A new product, after it has been introduced in the market, goes through a series of stages in chronological order which are: introduction, growth, maturity and decline. This series of stages combine to form the product life cycle. Understanding the product life cycle model can help you in designing your own business strategies for your marketing essay. Based on the life cycle stage of the product, the company needs to adopt specific strategies for its management. But first, let us look at what product life cycle really is.
A company after it has launched a new product, expects it to sustain in the market for a long time so that it can earn decent profits after covering the initial cost of product development. It is expected that the product is never going to last forever, as it eventually will reach its decline stage and will be discontinued from the market. As highlighted in the graph above, each stage of the product life cycle is characterized by different sales volume and revenue generation.
Introduction: The introduction stage is the first stage of the lifecycle, where the sales growth is quite slow as the product has been newly launched in the market. In this stage the company hardly makes any profit from the product and the revenue earned is used to cover the expenses of the product development and its introduction to the target market.
Growth: In the growth stage, the product has been widely accepted by the customers, and is characterized by rapid sales growth. In this stage, the company is able to acquire new customers for its products, which leads to rapid increase in revenue.
Maturity: In the maturity stage, the revenue growth stabilizes as the product has already found acceptance in the entire target market. The company find its very difficult to acquire any newer customers for its product.
Decline: In the decline stage, the sales starts to fall off and the profit also declines. At this stage the customers are no longer willing to purchase this product as they are looking for something new in the product category.
While you are developing a business plan for a company, it is important for you to recognize the stage at which the product currently is. As we have found, different stages of lifecycle show different level of preference from the customers. It is important to understand, that not all product will necessarily go through all the four stages of its lifecycle. A product may fail to attract the intended customer base and may never reach the growth stage after its introduction and is discontinued thereafter. Organizations seek to prolong the life of its brand through effective brand management, aggressive promotion and brand rejuvenation and repositioning. Brands like Coca-Cola and Gillette are more than a century old. These companies have been able to keep the brand alive by constantly updating its value proposition for its customers.
The concept of product life cycle can be applied to an entire product category or to a single product of a company. A product category is likely to have a much longer life span, compared to that of a single product. When preparing your college essay, it is important for you to identify the given case or situation where you are required to apply the product life cycle.
As mentioned earlier, a product performs differently throughout its life span, based on which stage of its life cycle it is currently in. Based on the stage of the life cycle, a company needs to adopt various strategies in order to prolong its life span and increase its revenue and profit generation. Let us look at the management of each of the different stages of the product life cycle.
Introduction: During the introduction stage, the sole objective of the company is to create product engagement and convince the customers to try out the new product. In this stage, the company offers a basic product which highlights the core value proposition. The company adopts the cost-plus pricing to cover the initial expenses of developing the product, such as the R&D expenditures.The product is distributed to selected markets, in order to test the acceptance of the product. In terms of promotional strategy, the company advertises in order to create a strong awareness of the product among the early adopters and the retailers. Moreover, aggressive sales promotion is also used to attract the customers to tryout the product for the first time.
Growth: During the growth stage, the objective of the company is to maximize the market share of the product. The firm now offers a wide variety of the product, in the form of product extensions. More added features and attributes are added to the basic product which was launched in the introduction stage. Some company may also add additional services for the customers, such as extended warranty. In this stage the company adopts penetrative pricing to acquire as many new customers as possible to increase its sales volume. The distribution is now extended to add more target market areas, so as increase its customer base. The advertising now focuses on building customer engagement in a much wider audience group. The company no longer offer heavy promotional offers, as it can now take the advantage of the high customer demand.
Maturity: As the product reaches the maturity stage, the objective of the company changes to maximizing its profit while retaining its market share. As a part of the product strategy, the company now diversifies the brand and product variants. At this stage, various sub-brands are introduced to take advantage of the popularity of the umbrella brand. A competitive pricing is adopted to beat the rival brands in the industry. The distribution of the product is further strengthened to reach out to more potential markets. The advertising of the company focuses on highlighting the differentiating factors of the brand. The sales promotion is focused more on brand switching.
Decline: In the decline stage, the objective of the company comes down to reducing the expenditure on the product and to take as much advantage as possible from the brand image. The product strategy involves streamlining the product line up, by discontinuing weak variants or items. Massive price cuts are offered in order to attract customers. The company now adopts selective distribution and may choose to close unprofitable distribution channels. The advertising and promotional offers are reduced to a bare minimum only to retain the brand loyal customers.
As we can see that as the product moves from one stage to another, the objective of the company changes accordingly. It needs to adopt different strategies based on characters of each of the life cycles. At this point, you are fully aware of the product life cycle management processes, and the associated strategies that a company takes to prolong the life span of the product as much as possible and it reap financial benefits from it. Now you should be able to apply this framework into your paper without any assignment help.
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