Question

Answer the below question:

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1. Discuss two of the phases of the product/process life cycle that you feel are most important? Explain your reasoning with experience and at least two references.

Answer 1

The product life cycle has 4 very clearly defined stages, each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products.

Introduction Stage – This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector.

Growth Stage – The growth stage is typically characterized by a strong 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. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.

Maturity Stage – During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.

Decline Stage – Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.

There are several alternative strategies available for handling the decline stage appropriately.

• Milking or Harvesting: When this strategy is used, the product receives only little or no marketing support. The firm aims to maximize the life of the product while generating the cash and the time required to establish new products. In addition, the slow decline of the product provides the firm with sufficient time to adjust to the declining cash flow and to find alternative means of generating income.
• Phased Withdrawal: Unlike under the milking approach, where the product could in theory continue indefinitely, phased withdrawal involves setting a hard cut-off date for the product. Before the cut-off date, there may be interim stages at which the product is either pulled form certain channels of distribution or certain geographic areas. Phased withdrawal provides the advantage of enabling the firm to plan the introduction of replacement products. However, it can be a source of dissatisfaction to customers, who may not like the sudden disappearance of their favoured product. A typical example of the phased withdrawal strategy can be found in the automotive industry: car manufacturers normally set hard cut-off dates to existing products, so that both dealers and the public are notified of product withdrawals and new product launches.
• Contracting out or Selling: Loyal users of a product can be retained when the brand or the rights to produce and sell the product are handed on to a niche operator or by subcontracting. Many smaller firms use this strategy since they are flexible enough to offer the product’s market a satisfactory return. Each party involved in this strategy benefits from the deal: the originating firm can dispose profitably of a product it no longer wants, consumers can keep buying products they desire, and the subcontractor or buyer can gain the benefits of a brand they could never have established on their own.

Here is the example of watching recorded television and the various stages of each method:

1. Introduction – 3D TVs
2. Growth  – Blueray discs/DVR
3. Maturity – DVD
4. Decline – Video cassette

The traditional product life cycle curve is broken up into four key stages. Products first go through the Introduction stage, before passing into the Growth stage. Next comes Maturity until eventually the product will enter the Decline stage. These examples illustrate these stages for particular markets in more detail.

• 3D Televisions: 3D may have been around for a few decades, but only after considerable investment from broadcasters and technology companies are 3D TVs available for the home, providing a good example of a product that is in the Introduction Stage.
• Blue Ray Players: With advanced technology delivering the very best viewing experience, Blue Ray equipment is currently enjoying the steady increase in sales that’s typical of the Growth Stage.
• DVD Players: Introduced a number of years ago, manufacturers that make DVDs, and the equipment needed to play them, have established a strong market share. However, they still have to deal with the challenges from other technologies that are characteristic of the Maturity Stage.
• Video Recorders: While it is still possible to purchase VCRs this is a product that is definitely in the Decline Stage, as it’s become easier and cheaper for consumers to switch to the other, more modern formats.

Another example within the consumer electronics sector also shows the emergence and growth of new technologies, and what could be the beginning of the end for those that have been around for some time.

• Holographic Projection: Only recently introduced into the market, holographic projection technology allows consumers to turn any flat surface into a touchscreen interface. 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.
• Tablet PCs: There are a growing number of tablet PCs for consumers to choose from, as this product passes through the Growth stage of the cycle and more competitors start to come into a market that really developed after the launch of Apple’s iPad.
• Laptops: Laptop computers have been around for a number of years, but more advanced components, as well as diverse features that appeal to different segments of the market, will help to sustain this product as it passes through the Maturity stage.
• Typewriters: Typewriters, and even electronic word processors, have very limited functionality. With consumers demanding a lot more from the electronic equipment they buy, typewriters are a product that is passing through the final stage of the product life cycle.

The idea of the product life cycle has been around for some time, and it is an important principle manufacturers need to understand in order to make a profit and stay in business.

However, the key to successful manufacturing is not just understanding this life cycle, but also proactively managing products throughout their lifetime, applying the appropriate resources and sales and marketing strategies, depending on what stage products are at in the cycle.

	Product Life Cycle Stage
	Introduction	Growth	Maturity	Decline
Marketing emphasis	Create product awareness Encourage product trial	Establish high market share	Fight off competition Generate profits	Minimize marketing expenditure
Product strategy	Introduce basic products	Improve features of basic products	Design product versions for different segments	Rationalize the product range
Pricing strategy	Price skimming or price penetration	Reduce prices enough to expand the market and establish market share	Match or beat the competition	Reduce prices further
Promotional strategy	Advertising and sales promotion to end-users and dealers	Mass media advertising establish brand image	Emphasize brand strengths to different segments	Minimal level to retain loyal customers
Distribution strategy	Build selective distribution outlets	Increase the number of outlets	Maintain intensive distribution	Rationalize outlets to minimize distribution costs