In today's world, where market is unpredictable, strategies play crucial role in defending a firm's product position. "The main reason why companies must continually develop new products is because products have life cycle", (Bittel, 1980). Just as operation managers must be prepared to develop new products, they must also be prepared to develop strategies for both new and existing products. First and foremost, before proceeding into the product life cycle strategies, lets define what a product life cycle is. According to Griffin and Ebert (2002), a product life cycle is a series of stages through which it passes during its profit -producing life. Depending on the product's ability to attract and keep customers over time, a product life cycle may be a matter of months, years, or even decades. Anyway, there are four phases that every product undergoes in a market since it was produced and launched to its out-of market position. They are the introductory, growth, maturity and decline phases.
Below follows the figure of a product life cycle and all phases' detailed descriptions shall be described later.
Also, considerations must be given to how far the product is along the product life cycle. A new concept / product just entering the product life cycle may require intensive distribution to start with to launch it on to the market. As it becomes more established, perhaps the after sales-service will play a more important role which leads to a more selective distribution, with only those dealers that are able to offer the necessary standard of after sales-service being allowed to sell the product. In simpler words, in every phase of a product life cycle, a product should undergo different, suitable strategy in order to stay competitive in the ever changing market.
Below follows the product life cycle stages along with their definitions and beneficial strategies...
According to Stevenson (1999), the introduction stage begins when a product reaches the market place. When an item is first introduced, it may be treated with curiosity by the buyers. Demand is generally low as buyers are not yet familiar with that item. This often leads to the drop of the product's price. Therefore, along with time, production and design improvements, many new products became more reliable, less costly, and also the increase in awareness in buyers lads to the increase in demand. Also, according to Griffin and Ebert (2002), during this stage, marketers focus on making their target markets aware of the products and their benefits.
Also, during this stage, the particular product is represented with innovation (diffusion of innovative curve), product development (Ansoff Growth Matrix) and problem children (Boston Consulting Group). Among the common characteristics, according to Smith et al - 1997 are:
- new products;
- low sales;
- low market share;
- Specific type of customers willing to buy new products.
During this phase, as compared to the other phases, profits are negative or low because of low sales and high distribution and promotional expenses. Promotional expenditures are high as the company is eager to inform customers' about the product's availability and get them to try it. Since the market is not ready for new products at this stage, the firm focuses on selling such items to those who are the readiest to buy.
A company that wishes to be a market leader for its product must choose to launch a strategy that is consistent with the intended product positioning. The company, when deciding on which strategy to implement for the product's long-term, life and will have to continuously formulate new pricing, promotion and other marketing strategies.
It is the second stage of product life cycle process. Only if the new product satisfies the market's demand and need, it will enter this stage. According to Heizer and Render (2001), in the growth phase, product design has begun to...
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