Product life cycle
A product life cycle deals with the life of a product in the market, with respect to the business costs and sales. A product goes through three stages in the design cycle and these stages are introduction, maturity and decline.
The first stage is the introduction stage and in this stage, the product created and is promoted to create awareness as sales will be low until customers become aware of the product and its benefits. The primary goal of this stage is to establish a market and build a primary demand for the product class.
The introduction stage has implications on the marketing mix, which refer to the Product, Pricing, Distribution and Promotion. In this stage the Product is branded and quality level is established. Intellectual property and protection such as patents and trademarks are obtained. Pricing may also be penetrated if the product is new in the market and the cost would be low to build market share rapidly. High skimming pricing may also be done to recover development costs.
The Distribution is selective and scattered till the consumers show acceptance of the product. The Promotion is aimed at building brand awareness and loyalty. The introductory promotion is also intended to convince potential resellers to carry the product. It helps to educate potential consumers about the product.
The Maturity stage is the second stage. It is the most profitable and common stage for all markets. It is in this stage that competition is most intense as companies fight to maintain their market share. Here, both marketing and finance become key activities. Marketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. The Maturity Stage is the time when most profit is earned by the market as a whole. Any expenditure on...