. Product´s life cycle | Febmat


Product´s life cycle

Last updated: 03.11.2016

Product´s life cycle stages

 

 

Research and development

  • product has not yet been launched to the market and pre-production costs such as research & development or costs of finding appropriate production premises are incurred
  • this stage is included within introduction stage in some sources

 

Introduction

  • product or service is already launched to the market
  • customers do not know the product, the sales are therefore low. In addition, the company usually incurs marketing costs, so the profit is negative

 

Growth

  • market share of the product increases, sales thus increase as well (during second half of the stage usually strongly)
  • marketing costs are usually still incurred
  • unit costs are reduced as the fixed costs are spread over more units sold and the company already benefits from economies of scale
  • the product/service begins to be profitable

 

Maturity

  • product/service already is established at the market
  • at the beginning of the stage sales (and profits as well) increase
  • but later on, competition will reduce the sales and it is the right time to think about an action to extend the product´s life cycle. This may include:
    • modifications or improvements of the product/service
    • enhanced marketing to enter to new markets (geographical, different segment etc.) or increase market share
    • reduction of production costs in order to compete with lower price
    • find different ways to use the product etc.

 

Decline

  • volumes sold are reduced because:
    • market is already saturated (the customers who wanted the product already bought it)
    • other competitors with the same or similar product/service came to the market
    •  customers start to prefer different products (usually more advanced)
  • unit costs increase as the result of reduced volumes
  • finally, the product/service may become unprofitable
  • the company should thus decide between:
    •  discontinuing to sell the product/service
    •  taking some of the product life cycle extension actions (mentioned within maturity stage)

 

Different products/services have different life length, it may last from several months to dozens of years.



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