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Product Life Cycle - Free Essay Examples and Topic Ideas

Product life cycle refers to the stages a product goes through from its inception to its eventual decline and discontinuation. There are typically four stages: introduction, growth, maturity, and decline. During the introduction stage, the product is launched and marketed to create awareness and generate demand. In the growth stage, sales increase rapidly as the product gains popularity and competition increases. In the maturity stage, sales growth slows as the market becomes saturated, and the product may face declining profitability. Finally, in the decline stage, sales decrease as newer products or technologies emerge, and the product is eventually phased out. Understanding the product life cycle is important for businesses to plan their marketing and product strategies, manage inventory levels, and make informed decisions about investments and resource allocation.

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Product Lifecycle Phases and Their Importance

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The four fundamental stages in a product cycle include introduction, growth, maturity, and decline. All these stages are pertinent to the development of a company. The value of having a product life cycle in an organization is to ensure that the firm understands that its products have a limited lifespan (Saaksvuori 2014). Thus, the company will be forced to invest deeply in new product development for the survival of the business.

The product life cycle is important in ensuring that a firm maintains its competitive edge in the market (Niemann 2009). The product life cycle is also an important principle that manufacturers need to comprehend to make profits and survive in the business. Each stage is strategically important to an organization. The introduction stage deals with the launching of the product. During this time, the size of the market is small. Thus, the firm is not expected to make much revenue. Also, in the introduction phase, firms incur costs in research and development. Other expenses are experienced in product testing and market studies.

This stage is critical to a company as it facilitates investment in the best method to reach the consumers. In the growth stage, business experiences a steady increase in revenues from sales and profits. Additionally, the company enjoys benefits from economies of scale and profit margins. The increase in revenue would be pertinent to the respective business to invest in promotional activities (Wang 2011). The promotional activities are geared towards the maximization of the potential of the particular growth stage. Once a firm majors in a particular promotional medium, it will be able to use it next time it introduces a product in the market.

In the maturity phase, the product becomes established. In this phase, the focus of the business is to retain the market share captured (Stark 2011). In addition, a firm must devise the most appropriate competitive method to prevent the operations of its competitors. Thus, the focus shifts to marketing. The company also engages in product modifications to increase its competitive edge.

The significance of the maturity stage is that a company can determine the marketing strategies that are best to use when a product reaches maturity (Saaksvuori 2014). In the decline stage, the product has reached the final stage. In this phase, the market shrinks slowly. One reason behind the shrinkage is that the market becomes saturated with the product. Besides, clients might be switching to the closest substitutes (Giordano 2012). Not only could the consumers be switching to substitutes, but also the different types of products.

Phases in the Product cycle are evaluated based on the outcome of each phase. The phases are used to indicate the next line of action to take. For instance, the introduction phase gives a clue on how an organization is going to handle the growth phase. In the end, the level of customer satisfaction, the number of customers attracted, and the revenues realized indicate how the stages are important. The most crucial stage is the decline stage.

This stage is inevitable. Most firms counteract the repercussions of this stage by switching to cheaper markets or less-expensive production techniques (Niemann 2009). The importance of this phase is that it enables a firm to be adaptive to negative market shocks such as a decline in sales and a reduction in the number of customers. Focus on innovation makes certain that there is product achievement in the development of the other components. Also, a focused attention design-manufacturing interface is significant for less effective marketing methods.

ADNOC (Abu Dhabi National Oil Company) is a firm in the UAE that has utilized the concept of product life cycle. The firm majors in the marketing and distribution of refined products (Abu Dhabi National Oil Company 2016). The products are meant to satisfy petroleum-product users in the UAE. Once the company realized that the market was saturated with its products, it resulted in modifying them. The firm introduced different packaging of the petroleum products using branded containers (Field 2008). In addition, the company lowered the prices of the products to continue holding the attracted market share by its side.

In conclusion, it can be indicated that the product lifecycle is important to understand the growth of a firm. The cycle enables a firm to change policies and tactics to address the outcome of each stage. If a firm successfully comprehends and address each stage successfully, profits and increased sales will be realized.

Abu Dhabi National Oil Company (ADNOC) 2016. Web.

Field, F 2008, China, India and the United States: competition for energy resources . Abu Dhabi, The Emirates Center for Strategic Studies and Research. Web.

Giordano, M 2012, Product Life-Cycle Management Geometric Variations . London, Wiley. Web.

Niemann, J 2009, Design of Sustainable Product Life Cycles . Berlin, Springer. Web.

Stark, J 2011, Product Lifecycle Management 21st Century Paradigm for Product Realisation . London, Springer. Web.

Saaksvuori, A 2014, Product Lifecycle Management . Berlin, Heidelberg, Springer Berlin Heidelberg. Web.

Wang, H 2011, Green Supply Chain Management: Product Life Cycle Approach . New York, McGraw-Hill. Web.

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IvyPanda. (2020, July 20). Product Lifecycle Phases and Their Importance. https://ivypanda.com/essays/product-lifecycle-phases-and-their-importance/

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IvyPanda . (2020) 'Product Lifecycle Phases and Their Importance'. 20 July.

IvyPanda . 2020. "Product Lifecycle Phases and Their Importance." July 20, 2020. https://ivypanda.com/essays/product-lifecycle-phases-and-their-importance/.

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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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The 6 Stages of the Product Life Cycle [+Examples]

Published: September 14, 2023

When I was 12 years old, I used to be confused about my cousin's CD collection. Why have CDs when I could go on iTunes and listen to all my favorite songs? This is a perfect example of a product life cycle (PLC) in action.

No one wants their product to become “obsolete” and reach the end of its product life cycle. That’s why it’s important to understand what stage your product is in so you can make better marketing and business decisions.

Below, we’ll learn about the product life cycle inside and out. If you’re in a pinch, use the links below to jump straight to what you need:

What is the product life cycle?

What are the stages of the product life cycle, importance of the product life cycle, breaking down the product life cycle theory, product life cycle marketing strategies, product life cycle examples, international product life cycle, when to use the product life cycle.

The product life cycle is the succession of stages that a product goes through during its existence, starting from development and ultimately ending in decline. Business owners and marketers use the product life cycle to make important decisions and strategies on advertising budgets, product prices, and packaging.

In the marketing industry, the typical depiction of the product life cycle only has four main stages — Introduction, Growth, Maturity, and Decline. At HubSpot, we agree that these are vital for a product, but the two stages “Development” and “Decline” aren’t nearly covered enough.

This phase can last for a long time, depending on the complexity of the product, how new it is, and the competition. For a completely new product, the development stage is particularly difficult because the first pioneer of a product isn’t always as successful as later iterations.

Before full-scale production, the product may be released in a limited market or region for testing purposes. This allows companies to assess market acceptance, gather user feedback, and make necessary adjustments before a wider launch.

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2. Introduction

The introduction stage happens when a product is launched in the marketplace. This is when marketing teams begin building product awareness and targeting potential customers. Typically, when a product is introduced, sales are low and demand builds slowly.

In this phase, marketers focus on advertising and marketing campaigns. They also work on testing distribution channels and building product and brand awareness.

This stage is crucial because companies have the opportunity to shake up the status quo and capture the attention and loyalty of early adopters. The positive experiences and word-of-mouth recommendations from these early customers can influence the broader target market and accelerate product adoption.

Some examples of products currently in the introduction stage include:

• Generative AI
• Self-driving cars
• 3D televisions

Ultimately, the success of this stage sets the foundation for the product’s future growth and success in subsequent stages of the product life cycle.

During the growth stage, consumers have accepted the product in the market and customers are beginning to truly buy in. That means demand and profits are growing, hopefully at a steadily rapid pace. This momentum is crucial for sustaining business operations, funding further product development, and generating returns on investment.

As companies scale, they can benefit from lower per-unit production costs, improved supplier relationships, and optimized distribution networks.

However, there are some challenges that come with the growth stage. As the market for the product expands, competition grows. Potential competitors will see your success and will want in.

Some products that are currently in the growth stage are:

• Smartwatches
• Electric cars

During this stage, it’s important to keep attracting new customers and solidify your brand image so you can stay ahead of the competition.

4. Maturity

The maturity stage is when the sales begin to level off from the rapid growth period. At this point, companies begin to reduce their prices so they can stay competitive amongst the growing competition. Streamlining production processes, negotiating favorable supplier contracts, and optimizing distribution networks also become important considerations.

This is the phase where a company begins to become more efficient and learns from the mistakes made in the introduction and growth stages. Marketing campaigns are typically focused on differentiation rather than awareness. This means that product features might be enhanced, prices might be lowered, and distribution becomes more intensive.

During the maturity stage, products begin to enter the most profitable stage. The cost of production declines while the sales are increasing.

• Smartphones
• Video game consoles

5. Saturation

During the product saturation stage, competitors have begun to take a portion of the market and products will experience neither growth nor decline in sales.

Typically, this is the point when most consumers are using a product, but there are many competing companies. At this point, you want your product to become the brand preference so you don't enter the decline stage. To achieve this, you’ll want to focus on providing exceptional service and building strong relationships with your customers.

In a saturated market, innovation also becomes essential to stay relevant. Businesses must continuously invest in research and development to improve products and offer new features. Failure to do so may lead to product obsolescence and loss of market share.

Some examples of products in the saturation stage are:

• Streaming services
• Breakfast cereals
• Soft drinks

Unfortunately, if your product doesn‘t become the preferred brand in a marketplace, you’ll typically experience a decline. Sales will decrease during the heightened competition, which is hard to overcome.

Decline also occurs when products become outdated or less relevant as newer technologies enter the market. Consumers may turn to more advanced options, rendering the declining product less desirable.

If a company is at this stage, it'll either discontinue its product, sell the company, or innovate and iterate on its product in some way.

Here are a few examples of products in the decline stage:

• CDs and cassette tapes
• Landline telephones

The best companies will usually have products at several points in the product life cycle at any given time. Some companies look to other countries to begin the cycle anew.

The product life cycle is important because it informs an organization’s management and decision-makers how well a product is performing and what strategic actions it will take to succeed. This helps companies allocate resources like staff, budgets, shows which products should be prioritized, and where the company should innovate next.

Other benefits of using the product life cycle include:

• Make better marketing investments and decisions
• Easier to make long-term plans
• Allows for better decision making with accurate information on performance
• Easier to streamline current processes within your company

Product Life Cycle Limitations

While using the PLC method certainly helps stakeholders plan, it does have limitations. The cycle breaks down performance over several stages, but unfortunately there is no way to tell how long each stage will last.

Complicating things further, not all products will move through these stages at the same pace. For example, a product may take longer to decline than others. Plus product managers run the risk of not dedicating enough effort and resources into a particular product if they think the product will decline, creating planned obsolescence – even if customers still use it.

Free Product Go-to-Market Kit

In the late ‘60s, Harvard Business School professor Raymond Vernon developed this marketing theory in response to an economic model that failed to account for trends present in international trade – that’s why it was originally called the international product life cycle theory.

It stated that products developed in an international market had three phases:

• New product
• Maturing product
• Standardized product

Here’s a quick breakdown of his theory.

Vernon theorized a new product would perform best in its country of origin to keep manufacturing and production costs low. Once the product gained demand, companies could begin exporting to other countries and continue building local production plants in each new location.

Having these local plants would offer the flexibility to make changes to the product without incurring huge costs.

The standardized phase would involve an influx of competitors, which would lead the company to focus on driving down production and manufacturing costs to remain competitive. As the market becomes saturated and a new product gets introduced, the company loses its relevance in its home country and shifts gears to create something new, with the cycle beginning again.

Since then, the product life cycle theory has evolved to focus less on geography and more on marketing. Let’s dive into it next.

You can use this template to map out your own product's life cycle phases.

Download the Free Product Life Cycle Template

Now that we’ve discussed the different stages of the product life cycle, let’s explore how to market products in each stage.

Development Stage Marketing Strategy

While marketing typically begins in the introduction stage, you can begin to build “buzz” around your product by securing the endorsement of established voices in the industry.

You can also consider a limited release of the product to a select group of customers or in a specific market segment. This exclusivity can create a sense of anticipation and urgency among potential buyers.

Then, you can use the feedback from the limited release to publish early (and favorable) consumer research or testimonials. Your marketing goal during this stage is to build upon your brand awareness and establish yourself as an innovative company.

Introduction Stage Marketing Strategy

This is where the fun begins. Now that the product is launched, you can actually promote it using inbound marketing and content marketing .

Consider collaborating with influencers or industry experts who have a strong following and influence in your target market. Encourage them to review and promote your product through blog posts, vlogs, social media posts, or sponsored content. Their endorsement can help generate credibility and reach a wider audience.

Education is vital in this stage. If your marketing strategies are successful, the product goes into the next stage — growth.

Growth Stage Marketing Strategy

During this phase, marketing campaigns often shift from getting customers’ buy-in to establishing a brand presence so consumers choose them over developing competitors.

One way to do this is by allocating resources to digital marketing channels like social media advertising, search engine optimization (SEO), content marketing, and influencer partnerships. Then, leverage data analytics to target and reach your ideal customers effectively.

Additionally, as companies grow, they'll begin to open new distribution channels and add more features and support services. Consider partnering with retailers, entering new markets, or exploring e-commerce platforms to reach a wider customer base. In your strategy, you’ll advertise these as well.

Maturity Stage Marketing Strategy

When your product has become a mature offering, you may feel like you’re “sailing by” because sales are steady and the product has been established. But this is where it’s critical to establish yourself as a leader and differentiate your brand.

Consider sharing valuable and educational content, such as blog posts and industry insights, to position your brand as an authority. Educate potential customers about the benefits and value they can gain from your product.

Continuously improve upon the product as adoption grows, and let consumers know in your marketing strategy that the product they love is better than it was before. This will protect you during the next stage — saturation.

Saturation Stage Marketing Strategy

When the market has become saturated, you’ll need to focus on brand awareness and differentiation.

Identify specific customer segments within your market and tailor marketing efforts to appeal to their specific needs and preferences. Refine your messaging and positioning to resonate with each segment, allowing for a more targeted and efficient marketing approach.

You’ll also want to focus on retaining and strengthening relationships with your existing customers. Consider creating a personalized customer service experience and introducing new product features, loyalty programs, packaging options, or bundling with complementary products.

Competition is highest at this stage, so it’s critical to leave no doubt regarding the superiority of your product.

If innovation at the product level isn’t possible (because the product only needs minor tweaks at this point), then invest in your customer service and use customer testimonials in your marketing.

Decline Stage Marketing Strategy

While companies would want to avoid the decline stage, sometimes there’s no helping it — especially if the entire market reached a decline. In your marketing strategy, you can emphasize the superiority of your solution to successfully get out of this stage.

To extend the product life cycle, successful companies can also implement new advertising strategies, reduce prices, add new features to increase their value proposition, explore new markets, or adjust brand packaging.

Unfortunately, not every company is successful at pivoting their product out of the decline stage. If the product is obsolete or financially unviable, it may be best to plan for an orderly exit from the market.

Now that we’ve gone through stages and history, let’s review some real-life examples of them in action.

• The Typewriter
• Floppy Disk

Let’s follow the product life cycle of popular products that have since reached the decline stage.

1. The Typewriter

The typewriter was the first mechanical writing tool — a worthy successor to pen and paper. Ultimately, however, other technologies gained traction and replaced it.

• Development: Before the first commercial typewriter was introduced to the market, the overall idea had been developed for centuries, beginning in 1575.
• Introduction: In the late 1800s, the first commercial typewriters were introduced.
• Growth: The typewriter quickly became an indispensable tool for all forms of writing, becoming widely used in offices, businesses, and private homes.
• Maturity: Typewriters were in the maturity phase for nearly 80 years, because this was the preferred product for typing communications up until the 1980s.
• Saturation: During the saturation stage, typewriters began to face fierce competition with computers in the 1990s.
• Decline: Overall, the typewriter couldn't withstand the competition of new emerging technologies, and eventually the product was discontinued.

Skipping forward to the 21st century, we see the rise and fall of Vine, a short-form video-sharing app that was the source for many memes at its peak but eventually declined due to other platforms.

• Development: Vine was founded in June 2012 and mainly competed with Instagram.
• Introduction: The app was introduced to the public in 2013. Its differentiating factor was its short-form video format — users had only seven seconds to film something that was hilarious, absurd, or a mixture of both.
• Growth: Only two years after its release, Vine had over 200 million active users. Its popularity led to the advent of the phrase “Do it for the Vine.”
• Maturity: Because it was only in the market for a few years, Vine never reached the maturity stage. While adoption was high, it was still a fairly new app.
• Saturation: Vine competed in an already saturated market. Instagram, Snapchat, and YouTube were the pre-eminent names in their category, and Vine soon started to decline in use.
• Decline: When Musical.ly was introduced, Vine lost a large amount of its user base and shut down. It was succeeded by Byte, a similar short-form video-sharing platform, but none of these have been able to surpass TikTok, which launched months after Vine’s end in 2016.

3. Cable TV

Remember the days of switching TV channels to find what to watch? I do — and they feel distinctly like something of the past. While cable TV is still around, it’s safe to say that it’s nearing the decline stage.

• Development: Cable TV was developed in the first half of the twentieth century. John Walson has been credited with its invention.
• Introduction: The first commercial television system was introduced in 1950, and by 1962, the technology saw the first hints of growth.
• Growth: After a decades-long freeze on cable TV’s development (due to regulatory restrictions), the technology began gaining traction, and by 1980, more than 15 million households had cable.
• Maturity: Cable TV matured around the 1990s. Around seven in ten households had cable.
• Saturation: The start of the 21st century saw an oversaturation of this technology, and it also started to compete with other modern developments such as on-demand services and high-definition TV (HDTV). While the internet was still in its nascent stages, it would soon gain on cable TV as well.
• Decline: From 2015 onwards, cable TV experienced a marked decline . Online video streaming services such as Netflix and Hulu have taken precedence — and this trend is set to continue.

4. Floppy Disk

This relic was once a popular and convenient way to store and share data between computers. I barely understood what they were growing up, and it astounds me to think of the very existence of cloud data sharing and other mass memory storage means.

• Development: The first floppy disk was developed in 1970 by IBM engineers. It was an 8-inch flexible magnetic disk in a square case with 2MB storage capacity.
• Introduction: It was introduced in 1971 and largely became known as the only way to transfer or store data.
• Growth: The floppy disk was majorly used in the 1980s-1990s.
• Maturity: Sold well in the market during the 1990s. Improving with time, it could hold 200MB of storage.
• Saturation: Major competitors emerged at the beginning of the 21st century. The invention of USB cables, external hard disks, and CDs gave people options to store their data.
• Decline: The floppy disk faced a major decline up to Hewlett-Packard stopping production for the disk in 2009. The storage capacity for other products in the market grew to be more efficient. Data storage evolution has grown to the point where floppy disks are simple relics.

Not all products need to face the decline stage. Companies can extend the product life cycle with new iterations and stay afloat as long as they have several products at various points of the product life cycle.

The international product life cycle (IPL) is the cycle a product goes through in international markets. As products begin to mature and companies want to avoid the decline stage, they'll typically begin to explore new markets globally.

When products reach mass production, manufacturing and production shift to other countries as well.

The international product life cycle stages are identical to that of a normal product life cycle. The development stage looks different, however, because local customs and regulations can affect how long it takes to bring the product to a new marketplace.

However, once you lay the groundwork in a new marketplace, your competitors will be sure to follow, and the life cycle stages will continue up until saturation and eventually decline. Your option is to either expand into another market or learn from prior mistakes and innovate before the decline stage rolls around.

Next, we’ll look at when you should use the product life cycle.

Businesses use the product life cycle to achieve the following:

• Establish competitive authority. If your product is new and recently introduced to the market, you can advertise it as a new and improved alternative to an existing product. If the product is established, you can vouch for its long history of use in your branding.
• Decide on a pricing strategy . Depending on the life cycle stage your product is in, you’ll choose how to price the product. A new product may be priced lower to entice more buyers, while a product in the growth stage can be priced higher.
• Create a marketing strategy . Your product life cycle stage will determine which strategy to pursue. Maturity and audience knowledgeability play a big role in the type of content you publish on your site and social media profiles.
• Respond before the product begins its decline. There’s no worse feeling than watching your product slowly become obsolete or be displaced by a competing product. By keeping the life cycle stages in mind, you can create a strategy that keeps you ahead of the curve as you reach the saturation and decline stages.

The product life cycle benefits businesses because they can shift their wording and positioning to best market the product at the stage it is in. If your product has recently been introduced and you try to market it as a long-established solution, consumers will see right through it and trust you less as a result.

Keep Your Product’s Life Cycle in Mind

Whether you're developing a brand new product or working with a mature, well-established brand, you can use the product life cycle stages as a guide for your marketing campaigns.

Each stage will dictate how you inform your audience about the product, how you position your brand in the marketplace, and how you decide to move forward after the decline stage.

By keeping your product’s life cycle in mind, you can invest in better marketing campaigns that result in a higher ROI.

Editor's note: This post was originally published in January 2020 and has been updated for comprehensiveness.

This article was written by a human, but our team uses AI in our editorial process. Check out our full disclosure to learn more about how we use AI.

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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).

Home — Essay Samples — Business — Starbucks — Analysis Of Starbucks’ Product Life Cycle

Analysis of Starbucks’ Product Life Cycle

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Published: Jun 17, 2020

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Table of contents

Introduction.

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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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