How To Determine The Life Cycle Of A Product

Table of contents:

How To Determine The Life Cycle Of A Product
How To Determine The Life Cycle Of A Product

Video: How To Determine The Life Cycle Of A Product

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When selling a product on the market, a manufacturer must be able to foresee the life cycle of his product: how long it will last before demand for it falls and its further production becomes unprofitable.

How to determine the life cycle of a product
How to determine the life cycle of a product

Instructions

Step 1

Consumer demand is influenced by many factors: taste, style, fashion, technological progress, the level of financial capabilities, and much more. The life cycle of a product is the time interval from the moment of the first appearance of a product on the market until the complete cessation of its sales in the same market and its discontinuation.

Step 2

Different product names have their own life cycle. The formation of the predicted value of the life cycle is influenced by indicators of sales volumes and received income. The main stages of the cycle are design, implementation, development, maturity and decline.

Step 3

The development stage is often combined with the implementation stage, bringing the product to the consumer market. This period is characterized by an extreme degree of uncertainty, it is difficult to determine how the consumer will react to the new product, whether there will be demand. At this stage, the marketing services of the enterprise are working closely, advertising is being developed. Accordingly, the costs of marketing and sales are high, the batch of goods is small, trial. There is no profit at this stage.

Step 4

At the stage of development (growth), sales begin. If the consumer likes the product, the volume of production of the product increases, and accordingly, production costs decrease due to the appearance of the first income. If the sales are fast enough, the business can lower the price to reach the potential buyers' market as much as possible, but at this stage it has inevitable competitors. Marketing and advertising continue to work.

Step 5

At the stage of maturity, consumer demand peaks, sales begin to slow down. This is due to the fact that the majority of consumers have already purchased the product. At this stage, the profit reaches its maximum and then begins to decline. Perhaps the enterprise will have to make a decision on the modification, improvement of the product. This leads to additional costs, in addition, advertising costs increase, and special promotions are held to support the product. The company is trying to attract new consumers to its product from a related market sector.

Step 6

A recession stage is inevitable for any product; sooner or later, demand decreases. The product is out of date and is no longer of interest. Competitors are curtailing production and moving to other market segments. The company may try to revive interest in its products and remain on the market for a while, if the decline is not too sharp. However, it makes sense already at the first signs of the beginning of this stage to begin to analyze other opportunities for making a profit.

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