Product Life Cycle

Product Life Cycle Introduction 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.Advertising We will write a custom essay sample on Product Life Cycle specifically for you for only $16.05 $11/page Learn More 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 Old products are finally withdrawn from the market marking decline (Marketing Teacher, 2000, Para 1).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 t he 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 First of all, it is possible to tell when a product can be introduced or withdrawn from a market.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. Stages of Product Life Cycle In addition to the four stages in figu re 1 presented, I will also discuss the development phase in this section. Figure 1. The Product Life CycleAdvertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Source: Christiansen et al, 2010 p 801 Development Phase 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 companys 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 nec essary to take into account the customers demands that a product should meet (Haslam, 1989, p. 20 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).Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More 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. Figure 2. iPods Sales Chart Source: Ashcroft, Nd, 8 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 h ad been reduced from 11 million to 10.2 in a span of three months. Figure 3. Apple Product Sales by Segment Source: Ashcroft, Nd, 8 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. Different Product Market Phases and Their Impact on Cost Recovery In introduction phase of the product, costs ar e 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. Summary Product life cycle analys is 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). References Ashcroft, J Nd, Apple in the digital age from the iPod to the iPad. Available from: pro-manchester.co.uk/assets/Applecasestudy.pdf. [5 December 2011]. Avlonitis, G 2001, Strategic Industrial Marketing, Stanoulis, New York. Business 101 - The Basics n.d., Product and Pricing Strategies. Available from: http://faculty.piercecollege.edu/rskidmore/Ghost/library/Chapters/CHPT12-04.pdf. [5 December 2011]. Cahill, B. iPod Sales – does this graph look familiar? Available form: http://tutor2u.net/blog/index.php/business-studies/comments/ipod-sales-does-this-graph-look-familiar. [5 December 2011]. 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. Available from: urenio.org/tools/en/Product_Life_Cycle_Management.pdf. [5 December 2011]. Kotler, P., Armstrong, G. 2001, Principles of Marketing. Prentice Hall, New Jersey.  Marketing Ass ignment No.3. (Nd). 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