Product Life Cycle
Introduction Phase
The introduction phase is when the public first sees or hears about a product. The product appears in stores for the first time, and people start seeing print and television ads. During this phase, a company may choose one of two pricing strategies. They may set prices high to recoup initial expenses that went into producing the product. For example, a cellphone manufacturer with new technology may introduce cellphones 10 percent to 20 percent above the prices of most premium cellphones. They may price their phones higher because of the hype and anticipation of the new technology. The company also knows enough people will pay the extra 10 to 20 percent for it to earn substantial profits. Contrarily, the same cellphone company may introduce a cellphone with basic features at reduced prices in hopes of gaining lots of new customers.
Growth Phase
The growth phase is when sales and profits for the new product start rising. A company will usually keep product prices about the same during the growth stage to maximize earnings. Product quality is also maintained. However, a company will usually expand its product distribution during the growth stage. For example, a consumer-products company might start selling its organic cereal in new markets, based on positive marketing research from consumers. Eventually, the organic cereal will start appearing in stores across the country. Company marketers usually increase advertising during the growth phase, too, according to NetMBA.com.
Maturity Stage
Success inevitably leads to increased competition. Other companies eventually will start introducing similar products, especially if the initial product is highly successful. Consequently, the demand for the product and its competitors will peak at some point. Sales growth will start to decline. Some companies may lower prices to capture additional market share or new customers. At this point, a company may need to develop new product features or
The introduction phase is when the public first sees or hears about a product. The product appears in stores for the first time, and people start seeing print and television ads. During this phase, a company may choose one of two pricing strategies. They may set prices high to recoup initial expenses that went into producing the product. For example, a cellphone manufacturer with new technology may introduce cellphones 10 percent to 20 percent above the prices of most premium cellphones. They may price their phones higher because of the hype and anticipation of the new technology. The company also knows enough people will pay the extra 10 to 20 percent for it to earn substantial profits. Contrarily, the same cellphone company may introduce a cellphone with basic features at reduced prices in hopes of gaining lots of new customers.
Growth Phase
The growth phase is when sales and profits for the new product start rising. A company will usually keep product prices about the same during the growth stage to maximize earnings. Product quality is also maintained. However, a company will usually expand its product distribution during the growth stage. For example, a consumer-products company might start selling its organic cereal in new markets, based on positive marketing research from consumers. Eventually, the organic cereal will start appearing in stores across the country. Company marketers usually increase advertising during the growth phase, too, according to NetMBA.com.
Maturity Stage
Success inevitably leads to increased competition. Other companies eventually will start introducing similar products, especially if the initial product is highly successful. Consequently, the demand for the product and its competitors will peak at some point. Sales growth will start to decline. Some companies may lower prices to capture additional market share or new customers. At this point, a company may need to develop new product features or