Product Lifecycle
A product life cycle is the length of time from a product first being introduced to consumers until it is removed from the market.
The concept of product life cycle helps inform business decision-making, from pricing and promotion to expansion or cost-cutting. (advertising, reduce prices, expand to new markets, or redesign packaging.)
A company often incurs higher marketing costs when introducing a product to the market but experiences higher sales as product adoption grows. Sales stabilize and peak when the product's adoption matures, though competition and obsolescence may cause its decline.
A product's life cycle is usually broken down into four stages; introduction, growth, maturity, and decline.
 |
| Product Life Cycle |
1. Introduction Stage
The introduction phase is the first time customers are introduced to the new product. A product begins with an idea, and within the confines of modern business, it isn't likely to go further until it undergoes research and development (R&D) and is found to be feasible and potentially profitable. A company must generally includes a substantial investment in advertising and a marketing campaign focused on making consumers aware of the product and its benefits, especially if it is broadly unknown what the item will do. During the introduction stage, there is often little-to-no competition for a product. However, companies still often experience negative financial results at this stage as sales tend to be lower, promotional pricing may be low to drive customer engagement, and the sales strategy is still being evaluated.
2. Growth Stage
If the product is successful it moves to the growth stage. This is characterized by growing demand, an increase in production, and expansion in its availability. During the growth phase, the product becomes more popular and recognizable. Company may also refine its product by improving functionality based on customer feedback. Company may still spend high in advertising if the product faces heavy competition. The growth period of the product life cycle results in increased sales and higher revenue.
3. Maturity Stage
The maturity stage of the product life cycle is the most profitable stage, the time when the cost of producing and marketing decline. With the market saturated with the product, competition now higher than at other stages, and profit margins starting to shrink, some analysts refer to the maturity stage as when sales volume is "maxed out". Depending on the good, a company may begin deciding how to innovate its product or introduce new ways to capture a larger market presence. During the maturity stage, competition is at the highest level, sales levels stabilize, and a company strives to have its product exist in this maturity stage for as long as possible.
4. Decline Stage
Product sales begin to drop due to market saturation and alternative products, and the company may choose not to pursue additional marketing efforts. Alternatively, the company may decide to revamp the product or introduce a next-generation, completely overhauled model.
The stage of a product's life cycle impacts the way in which it is marketed to consumers. A new product needs to be explained, while a mature product needs to be differentiated from its competitors.
ALM vs PLM <link to alm>
Comments
Post a Comment