which stage of a product's life cycle typically experiences the highest sales? course hero

Full Answer

What are the different stages of the product life cycle?

Every product goes through the various life cycle phases of introduction, growth, maturity and decline. Depending on its current stage in the product life cycle, a product will have different marketing, financing, manufacturing, purchasing and human resource requirements.

What is the product life cycle and why is it important?

The product life cycle not only explains how sales trends work over the lifetime of a product. It also helps dictate marketing efforts and how much support is needed to enable the product’s future success. This is the stage where a product exits the development and testing phases and enters the market.

What happens during the decline phase of the product lifecycle?

During the decline phase, the product has essentially reached its saturation point. Pricing will either remain stable or decline slightly in order to remain competitive. This stage is where the manufacturer tries to lengthen the product’s lifecycle.

What is the purpose of the introduction stage of a product?

The underlying goal in the introduction stage is to gain widespread product recognition and stimulate trials of the product by consumers. Marketing efforts should be focused on the customer base of innovators – those most likely to buy a new product.

What is the product life cycle?

The Product Life Cycle (PLC) defines the stages that a product moves through in the marketplace. Oligopolistic Market The primary idea behind an oligopolistic market (an oligopoly) is that a few companies rule over many in a particular market or industry, as it enters, becomes established, and exits the marketplace.

What is the introduction stage of a product?

1. Introduction Stage. When a product first launches, sales will typically be low and grow slowly. In this stage, company profit is small (if any) as the product is new and untested. The introduction stage requires significant marketing efforts, as customers may be unwilling or unlikely to test the product.

What happens to the market after a shakeout?

Eventually, the market grows to capacity, and sales growth of the product declines. In this stage, price undercutting and increased promotional efforts are common as companies try to capture customers from competitors. Due to fierce competition, weaker competitors will eventually exit the marketplace – the shake-out. The strongest players in the market remain to saturate and dominate the stable market.

What is selling a product to a niche operator?

Selling the product to a niche operator or subcontractor. This allows the company to dispose of a low-profit product while retaining loyal customers.

What is the goal of the introduction stage?

The underlying goal in the introduction stage is to gain widespread product recognition and stimulate trials of the product by consumers. Marketing efforts should be focused on the customer base of innovators – those most likely to buy a new product.

How are economies of scale realized?

Economies of scale are realized as sales revenues increase faster than costs and production reaches capacity. Competition in the growth stage is often fierce, as competitors introduce similar products. In the growth stage, the market grows, competition intensifies, sales rise, and the number of customers increases.

What is the product life cycle?

The product life cycle not only explains how sales trends work over the lifetime of a product. It also helps dictate marketing efforts and how much support is needed to enable the product’s future success.

What is the focus of a manufacturer during the maturity phase?

During the maturity phase, there is little growth potential and manufacturer focus is on maintaining market share by extending the life cycle as much as possible before competitor-driven oversaturation occurs. Sales levels may experience a decrease at the beginning but should eventually stabilize.

Why are laptops so relevant?

They continue to be relevant because the manufacturers keep adding more advanced components, such as high-resolution cameras and touchscreen capability, but as a concept, the laptop is in its maturity stage, with competitive pricing and different brands to choose from.

What are the hurdles in product development?

This is the stage where a product exits the development and testing phases and enters the market. Unless the seller or manufacturer is a household name, growth is generally slow at the beginning. The product may be first-rate and address a lot of consumer needs, but the public is not familiar with it, so demand will be lower. Other hurdles are: 1 Vendors and in-house sales teams may not yet know enough about the product to sell with confidence 2 There are no clearly defined distribution channels

What happens during the decline phase?

During the decline phase, the product has essentially reached its saturation point. Pricing will either remain stable or decline slightly in order to remain competitive. This stage is where the manufacturer tries to lengthen the product’s lifecycle. They can make significant changes to the product to keep it in the market or withdraw it and move on to something else.

What is the fifth stage of the life cycle?

Some marketing professionals say there is a fifth stage, which is when the product is being developed, while others believe that the life cycle only begins after the product is launched. Nonetheless, each life cycle stage has its own dynamics that affect the manufacturer’s advertising, support, and pricing strategies.

Why do manufacturers take special care during this stage?

Manufacturers have to take special care during this stage to prevent competitors and negative publicity from diminishing or preventing product growth.