Transcript
8/7/2019 PRODUCT LIFE CYCLE STAGE
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It is a complex process.
Absorbs significant recourses.
May not be successful.
May involve a long lead time before
sales are achieved.
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Inadequate demand.
Action of competitor.
Change in external environment.
Production problem.
High cost
Does not fit in firms product range.
Life cycle expected to be too short.
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The rate of change in technology is
rapid.
There is high degree of innovation.
Customer taste are changing rapidly.
The product is a fashion item.
The product is badly marketed
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Research and engineering skills will lead
to product development.
Product is put the market.
Promotion cost will be high.
Sales would be low
Profits would be almost negative.
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Product penetrates into the market
Sales will increase due to the earlier
promotion activity. Customer satisfaction has to be ensured
in this stage.
This stage may last for 1 year for
consumer products and longer forindustrial product.
Profit margin to its peak, as promotioncost is spread over large volume.
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This is usually the longest stage in the
market.
No further distribution channel to fill in.
Sales growth continue but at adiminishing rate.
Profit decline in this stage. Those who do not sustain competition
will withdraw from the market.
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Eventually most products and brands
enter a period of declining sales.
This may be caused due to followingreason.
1. Technical advances leading to product
substitutes.2. Fashion and changing tastes.
3. Profit will not exsist as the product life iscommercially complete.
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Product have finite lives and pass
through the cycle of development.
Product cost, revenue and profitspattern tend to follow predictable
pattern. profit are more in growth stage,after stabilizing in maturity and further
declining.
Profit per unit varies as product movesthrough life-cycles.
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Each stage of the cycle poses different
threats and opportunity to give rise to
different strategic actions.
Product requires different functional
emphasis in each phase such asR&
D indevelopment stage and cost control in
decline.
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In reality very few products follow such a
prescriptive cycle. The length of each
stage varies enormously.
Not all products go through each stage.
Some go from introduction to decline. Itis not easy to tell which stage the
product is in.
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Firms will often try to use extension strategiesto try to delay the decline stage of theproduct life cycle. The maturity stage is agood stage for the company in terms ofgenerating cash.
The costs of developing the product andestablishing it in the market are paid and ittends to then be at a profitable stage. Thelonger the company can extend this stagethe better it will be for them
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But ultimately this only delays a product
or service's decline. Ideally, you should
always have new products or services tointroduce as others decline so that at
least one part of your range is showing a
sales peak.
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INTRODUCTION
Third generation mobile phones
E-conferencing
All-in-one racing skin-suits
iris-based personal identity cards
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GROWTH
Portable DVD Players
Email
Breathable synthetic fabrics
Smart cards
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MATURITY
Personal Computers
Faxes
Cotton t-shirts
Credit cards
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DECLINE
Typewriters
Handwritten letters
Shell Suits
Cheque books
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