Published on March 12, 2014
MarketingThe Product Life Cycle Sources: *QuickMBA.com *Mindtools.com *Productlifecyclestages.com
PLC is used to map the lifespan of a product. Four stages in the life of a product: introduction, growth, maturity, & decline.
The product revenue & profits can be plotted as a function of the life-cycle stages:
This stage could be the most expensive for a company launching a new product. The cost of research & development, consumer testing, & the marketing needed to launch the product can be very high, especially if it’s a competitive sector.
Typically characterized by a strong growth in sales & profits. The company can start to benefit from economies of scale in production. The profit margins, as well as the overall amount of profit, will increase.
The product is established & the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products. Need to consider any product modifications or improvements to the production process which might give them a competitive advantage.
The market for a product will start to shrink. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods & cheaper markets.
Here is the example of watching recorded television & the various stages of each method: Introduction - 3D TVs Growth - Blu-ray discs/DVR Maturity - DVD Decline -Video cassette
Important principle manufacturers need to understand in order to make a profit & stay in business. The key to successful manufacturing is not just understanding this life cycle, but making good use of this knowledge by using appropriate resources depending on what stage products are at in the cycle.
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