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Last Updated: Oct 24, 2016 URL: http://asmadrid.libguides.com/content.php?pid=685507 Print Guide RSS Updates

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An Introduction

Product Life Cycle Stages

Product Life Cycle StagesAs consumers, we buy millions of products every year. And just like us, these products have a life cycle. Older, long-established products eventually become less popular, while in contrast, the demand for new, more modern goods usually increases quite rapidly after they are launched.

Because most companies understand the different product life cycle stages, and that the products they sell all have a limited lifespan, the majority of them will invest heavily in new product development in order to make sure that their businesses continue to grow.

Product Life Cycle Stages Explained

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.

Product Life Cycle Examples

It’s possible to provide examples of various products to illustrate the different stages of the product life cycle more clearly. 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

Credit: Productlifecycle.com

      

    Company Information

    Yahoo! Finance

    Business.com

    Hoovers

    InBusiness Business Directory and Business Profiles

    LinkedIn

    Zoom Info (requires a free signup)

        

      Product Components

      Components

      Component Manufacturers

      Thomas Net

      Raw Materials

      USGS Minerals Information Great for finding information on raw materials

          

        Trade Associations and Organizations

        Organizations

        These organizations have been compiled by Margaret Schaus at Brynmawr College.

        Trade Associations

            

          How Products are Made

          Good Stuff? - A Behind-the-Scenes Guide to the Things We Buy

          How everyday things are made A project form the Alliance for Innovative Manufacturing at Stanford University. Short video clips on the manufacturing process for items such as chocolate, motorcycles, plastics, etc.

          How Products are Made Simple, basic info -- good for background and getting started.

              

            Critical Raw Materials

            Raw materials are crucial to Europe’s economy and essential to maintaining and improving our quality of life. Securing reliable and unhindered access to certain raw materials is a growing concern within the EU and across the globe. To address this challenge, the European Commission has created a list of Critical Raw Materials (CRMs). CRMs combine a high economic importance to the EU with a high risk associated with their supply. Examples of CRMs include rare earth elements, cobalt and niobium.

                

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