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What is the Product Life Cycle?
A product's life cycle is the stages of development and sales figures a product goes through over its time on the market. For anyone thinking of developing a new product for the general market this is an extremely important factor to consider when determining whether the product is worth putting on the market at all and also in determining the work involved at different stages in the products life.
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Stage 1 - Development
This stage is when the product is in development. Right from when the idea is born until the product is released onto the market. This stage is crucial in getting everything right before the launch and can last years depending on the product.
Often, particularly in the technology field, the product can be somewhat different to the first prototype at the beginning of stage one as time has progressed and as such the product must adapt to a new world.
Costs are high in this stage for two reasons. Firstly, developing a product costs a lot of money for things such as research, technology and man power. Secondly, towards the end of stage 1, PR and marketing will have to be done in order to ensure a smooth transition into stage two.
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Stage 2 - Introduction
D-Day has arrived and the product is launched onto the market. As you can see from the graph, sales figures are small and only grow slightly as the prduct becomes known and the public decides whether it is actually needed or indeed whether it is any good. Should the product get a thumbs down in this stage, the rest of the graph will be non-existent as the development team either scrap the whole idea or go back to stage one and try again.
Should it get the thumbs up, then we enter stage three.
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Stage 3 - Growth
Here is where much of the money is made back on the product. The prior two stages have been expensive with development and marketing but now people begin to buy and the sales forecasts outweigh the costs. Some marketing is required as copycats may try to get in on the action in this stage when they see how big a hit the product has become.
It is important that this stage is prolonged in order to achieve high user numbers.
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Stage 4 - Maturity
Every dog has its day and this is it for products. Stage four is when a product has become popular and is widely accepted by the public despite competition and age. Examples of this at present include the XBOX 360 with its many popular games and Wii. Less marketing is required, if any at all and the company focuses on keeping its users whilst looking for new opportunities to be their next big hit.
This is of course, because it's all down-hill from here.
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Stage 5 - Decline
As time goes on, a product will eventually become outdated and unneeded by the public. This is particularly true in the IT sector but also with most other products. Newer versions come out or cheaper alternatives are just as good.
Trying to fight against decline is almost always a bad idea as the hundreds of thousands of dollars spent on advertising could be put into developing a new product. Once the public has gotten its use out of a product, that product will eventually fall from their consciousness and thus sales figures drop dramatically.
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Know The Cycle
For anybody thinking of developing a product, knowing the five stages of a products life is a must. Business plans are based around this cycle as well as investors opinions of how much return they will get on a product. Without knowing the life cycle, you're taking nothing better than a stab in the dark.
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