Stages in the Product Life Cycle
This paper defines and discusses in depth the four stages in the Product Life Cycle. Most successful products pass through these four stages which are Introduction, Growth, Maturity and Decline and the following will help to distinguish the transition between each stage while presenting their differing components. Additionally, it will display the direction in which companies take when faced with being in each varying stage. An understanding of the outcome of each stage and the development process of all of the four stages will be exposed in this paper. Products are also utilized to show examples in their current stage. In closing, the paper will express critic’s opinions and information to support their ideas that even though the Product Life Cycle theory is widely accepted, many do say that the theory has so many exceptions and so few rules that it is meaningless.
Every product has a life cycle. The stages through which individual products develop over time is known as the "Product Life Cycle." The classic product life cycle has four stages (shown below). A Product Life Cycle basically shows the path that a typical new product takes from its inception to its discontinuation (Examples of Product Life Cycle Phases, 2011).
At the Introduction (or development) Stage market size and growth is slight. It is possible that substantial research and development costs have been incurred in getting the product to this stage. In addition, marketing costs may be high in order to test the market, undergo launch promotion and set up distribution channels. It is highly unlikely that companies will make profits on products at the Introduction Stage (Anderson & Zeithaml, 1984). Products at this stage have to be carefully monitored to ensure that they start to grow. Otherwise, the best option may be to withdraw or end the product. The introduction phase of a product includes the product launch with its requirements to getting it launched in such a way so that it will have maximum impact at the moment of sale. This period can be described as a money sinkhole compared to the maturity phase of a product. Large expenditure on promotion and advertising is common, and quick but costly service requirements are introduced. A company must be prepared to spend a lot of money and get only a small proportion of that back. In this phase distribution arrangements are introduced. Having the product in every counter is very important and is regarded as an impossible challenge (Day, 1981). Some companies avoid this stress by hiring external contractors or outsourcing the entire distribution arrangement. Pricing is something else for a company to consider during this phase. Product pricing usually follows one or two well structured strategies. Early customers will pay a lot for something new and this will help a bit to minimize losses. Later the pricing policy should be more aggressive so that the product can become competitive (Product Life Cycle, 2011). Another strategy is that of a pre-set price believed to be the right one to maximize sales. This however demands a very good knowledge of the market and of what a customer is willing to pay for a newly introduced product. A successful product introduction phase may also result from actions taken by the company prior to the introduction of the product to the market. This is accomplished during product development by the use of market research. Customer requirements on design, pricing, servicing and packaging are invaluable to the formation of a product design. A customer can tell a company what features of the product are appealing and what are the characteristics that should not appear on the product. They may also describe the ways of how the product will become handy and useful. So this way a company will know before its product is introduced to a market what to expect...
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