Product Life Cycle
Product Life Cycle Management
Product Life Cycle, Product Life Cycle Management and Product Life
Cycle Phases / Stages for new Products and Services
"Product Life Cycle" is related to the lifetime of a new product or service in the marketplace. It describes the entire life of the offering from product development to selling and marketing the product and all the activities until the end of the product marketing.
Each step in the Product Life Cycle requires different specific marketing strategies in order to maximize the performance of the product or service throughout its lifetime. The reason for doing that is because every stage in the Product Life Cycle is different and the environment, goals, customer requirements, competition, etc. are all different and change from one stage to another.
Product Life Cycle develops into sequence of product management stages and demands various business management skills, approaches and strategies especially product marketing skills and tactics. Every product and service has its Product Life Cycle because products and services have certain life, they go through different phases and as a result require different management in terms of various management functions such as finance, sales, marketing, engineering, investments, product design, product development, production, HR, etc.
The four typical Product Life Cycle phases are:
1. Product Life Cycle Phase 1: Introduction
During the product and service introduction phase the costs are the highest as well as the risk. Most products and services fail so this is the phase of the Product Life Cycle which is critical for the success of the product and services being introduced. Different strategies and tactics must be used to ensure successful product management for maximum sales and marketing performance. At the same time the revenue growth is very slow and sensitive since the product and service are new to the market. The good thing is that at this stage there is a little or no competition so if the company executes this stage successfully the revenue will start growing. This is the demand creation stage and since the product is new to the market customers need to learn about the product benefits through effective promotion and advertising.
2. Product Life Cycle Phase 2: Growth
Once the introduction stage has been executed successfully the next stage in the Product Life Cycle is the growth phase. Sales revenue grows more aggressively at this stage and also the profit since the company is more efficient at production and marketing. Production and distribution costs are lower due to the economies of scale and the company is more experienced in selling and marketing the product. Due to the successful sales growth competition starts to appear with new companies trying to get a piece of the market share created with the new product.
3. Product Life Cycle Phase 3: Maturity
After the growth phase due to strong competition prices will drop significantly. Similar products and services are now offered by competition and it is getting harder to differentiate the product or service. As a result profits are lower.
4. Product Life Cycle Phase 4: Decline
During the decline stage of the Product Life Cycle profitability declines. The demand for the product can go down due to new offerings in the marketplace. Many competitors won’t be efficient in marketing this product anymore. Since prices and profits are down only competitors with strong production and marketing efficiencies will be able to create a profit out of this product or services. At this stage the new product becomes standard product which cab be purchased by many different companies.
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