Every product we
encounter has a life cycle. The product life cycle has four stages, from its introduction in an office to the product’s decline and removal from store shelves. It’s imperative for a business to fully understand all four stages of the product life cycle. Misunderstanding or a lack of knowledge at any stage can lead to the product’s failure. In a piece published in the Harvard Business Review, Joan Schneider and Julie Hall – partners in a firm specializing in product launches – found
that 75 percent of consumer-packaged goods and retail products fail to earn as little as $7.5 million in their first year, a benchmark of a successful launch. Part of the problem that Schneider and Hall found is that companies aren’t prepared for the marketing and advertising aspect of their product until it istoo late. Companies will adjust and shape their marketing and advertising efforts around a product’s life cycle. It’s crucial that a company spends time and money wisely at each stage to boost growth and control a bigger share of the market. Product Life Cycle StagesThere are four clearly defined stages in the product life cycle, and each stage has unique characteristics that generate different responses or stimuli for business. Introduction StageWhen a product is launched, it requires a significant investment from a business. Although spending money in general isn’t indicative of a product’s success, a business has to allocate funds for research and development, develop an effective marketing plan, as well as spending time and money to get the product on retail shelves or online outlets. At the introduction stage, more money will be spent than is brought in as consumers learn about the product and begin to purchase it. Benefits
Challenges
Growth StageThe second stage of the product life cycle is considered the key stage for many businesses and manufacturers in establishing “a product’s position in a market, increasing sales, and improving profit margins.” Businesses can achieve these gains with the development of consumer demand through advanced marketing and promotional activity as well as scaling up their business to reduce manufacturing costs. Depending on the product and market, the time between the introduction stage and growth stage can differ. Benefits
Challenges
Maturity StageThe third stage of the product life cycle can be a challenging time for manufacturers as they look to maintain their market share while growth slows down. It can be hard for businesses to maintain profit margins with the product as other companies get into the market with their own products and the market potentially becomes saturated. Benefits
Challenges
Decline StageIn the fourth stage of the product life cycle, the product fails to make the same kind of revenue and profits as it did before, though it could still be profitable, albeit with smaller margins. Benefits
Challenges
Limitations of Product Life CycleThe traditional product life cycle theory does come with limitations. It can be challenging for a business to determine a product’s stage in the life cycle. In addition, a rise or fall in sales may not signify a change in the life cycle stage. For example, a dip in sales during growth could be temporary and not a sign that the product is in decline. Also, most products that fail skip the growth and maturity stage and jump straight from introduction to decline. Ultimately, the product life cycle curve should be used as a rough guide for marketing management and sales decisions and not as fact. Become Savvy in the Business IndustryUnderstanding product life cycles could be the difference between a successful product and a dud. Become an expert in business theory and practices with Alvernia University’s online BS in Management or online MBA. You’ll learn key skills that will help you become a leader in your company from knowledgeable faculty with your success in mind. Alvernia’s fully-online format also allows you to continue working while advancing your career. Get started today! What happens in the maturity stage of the product life cycle?The maturity stage is when the sales begin to level off from the rapid growth period. At this point, companies begin to reduce their prices so they can stay competitive amongst growing competition.
What occurs during the maturity stage of the product life cycle quizlet?During the maturity stage of a products life cycle, sales revenues continue to rise but at a much slower rate. Economics of scale will give the firm a competitive advantage. Promotional activities tend to focus on remaining customers.
What is one aspect that happens in the growth stage of the product life cycle?In the growth stage, the market grows, competition intensifies, sales rise, and the number of customers increases. Price undercutting in the growth stage tends to be rare, as companies in this stage can increase their sales by attracting new customers to their product offerings.
What is maturity in life cycle?The maturity stage occurs after the introduction and growth stages. The maturity stage is the longest stage of the product life cycle. In this stage, sales growth begins to decline; the company reaches the highest point in the demand cycle; and advertising strategies have minimal impact on sales growth.
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