at what stage of the product life cycle do industry profits start to decline?

A production life cycle is the length of time from a product first being introduced to consumers until it is removed from the market. A product'south life cycle is ordinarily cleaved downwards into iv stages; introduction, growth, maturity, and turn down.

Product life cycles are used by management and marketing professionals to help determine advertising schedules, price points, expansion to new production markets, packaging redesigns, and more than. These strategic methods of supporting a product are known as product life cycle management. They can also help determine when newer products are ready to push button older ones from the market place.

Contents

Click the links below to skip to the section in the guide:

• How does information technology work?
• Stages
• Production life bike strategy and management
• Examples
• Determination

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How Does it Work?

As mentioned above, there are four stages in a product's life wheel - introduction, growth, maturity, and decline – simply before this a product needs to go through pattern, research and development. Once a product is found to be feasible and potentially profitable it can exist produced, promoted and sent out to the market. It is at this betoken that the product life wheel begins.

The diverse stages of a product'southward life cycle make up one's mind how information technology is marketed to consumers. Successfully introducing a product to the market should come across a rise in need and popularity, pushing older products from the market. Every bit the new product becomes established, the marketing efforts lessen and the associated costs of marketing and production drop. As the production moves from maturity to decline, and so need wanes and the product can exist removed from the market, possibly to exist replaced by a newer alternative.

Managing the four stages of the life cycle tin can help increase profitability and maximise returns, while a failure to exercise and so could see a product fail to run into its potential and reduce its shelf life.

Writing in the Harvard Business Review in 1965, marketing professor Theodore Levitt alleged that the innovator had the nigh to lose as many new products fail at the introductory stage of the product life bicycle. These failures are peculiarly costly as they come after investment has already been made in enquiry, development and production. Because of this, many businesses avert genuine innovation in favour of waiting for someone else to develop a successful product before cloning it.

Stages

There are four stages of a product'southward life cycle, every bit follows:

1. Market Introduction and Development

This product life bike stage involves developing a marketplace strategy, usually through an investment in advertising and marketing to make consumers enlightened of the product and its benefits.

At this phase, sales tend to be wearisome every bit demand is created. This stage can take time to move through, depending on the complication of the production, how new and innovative it is, how it suits customer needs and whether there is any competition in the market. A new product development that is suited to customer needs is more likely to succeed, simply at that place is plenty of bear witness that products can fail at this point, pregnant that phase 2 is never reached.  For this reason, many companies prefer to follow in the footsteps of an innovative pioneer, improving an existing product and releasing their ain version.

2. Market Growth

If a product successfully navigates through the marketplace introduction information technology is gear up to enter the growth phase of the life cycle. This should meet growing demand promote an increase in production and the product becoming more widely available.

The steady growth of the market introduction and development phase now turns into a sharp upturn equally the production takes off. At this indicate competitors may enter the marketplace with their ain versions of your production – either direct copies or with some improvements. Branding becomes important to maintain your position in the market every bit the consumer is given a choice to go elsewhere. Product pricing and availability in the market place become important factors to continue driving sales in the face of increasing competition. At this point the life wheel moves to phase 3; market place maturity.

3. Market Maturity

At this point a production is established in the market place and so the cost of producing and marketing the existing product will decline. As the product life wheel reaches this mature stage there are the ancestry of market saturation. Many consumers volition now have bought the production and competitors will be established, meaning that branding, toll and product differentiation becomes even more than important to maintain a market place share. Retailers will non seek to promote your product equally they may have washed in stage one, but volition instead become stockists and order takers.

iv. Market Decline

Eventually, equally competition continues to rise, with other companies seeking to emulate your success with boosted product features or lower prices, and so the life wheel will go into decline. Decline can besides exist caused past new innovations that supersede your existing product, such every bit horse-drawn carriages going out of style as the automobile took over.

Many companies will begin to movement onto different ventures as market saturation ways there is no longer any profit to be gained. Of course, some companies volition survive the decline and may proceed to offer the production but production is likely to be on a smaller scale and prices and profit margins may become depressed. Consumers may besides turn away from a product in favour of a new alternative, although this tin can be reversed in some instances with styles and fashions coming back into play to revive interest in an older product.

Production Life Cycle Strategy and Management

Having a properly managed product life cycle strategy tin can aid extend the life cycle of your product in the market.

The strategy begins correct at the market introduction stage with setting of pricing. Options include 'toll skimming,' where the initial price is set high then lowered in guild to 'skim' consumer groups as the market grows. Alternatively, y'all tin can opt for price penetration, setting the toll depression to attain every bit much of the market every bit chop-chop as possible before increasing the toll one time established.

Production advertizing and packaging are every bit important in society to appeal to the target marketplace. In addition, information technology is important to market your product to new demographics in lodge to grow your acquirement stream.

Products may as well become redundant or need to exist pivoted to meet changing demands. An example of this is Netflix, who moved from a DVD rental commitment model to subscription streaming.

Understanding the product life bike allows yous to go on reinventing and innovating with an existing production (similar the iPhone) to reinvigorate demand and elongate the product's market life.

Examples

Many products or brands accept gone into reject as consumer needs change or new innovations are introduced. Some industries operate in several stages of the product life bike simultaneously, such as with televisual entertainment, where flat screen TVs are at the mature stage, on-demand programming is in the growth stage, DVDs are in decline and video cassettes are now largely redundant. Many of the nearly successful products in the world stay at the mature stage for as long every bit possible, with small updates and redesigns forth with renewed marketing to continue them in the thoughts of consumers, such as with the Apple iPhone.

Here are a few well-known examples of products that have passed or are passing through the product life cycle:

1. Typewriters

The typewriter was hugely popular following its introduction in the late 19^th century due to the fashion it fabricated writing easier and more efficient. Quickly moving through market growth to maturity, the typewriter began to go into reject with the advent of the electronic give-and-take processor and and so computers, laptops and smartphones. While there are still typewriters available, the product is at present at the end of its pass up stage with few sales and little need. Meanwhile, desktop computers, laptops, smartphones and tablets are all experiencing the growth or maturity phases of the production lifecycle.

2. Video Cassette Recorders (VCRs)

Having offset appeared as a relatively expensive product, VCRs experienced large-calibration product growth as prices reduced leading to market maturation when they could be found in many homes. Yet, the creation of DVDs so more recently streaming services, VCRs are now effectively obsolete. Once a footing-breaking production VCRs are now deep in a pass up stage from which it seems unlikely they will ever recover.

3. Electrical Vehicles

Electric vehicles are experiencing a growth phase in their product life cycle as companies work to button them into the marketplace with continued design improvements. Although electric vehicles are non new, the consistent innovation in the market and the improving sales potential ways that they are still growing and not even so into the mature phase.

4. AI Products

Like electric vehicles, artificial intelligence (AI) has been in development and use for years, but due to the continued developments in AI, at that place are many products that are still in the market place introduction phase of the production life wheel. These include innovations that are however existence developed, such as democratic vehicles, which are yet to be adopted by consumers.

Decision

Understanding how a product's life cycle works allows companies to piece of work out whether their products are meeting the needs of the target market and, thereby, when they may need to change focus or develop something new.

Examining a production in relation to marketplace needs, contest, costs and profits allows a company to pivot their production focus to maintain longevity in the marketplace.

Knowing when a product is going into decline prevents your company from following equally a result of being overly reliant on a fading market. A product life cycle strategy means that y'all can reinvigorate an existing product, develop a new replacement product or change direction to stay abreast of a changing market place.

While all products have a life wheel, many of the nigh successful ones are able to maintain the mature phase of the life wheel for many years before any eventual decline.

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Source: https://www.twi-global.com/technical-knowledge/faqs/what-is-a-product-life-cycle

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