Product life cycle also plays a critical role in marketing strategy. Price Prices may be lowered to sell off the remaining inventory of the discontinued products. This is also known as commercialization. The marketing department is extremely important at this point. The type of advertising depends on the product.
Benefits of the Introduction Stage Limited competition: If the product is truly original and a business is the first to manufacture and market it, the lack of direct competition would be a distinct advantage. Also, the four stages are not the same time period in length, which is often overlooked. There are many features of this stage of product life cycle: Small Market: This stage involves business capturing the market. This can be attributed to a variety of different reasons. In contrast, the Growth stage can be the most profitable part of the whole cycle for a manufacturer. Introduction Stage This stage is where the idea becomes an actual product for sale in the market. Growth Stage The second stage in the life cycle, occurs when the company starts to make profits on its products.
Product life cycle is the progression of an item through the four stages of its time on the market. Competition grows as awareness of the product builds. Usually, there are 4 different stages in the Product life cycle. Example: Apple iPhone which is launched with a new promotion and a very high price. Any investment in research and new product development has to be weighed up against the likely return from the new product, and an effective marketing plan will need to be developed, in order to give the new product the best chance of achieving this return. Your business might grow in scope, products offered, size or number of locations as you finalize your plans. Decline and Rebirth As your company grows and ages and sales flatten or decline, your overhead costs might rise, making you less competitive, allowing other businesses to take some of your market share.
The product can simply be discontinued, or it can be sold to another company. Maturity isn't necessarily a bad place to be, though. Peter obviously has a challenge on his hands because he needs to launch his product and begin to increase demand for the product. However, since no one knows how awesome yogurt tastes, Peter cannot simply market his product as a great tasting snack because no one will believe him! The Growth Phase The growth phase is the next step in a product's evolution when the concept is already proven and customers are lining up to buy the product in increasing numbers. Description: Employee involvement is not any quantitative tool or a goal of an organisation, it is more of a leadership tool or a thought which usually percolates from the top. She has a vast experience in clinical medicine and in the fields of Market Access, Health Economics and Outcomes Research, coupled with an exceptional background in Health Care Administration and Clinical expertise. Main aim to build high awareness of the product.
This high production cost combined with distribution and marketing and promotion costs are high for the start. . Once that is done, more thorough specifications are developed, including price and style. The main objective in the growth stage is to maximise the market share. Soft drinks and cigarettes are some of the examples on which intensive distribution is followed.
Final design questions are answered and final product specs are determined so that a prototype can be created. Product width increases in the maturity stage of the product life cycle. Fresh from successful clinical trials, the drug is likely to generate attention in the media. Additionally, businesses need to select the for their. Since promotion costs are now spread over a larger volume and because of the decrease in unit manufacturing costs, profits increase during the growth stage. If a competitor enters the market, that competitor will most likely have to set yogurt prices close to the market price set by Peter's yogurt company in an attempt to gain a share of the market.
If you do everything right with your business, your long-term reward will likely be stagnant sales and profits. With a huge investment in research and development, and high prices that will only appeal to early adopters, this is another good example of the first stage of the cycle. Because of the success of one or more companies, more competitors will enter the market with their own brands. The reason is that early adopters will continue to buy, and later buyers will start following their lead, in particular if they hear favourable word of mouth. Most of your business probably comes from first-time buyers. Edmunds has a bachelor's degree in journalism.
So, rather than dedicated time to building a better iPod, they focussed on building its perfect competitor. Promotion More emphasis on building up of brand loyalty and brand preference. For example, a small detergent manufacturer may extend the life of the brand by selling to emerging markets, such as India. Competition may appear with similar products. By keeping a strong hold on the four stages of a product life cycle, a business can maximise returns and realise when the time is right to divest itself of the product.
Any business that is launching a new product needs to appreciate that this initial stage could require significant investment. This method is particularly useful for products like soft drinks, cigarettes etc. Although many products in the maturity stage seem to remain unchanged for long periods, most successful ones are actually adapted constantly to meet changing consumer needs. A product is introduced to the market during the introduction stage. Prices are set high on the product or service to recoup some of the development and introduction costs but may also be low as a way to more quickly build market share. Not only do sales drop off at this time, but production costs may also rise due to declining volumes.