third stage of the PLC, growth, is a time of
quick, dramatic sales and a sharp, drastic decline differs rapid market acceptance and increasing profits. Product
from the five stage product life cycle concept of product distribution becomes more widespread, and advertising
development, introduction, growth, maturity, and shifts from being informative to being persuasive. Real-
decline. Fads have a limited following and tend to die izing the opportunity for profit, competitors will enter
quickly because they do not satisfy a strong consumer the market, creating market expansion. Promotional
need. spending remains the same or increases slightly. Prices

Called the “greatest fad of them all” the Hula Hoop was developed in 1957.

292 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION