Question

“The process of new product development is typically a linear process”. Do you agree with this statement? Why (not)? Illustrate with an example / examples.

Answer 1

“The process of new product development is typically a linear process”. -- We certainly agree with this statement.

Product Life Cycle consists of 4 phases. It begins with introducing the newly product developed in the market and ends when the demand of the product starts declining. Theses phases can be described as further:

1. Introduction: Once a product has been developed, the first stage is its introduction stage. In this stage, the product produces enters into the market. When a new product is released, it is often a high-stakes time in the product's life cycle - although it does not necessarily make or break the product's eventual success.

This stage of the life cycle is considered as the most expensive as in this phase marketing are promotion are extremely high. The size of the market for the product is small, which means sales are low, although they will be increasing. The principle goals of the introduction stage are to build demand for the product and get it into the hands of consumers, hoping to later cash in on its growing popularity.

2. Growth: The growth stage enters when there is growth in sales and profits, and because 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 public is becoming increasingly aware of your product and word of mouth is starting to spread.

Although competition may be minimal in this stage, it’s important to continually make refinements and stay ahead of the competitive curve. Build product and service development capabilities with the cash you get from increasing sales.

3. Maturity: The maturity phase is when your product is established in the market and the firm's sales continues to increase or level off. Profits decrease since prices are continually lowered to compete. Still, a great amount of cash flow is generated through sales.

Saturation is reached at this stage and the volume of sales is also at its peak. The maturity stage may last a long time or a short time depending on the product.

4. Decline: At this stage, sales drop even though prices continue to fall. Profits are extremely low at this stage, but the product or service has generated sufficient cash flow during its life. The market starts to shrink. The reasons could be due to the market becoming saturated or because the consumers are switching to a different type of product.

Eventually, the product will be wiped out of the market unless some modifications might induce demand for the product. For example, products like typewriters, telegrams, televisions etc.

Example of product passing through various stages of life cycle process

Typewriter:

Typewriters were introduced in the market in the 19th century and it became a revolution in its early introduction phase. Typewriters soon gained market share and entered into growth stage with increasing popularity. Typewriter achieved maturity stage as saturation is reached and sales were at max level. However, new electronic technology like computers, provided a setback laptops and even smartphones have quickly replaced typewriters causing their revenues and demand to drop off and finally it enters into the declining stage.