Question

Product Life Cycle

The product life cycle is a set of phases a product must go through. It starts from when the product is introduced to the stage at which the product is removed from the market. It is the processes through which the product is testing, promotion, growth, development and decline.

Stages of Product Life cycle

Following are the stages in Product Life cycle and and the dominant characteristics of each stage.

1. Introduction Stage: It is the first stage in product life cycle and it is the stage at which a new product is distributed in the market and make it available to the customers.

Characteristics of Introduction Stage

* Competitors are very low

* Sales are very low.

* Production is very low. Because, the unit cost is high.

* Profit is low due to sales are low.

* Marketing cost is high due to create new customer group and marketing activity.

2. Growth Stage: It is the second stage at which the sales increases quickly. It is the point of Take off.

Characteristics of Growth Stage

* Sales increases the quickly

* Competition increases significantly.

* The customers become more price sensitivity.

* Production increases and the units produced are increasing.

* Profits are rise quickly.

3. Maturity Stage: In the maturity stage the product sales slows done and the market become saturated.

Characteristics of Maturity Stage

* Production and marketing cost rises because market saturation.

* Profits declines at this stage

* Competition is high

* Producers starts to leave from the market

4. Decline Stage: In this stage the consumer interest charges and product is out of market.

Characteristics of Decline Stage

* Profits become very low

* Customers switch their products

-THIS IS THE QUESTION- nice summary of the PLC here. Please explain why you did not include the "shakeout" phase?

Answer 1

A product does not always have the same demand and supply in the market. As it enters the market, it too does have a product life cycle. A product life cycle explains the different stages that the product faces in the market based on its demand and other factors. It consists of four stages namely introduction stage, growth stage, maturity stage and decline stage.

The introduction stage is when the product is newly brought in the market. Few customers know about it and hence the sales and profit derived from it are low. The competition is faces is also low. The main focus is on promotional strategies as the motive of the business here is to increase its manufacturing and marketing so that more people know about it and start buying it. After this comes the growth stage when the product is known and prefered in the market, the sales increase and so does the profit. The demand increases which increases the manufacturing and also the competition as new entrants try to compete for the product. It faces its highest profits and growth in this stage.

In the maturity stage, the growth stops and the market is saturated. The sales start to get slow and profits decrease. Competitors already give ough competition and market saturation leads to higher costs. In the decline stage, the product sales decline totally. The customer preferences change and they no longer want to buy this product. The product starts to face losses and there is no option left than to withdraw the product from the market.

Shakeout phase is not included in the product life cycle because it is a stage of industrial life cycle. In this stage the companies which are not able to compete and survive in this stage are forced out of the industry or merged and acquired by other stronger companies. This does not happen in the product life cycle as in it if a product is unable to peform, it reaches the decline stage.