essay questions on product life cycle

Product Life Cycle Essay

Introduction, stages of product life cycle, development phase, extended example, different product market phases and their impact on cost recovery.

According to definition provided in the biology sciences, living things follow a rigid development lifecycle of birth, growth, maturity and death. This cycle forms the basis for the concept of product lifecycle and, by extension, a framework for describing the path a certain product will follow in a particular period of time.

In product management, this concept comprises of introduction, growth, maturity and decline stage. In the introduction stage, it takes some time for a product to be accepted by the public, but by the time it reaches the growth stage it is able to attract many customers. In maturity stage, its market even out as competitors develop competitive products, and its popularity declines. Old products are finally withdrawn from the market marking decline (Marketing Teacher, 2000, Para 1).

Since PLC depicts the product path from the launching period, it is a perfect tool for managing a product. Organizations can establish customer demands and alter the products features to meet these requirements. In addition, it helps the organization to determine when cost recovery will commence, as well as define the volume of transactions.

This information is important to the organization for two reasons. First of all, it is possible to tell when a product can be introduced or withdrawn from a market. Secondly, it gives information about a product success or failure, as well as its position relative to competitors’ products.

However, PLC has its limitation, especially it lacks for the universality in application (Tellis, nd, 6). This paper discusses the concept of PLC and how it is applied to cost recovery. It further examines how the concept has been successfully applied in development of technological products by Apple Inc.

In addition to the four stages in figure 1 presented, I will also discuss the development phase in this section.

This phase involves the conception of a product idea and various changes made on the basis of the original mode before it is being developed into a final product. The model product is passed through the test market before being delivered to the target customers. In the development stage, company does not generate any revenue, although it incurs expenditures. This stage is followed by launching of the model product that survives test market.

Introduction Stage

At this stage, the product adopted after development phase is launched. The company’s goal in this stage is to ensure that the product will have maximum impact by the time it goes in the market. This is why it is necessary to take into account the customer’s demands that a product should meet (Haslam, 1989, p. 20-21).

Because of promotion at this stage, the costs are high, advertisements and need for equipment for distribution are needed, and thus, this phase involves spending with little returns (NetMBA, 2002, Para 2). Some companies prefer to outsource some functions such as distribution in order to reduce the cost. The main goal of this stage is to establish a customer loyalty and increase product demand.

Growth Stage

A product that makes to this stage enjoys public awareness and significant rise in sales. As a result, the company is satisfied because it can now start recovering its initial costs (Business 101 — The Basics, Nd, 7). Because of the increased public awareness, distributors readily accept the product since it is easy to market.

Consequently, the company derives profit and recovers initial expenditure. This stage is an opportune moment to maximize product market share. Products that are new entrants into the market gain market share quite easily (Komninos, 2002, 6). However, as the market expands, competition begins to emerge and, as a result, prices begin to decline.

Previous stage competitions continue and increase in strength and ferocity. This is because more competitors have begun to develop similar products. Competition to maintain the market share becomes intense and profits starts to dwindle.

Differentiation of strategies applied in order to survive in this market that were initiated at the previous stage are widely used. The result of this differentiation is a market that has many product models.

At the beginning of this stage and end of the previous one, sales have reached their peak levels. Customers are already familiar with the products and they have several substitutes to choose from, thus demand depends on customer preference of a products feature. Since the brand is established, advertisement expenditure is minimal.

Profit margins are also low as key players cut their prices in order to maintain market share. The best companies and products are the ones that stand competition at this stage. Thus, the main goal of this stage is to expand product market share from previous stage.

Decline Stage

At this stage, many companies abandon the market as demand for their products decreases due to the fact that customers change their tastes and preferences. This tendency provokes the development of more competitive products. According to Avlonitis (2002, 14), the company’s strategies influences the decline of a product, as well as the generation of this products.

Old products will attract little customer demand, but companies that have highly differentiated products may continue to make profit (Perreault et al, 2009, 243). As a result, companies register low sales in this stage due to changes in customers’ tastes and fashions. As a result, companies embark on other marketing strategies hoping to rejuvenate and extend the product line on the marketplace.

In this section, I will use iPod and iPhone products to demonstrate the differences between mature and growing market. Apple Inc is an American multicultural corporations dealing with marketing and designing of computer software, consumer electronics, and Personal computers (Markoff, 2011).

Technological products have shorter product life cycles because companies are persistently evolving and improving their products by prolonging their significance and extending their life. Apple Inc, for instance, develops new and better technology after every twelve to eighteen months and, as a result, the products it offers to its customers are always innovative and revolutionary.

iPod sales trend in figure 2 shows the product cycle. Before its peak sales in 2008, various generations of the product had been introduced such as Nano, Class and Touch and iPhone in the middle of the year (Cahill, 2011, Para 2). This year, there was little competition for iPod but introduction of iPhone distracted its potential sales.

Both 2008 and 2009 years presented in the figure indicate that the sales had been stabilized and afterwards started to decline. In 2010, Apple quarterly sales report revealed a decline in the sales of iPod. These sales had been reduced from 11 million to 10.2 in a span of three months.

Figure 3 shows that iPod overstayed in a maturity stage and it’s now entering its decline. On the other hand, iPhone curve shows that these days it is going into its growth stage, and it has registered an increase in sales. The company has also introduced a new product in 2009 called the iPad.

However, it is iPod that has significantly contributed to the higher profits that apple has experienced. In spite of this, its sales graph has reflected the S-curve that indicates that it is undergoing the product life cycle. As we have already discussed, in order to prevent decline, it is necessary to improve the product features to rejuvenate the growth of sales. This may include development of new iPad model that will have additional feature.

In introduction phase of the product, costs are higher and there is no return for the company. As a result, it does not recover the cost incurred in product development at this stage. As the product progress to the third stage of PLC, company registers increased sales and the brand is be recognized, this results in further cutting the cost and increasing returns.

In the maturity stage, since the product brand is already established, the company does not spend much on promotion (Nagle & Hogan, 2006). In our case, iPod made more profit because it overstayed in the maturity stage, which is the phase with the least costs.

Since in growth stage the company registers increasing sales, iPhone curve is rising steadily, but in the maturity, the sales volumes even out because the market is beginning to be saturated by products of different models. This PLC analysis tool is important to a company like Apple Inc, which offers goods in the technological industry where the product must be constantly enhanced.

Product life cycle analysis reveals different pictures for a production. In introduction stages, capital outlay is high and sales are low which results in low profits. This is followed by growth where sales volumes begin to rise and cost lowers due to decrease in advertisement and promotions costs.

This stage register an increase in profits, but spending is still high as a company strives to expand market share. In maturity stage, cost gets even lower as the product brand is established, competition increase, and new generation products are developed. The product is more profitable due to lower cost in this stage. At the decline stage, sales decrease due to the fact that customers change tastes and profit margin remains intact (Marketing assignment No. 3, Nd, 7).

Ashcroft, J Nd, Apple in the digital age from the iPod to the iPad . Web.

Avlonitis, G 2001, Strategic Industrial Marketing , Stanoulis, New York. Business 101 — The Basics n.d., Product and Pricing Strategies . Web.

Cahill, B. iPod Sales – does this graph look familiar ? Web.

Christiansen J. K., Varnes C. J., Gasparin M.,Storm-Nielsen D. and Vinther E. J. 2010, ‘Living Twice: How a Product Goes through Multiple Life Cycles’. J PRODD MANAG 27: 797-827.

Haslam, C., Neale A., & Johal S. 1989, Economics in a business context, Cengage Learning EMEA London.

Komninos, I. 2002, Product Life Cycle Management. Research paper for Urban and Regional Innovation research unit, Aristotle University of Thessaloniki , pp. 1-26. Web.

Kotler, P., & Armstrong, G. 2001, Principles of Marketing. Prentice Hall, New Jersey. Marketing Assignment No.3 . Web.

Marketing Teacher. (2000). ‘The Product Life Cycle (PLC)’. Marketing Teacher. Web.

Markoff, J. 2011, ‘Apple Incorporated’. The New York Times . Web.

McNamara, C., Basic Overview of Organizational Life Cycles . Web.

Nagle, T. T., & Hogan J. E. 2006, The Strategy and Tactics of Pricing. A guide to Growing More Profitability , Pearson Education, New Jersey.

NetMBA. 2002, The Product Life Cycle . Web.

Perreault, W. D., Cannon J. P., & McCarthy E. J. 2009, ‘Product Management and New Product Development’. In Basic Marketing. A Marketing Strategy Planning Approach, Ed. 17 Chap 10. McGraw-Hill, New York.

Tellis, G., ‘An Evolutionary Approach to product Growth Theory’. Division of Research Graduate School of Business Administration The University of Michigan .232: 1-31.

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IvyPanda. (2019, April 29). Product Life Cycle. https://ivypanda.com/essays/product-life-cycle-essay/

"Product Life Cycle." IvyPanda , 29 Apr. 2019, ivypanda.com/essays/product-life-cycle-essay/.

IvyPanda . (2019) 'Product Life Cycle'. 29 April.

IvyPanda . 2019. "Product Life Cycle." April 29, 2019. https://ivypanda.com/essays/product-life-cycle-essay/.

1. IvyPanda . "Product Life Cycle." April 29, 2019. https://ivypanda.com/essays/product-life-cycle-essay/.

Bibliography

IvyPanda . "Product Life Cycle." April 29, 2019. https://ivypanda.com/essays/product-life-cycle-essay/.

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The Importance of Product Life Cycle

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Stages of Product Life Cycle:

Importance of product life cycle:.

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Understanding Product Life Cycle, Essay Example

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Products and go through different stages, and these stages (their order and length) have an impact on strategic alternative selection. The product life cycle can be analyzed based on the market conditions (sales and profits), throughout the time when the product or service is available for customers. The benefit of using product life cycle assessment is improving the organization’s knowledge about the market conditions. However, the disadvantage is that the assessment is based on individual judgements and predictions of the future. There are many unexpected market trends that can affect the life cycle of the service.   The four stages of product life cycle are: introductory, growth, maturity, and decline. Profitability, external conditions, and demand are different during each stage of the life cycle. In the introduction stage, sales are low, and profits are negative. There are only a few competitors, and the cost to customers is high. In the growth stage, revenue grow rapidly, profits peak, and the number of competitors grows, which makes the organization reduce its prices. In the maturity stage, growth of revenues is low, cost to customers is reduced, and competition is increased, while profits remain high. In the decline stage of the product life cycle, sales start to decline, profits are low, and prices are low. The number of competitors is declining.

It is important for a health care organization to complete a product life cycle analysis in order to select the right market entry strategy. No matter which market entry strategy the organization chooses, it needs to know the product life cycle associated with the strategy.  A product life cycle analysis answers the questions managers might have related to the market entry strategy, such as:

• Which stage of the cycle the organization’s products or services are
• How long is the current stage (and the entire cycle) likely to last

The results of the external analysis and environmental analysis can help judge the likely scenario related to the life cycle of the product or service. As an example, if the product or service is in the maturity stage, some of the strategy choices most suitable are market development or product development, while related diversification is not recommended.

Works Cited

Swayne, Linda E., W. Jack Duncan, and Peter M. Ginter.  Strategic management of health care organizations . John Wiley & Sons, 2012.

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Stages of the Product Life Cycle

Introduction, background to the study.

Marketing involves all activities carried out in the creation and satisfaction of customer needs profitably (Kotler & Keller, 2008, p. 43). The marketer is the liaison function between activities that constitute marketing and the clientele. Marketing activities involve the integration of the four Ps referred to as the marketing mix. Therefore as a marketer, one has to be acquainted with the product in terms of its characteristics, market performance and its ultimate life cycle.

As the basis upon which other marketing activities will be based, the product life cycle refers to, the time period between the products’ debut into and final exit from the market. The product Life Cycle is a set of five sequential stages which start upon the introduction of a new product into the market. The end of the cycle may result in a real product death or spell a return to the initial stage through innovation.

The product life cycle forms a basis for product management. This means that it is possible for management team to develop appropriate strategies. The report analyzes the various stages of a product and relevant marketing mix. Stages of product development before commercializing the product are also evaluated.

The report gives an analysis of the various marketing mix strategies that should be considered in product life cycle. The 4 stages of PLC are analyzed. On the other hand, the marketing mix strategies considered relate to pricing, distribution and promotion. A conclusion is given and relevant recommendations outlined. However, the report does not consider how these strategies will be implemented.

Introduction stage

This stage is characterized by a low level of sales since consumers are not aware of the product. A significant cost is incurred in the process of launching the product. These also relate to conduction of research and development and development of distributional system. As a result, a firm receives minimal profits from selling the product. In addition, introduction stage is characterized by minimal level of confidence amongst the suppliers. This arises from the fact that the products performance in the market is unknown (Pride, Hughes, Kapoor, p. 367).

In order to acquire and maintain product relevance and market share, each stage of the product life cycle requires different pricing approach. At the introduction stage, attractive pricing is used to prompt purchases and raise product awareness. Most of the new product sellers use the penetration pricing policy that involves foregoing present benefits for anticipated future benefits by selling at discounts. In addition, skimming pricing strategy can also be integrated in order to recoup investments over the shortest duration.

Skimming price strategy entails setting the price of a product at a relatively high price point. This is mainly considered if the product has a high competitive advantage compared to other competing products resulting from innovation (Nagle & Hogan, n.d. p.4). However, the price is reduced in the future as the demand reduces. The main objective of incorporating skimming pricing strategy is to reap the short-term profits which are relatively high. Skimming pricing strategy can contribute towards a firm attaining ‘high-quality’ image from the price of its product.

Market communication is one of the key considerations that the firm’s management team should consider in launching a new product or service (Bregendahl, Madsen & Haase, 2010, p. 18). Integrated Market Communication (IMC) should be integrated during the introduction phase. This entails incorporation of diverse methods of market communication. Introductory promotion is also aimed at convincing suppliers to include the product.

At this stage, the distribution of the product is selective and is not well developed. This results from the fact that the product is not fully integrated by consumers in their consumption pattern.

Growth phase

At this stage, a firm attains a high revenue growth. In addition, the level of sales increases since market awareness is high and product benefits are well recognized by consumers. A large number of retailers become interested at distributing the product. The product faces intense competition from similar products being developed (Pride, Hughes, Kapoor, 2010, p. 367).Intensity of competition increases a. There are various pricing strategies that the management can consider. For instance, the firm can maintain the high price if the level of demand is high. Alternatively, price can be reduced in order to increase the number of customers.

In order to attain market brand preference, increased advertising is integrated at this stage (Bregendahl, Madsen & Haase, 2010, p. 19). The core objective of increasing advertisement is to build a broad audience through awareness.

Maturity stage

The firm receives the highest profits from selling the product at this stage. Sales level increase but at a slow rate (Pride, Hughes, Kapoor, p. 367). Development of pricing policy at this stage is important since it determines whether the product will survive in the future. Firms should conduct appropriate price reduction. However, it should be ensured that price war does not result.

New channels of distribution are considered in order to reach a wide market. In addition, firms offer incentives to other resellers distributing the product so as to encourage them to continue stocking the product.

Building brand loyalty is paramount at this stage. This is due to the fact that it increases the consumer level of confidence in the product. Considering the intensity of competition at this stage, firms consider conducting intensive promotion of the product can be conducted through integration of product differentiation. In addition, incentives are also used in an effort to entice competitor’s customers to shift from their current brand and conduct repeat purchases of the product.

Decline stage

Sales level start to decline resulting from the market becoming saturated. In addition to the product experiencing technological obsolescence, a shift in customers’ tastes is also experienced. The level of profitability may be maintained if sufficient brand loyalty was attained. The unit cost associated with the product may increase as the value of production is reduced. The firm may decide to reduce the price in an effort to liquidate the inventory. Alternatively, the firm may decide to retain the price in order to supply to its target market.

At this stage, expenditures related to promotion of the product are relatively low. Promotional expenses incurred at this stage are aimed strengthening the firm’s brand image in the market. This enables the product to continue being distributed in the market.

Product Research and Development of PLC

New Product Development (NPD) refers to the entire process undertaken in introducing a new product to the market. For the product to be successfully developed, it is paramount that comprehensive research be conducted (Alexander, 1997, p. 106). The initial stage entails idea generation through various mechanisms such as SWOT analysis, competitors’ analysis, from sales people, employees, trade shows and focus groups. The ideas generated are screened to eliminate concepts which might result to wastage of resources. Idea screening also considers the target market, product cost effectiveness, its benefits, features and possibility of integrating technology in its development.

Business analysis is also conducted to determine the price and product profitability. A prototype is produced to test the product’s usage in real situations. In addition, customer interviews are conducted to enable the firm make necessary adjustments to the product. A technical implementation plan is also developed by considering issues such as supplier collaboration, department scheduling, requirement publication and development of contingency plan. By successfully considering these stages, a firm can be able to determine the idea to commercialize and launch a product.

Product lifecycle consists of four stages whereby each stage has got unique characteristics. Consideration of the entire product lifecycle is important in development of relevant marketing strategies. Some of the important marketing strategies that should be considered in the PLC include the marketing mix strategies. These relate to product, promotion, distribution and promotion. Formulation of appropriate marketing strategies determines the effectiveness with which a firm develops its competitive advantage. The ultimate result is that the product is able to develop in the long run.

Recommendations

In order for a new product to succeed in the future, the management should consider all the stages of PLC. Some of the issues that should be considered include.

• Adjusting the marketing mix strategies appropriately according to the product’s stage.
• Conducting effective research and development in the process of developing a new product. This will prevent possible losses upon commercialization of the developed product.

Reference List

Bregendahl, M., Madsen, J. & Haase, M. 2010. Market communication . Massachusetts: Systime. Web.

Kotler, P. & Keller, K. 2008. Marketing management . New York: Prentice Hall Publisher.

Nagle, T. & Hogan, J. n.d. The strategy and tactics of pricing . Sydney: Mahesh Gupta. Web.

Pride, W., Hughes, R. & Kapoor, J.2010. Business . New York: Cengage Learning. Web.

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Discussion Questions Related to the Product Life Cycle Concept

Provided by James R. Martin, Ph.D., CMA Professor Emeritus, University of South Florida PLC Main Page | PLC Multiple Choice Questions | Graduate MA Course

1. What is the relationship between the product life cycle and the value chain and value added concepts? (See the Donelan & Kaplan , and Clinton & Graves summaries).

2. What are the stages of the product life cycle (PLC) in terms of the marketing or revenue producing perspective? (See the PLC summary ).

3. Is the length and sequence of each of these stages predictable in terms similar to biological organisms? (See the PLC summary ).

4. What are the stages of the PLC from the production perspective? (See the PLC summary ).

5. What PLC stages are included in the customer or consumption perspective? (See the PLC summary ).

6. What is the difference between product life cycles and industry life cycles? (See the PLC summary ).

7. What is the main objective of PLC analysis from: 1) the producer’s perspective? 2) the customer’s perspective and 3) from society's (government’s) perspective? (See the PLC , Boer, Curtin & Holt , Lawrence & Cerf and Hammer & Stinson summaries).

8. What are the producer’s strategic objectives at the various (overlapping marketing and producer) stages of the PLC, i.e., 1) conception, design and development, 2) startup and production, 3) growth and production, 4) maturity and production 5) decline revitalize and abandon? (See the PLC summary and Clinton & Graves summary). (The target costing summaries are relevant to this question).

9. Susman (1989) shows expense indicators for the various stages in his Exhibit 1 except for the conception, design and development stage where he includes only R&D. What is another appropriate expense or cost related indicator for these combined stages? (See the PLC and target costing summaries).

10. Susman (1989) also indicates that profits are zero in the conception, design, and development stages. What is an appropriate measure of income or profit to consider in these stages? (See the PLC and target costing summaries).

11. What is the meaning of the term technological risk and what type of investment strategy creates the greatest amount of this type of risk? (See the PLC , Investment Management summaries. The Hayes & Wheelwright summary is also relevant).

12. What is the meaning of the term market share risk and what type of investment strategy creates the greatest amount of this type of risk? (See the Investment Management summary . The Hayes & Wheelwright summary is also relevant).

13. Which stages of the PLC does traditional cost accounting consider? Which costs are considered? (See the PLC summary ).

14. Which stages of the PLC does life cycle costing consider? Which costs are considered? (See the PLC , Hertenstein & Platt , Clinton & Graves and Howell & Soucy summaries).

15. What is an experience curve or learning curve? (See the Learning Curve summary ).

16. What is forward pricing? Hint: The answer is related to the learning curve (Susman 89). (See the PLC and Learning Curve summaries).

17. Why would forward pricing be used in the startup stage of the PLC? (See the PLC summary ).

18. How does the PLC concept focus on the long run as opposed to the short run? (See CAM-I Figure 2-3 & Figure 2-4 and the PLC , Hertenstein & Platt and Clinton & Graves summaries).

19. What are some of the things that are emphasized at the design and development stages of the PLC? (See the PLC and Cokins 2002 summaries).

20. Why are companies reluctant to use the PLC concept? (See the PLC summary ).

21. What are the two main life cycle strategies? (See the PLC summary ). (See Clinton & Graves for a 3rd strategy, and Hayes & Wheelwright for 4 growth models).

22. What are economies of scale? What is the difference between the static concept and the dynamic concept? (See note on Economies of Scale ).

23. What are economies of scope?

24. How do the concepts of economies of scale and scope relate to the two types of strategy referred to in question 21? (See the PLC summary and Hayes & Wheelwright summaries).

25. What percentage of the product’s life cycle costs are determined before production starts? (See the CAM-I summary ).

26. What is the tradeoff between design and development costs and production and logistical support costs? (See the CAM-I Figures 2-4 and 7-2 and the Cokins 2002 summary).

27. How are the various types of costs (engineering, manufacturing and logistical support) distributed across the PLC? (See CAM-I Figure 5-2 ).

28. What is the portfolio theory or concept? (See the PLC summary and Adamany & Gonsalves summary).

29. How is the portfolio concept related to the PLC concept? (See the PLC summary and Adamany & Gonsalves summary).

30. What are the final customer’s product life cycle costs? (See the Artto and PLC summaries).

31. When and how should the customer’s PLC costs be considered by the customer? (See the PLC summary for the example provided by White and Ostwald ).

32. Shields and Young (1991) make a distinction between life cycle costs and whole life costs. What is the difference between these concepts? (See Shields & Young summary). (See the Estes summary for a discussion of social or stakeholder accounting).

33. When should the final customer’s PLC costs be considered by the producer? (See the Estes summary for some ideas).

34. Discuss the problems created by the traditional cost focus? (See the PLC summary and Hertenstein & Platt summary).

35. Discuss the relationship and compatibility of the PLC concept with the other concepts such as Deming’s theory of management, ABC, ABM, JIT, and TOC.

36. Discuss the underlying assumption in standard costing related to cost drivers and the reason cost allocations based on this assumption tend to create distortions in customer and channel profitability. (See the Manning summary).

37. Discuss the underlying assumption in activity based costing related to cost drivers, as described by Manning, and the reason cost assignments based on this assumption tend to create distortions in customer and channel profitability. (See the Manning summary).

38. Discuss the underlying assumption in Manning's SCM approach related to cost drivers and the reason cost assignments based on this assumption tend to create more accurate estimates of customer and channel profitability. (See the Manning summary).

39. Is the invalid assumption referred to in question 37 part of the ABC concept? Discuss this issue.

40. How is target costing related to product life cycle management? (See Target Costing ). (See the Yu-Lee summary for a critics view of target costing).

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Product Life Cycle Development Essays

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