Product Life Cycle

Once the market has emerged and a firm has decided to enter, it must still contend with uncertinities in the products in the market. The marketing literature offers a parallel to the technology life cycle: the product life cycle. A product has four predictable stages with distinctive characteristics, marketing objectives, and strategies. The introduction stage starts when the new product is launched. Sales are low, costs per customer are high, profits are negative, customers are largely lead users, and competitors are few. In the growth stage, sales rise rapidly, costs per customer start to drop, profits start rising, and the number of customers also increases. In the maturity stage, sales peak, costs per customer are low, profits are high, and the number of competitors is stable. In the decline stage, sales start to decline, costs per customer increase, profits arte declining, and the number of compititors is also declining. These characteristics call for specific strategies. For example, in the introduction stage, a firm’s objective is to create product awareness, and product strategy is to offer a basic product. The demand in each market is fulfilled by a seriies of different generations of products, with the first one introduced at the emergence of the market.

 

The main drawback in using the product life cycle to reduce uncertainty is that number of stages and duration of each vary from product to product. It is also difficult to tell when a stage starts and ends. In any case, they provide some regularities to help a firm know when and what to invest in an innovation.

 

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

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