The product life cycle and online fashion
An asos.com case study

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Page 2: The product life cycle

The product life cycle shows the stages a product goes through over time in relation to its sales. Whilst individual products have their own life cycles it is important also to understand wider market trends. The retail market also follows a life cycle. In the UK the total retail market is in a mature state with growth slowing down. Retailers have to compete hard, shown by declining sales in high street stores.

In contrast, the online retail industry is a young market still showing huge growth since its introduction period between 1998 and 2002. Between 2004 and 2007, total retail growth was just 4.6%, whereas online retail grew by over 130% in the same period. One of the big changes that occurred was a move by businesses from selling from a catalogue to direct selling online. This is clearly illustrated by the growing market share of ASOS.com.

In the fashion industry there is a fairly short product life cycle because trends and tastes change regularly. For example, the ASOS.com website features a range of own-brand dresses which are a 'must-have' fashion item for the summer of 2009. The product life cycle for an ASOS.com own-brand dress typically follows the following sequence:

  • Introduction The dress is made available to customers on the website. Fashion leaders adopt the new item. ASOS.com initially gives a lot of prominence to newly launched products on its website, for example, by having links directly to these items from the homepage and weekly newsletters.
  • Rapid growth ASOS.com needs to ensure adequate stocks so as not to disappoint customers. Once the item moves into the growth stage it tends to promote itself as customers see the item in newspapers and magazines.
  • Maturity At this stage, ASOS.com will remind people about the product online, through for example, trend features on the website and in its newsletter. It may order more stock to ensure supply. For example, one dress from the summer 2008 collection is still selling well and has regular repeat orders.
  • Saturation At this point, ASOS.com may decide to reduce the price to clear remaining stock. Sales provide an opportunity to make space in the warehouse for new products.
  • Decline people become tired of the item or it is replaced by a new product. Fashion and trends have moved on.

There is a stage to the life cycle before the product is introduced Development. In this phase, the ASOS.com buying team choose materials, styles and colours to produce a dress design. Suppliers then produce and distribute the goods to ASOS.com's warehouse in the UK ready for introduction to the market. 

ASOS.com regularly introduces new products as customers demand the latest trends they have seen in magazines and on fashion catwalks. Introducing a new product involves considerable costs:

  • New stock needs to be purchased.
  • The website needs to be updated with pictures of the new fashionable items.
  • The ordering system needs to be updated.
  • The items need to be promoted through the website, newsletter and magazine.
  • There is the risk of an item selling poorly.

At the start of the life cycle, costs for a new product will be high whilst revenues are low. However, during the growth period revenues start to outstrip costs and contribute to the business' profitability. The life cycle in fashion can be a matter of days. Limited 100 a collection created in collaboration with students at London College of Fashion sold out in five hours.

asos.com | The product life cycle and online fashion
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