Fundamentals of Business

3.3.2 Production/Processing

Product is any tangible item.

Product life cycle (PLC) is to do with the life of a product in the market with respect to business/commercial costs and sales measures.

The Product Life Cycle refers to the succession of stages a product goes through.
Product Life Cyc Cycle Management is the succession of strategies used by management as a product goes through its life cycle.

1. Market introduction stage
√ cost high
√ sales volume low
√ no/little competition - competitive manufacturers watch for acceptance/segment growt losses
√ demand has to be created
√ customers have to be prompted to try the product

2. Growth stage
√ costs reduced due to economies of scale
√ sales volume increases significantly
√ profitability
√ public awareness
√ competition begins to increase with a few new players in establishing market
√ prices to maximize market share

3. Mature stage
√ Costs are very low as you are well established in market & no need for publicity.
√ sales volume peaks
√ increase in competitive offerings
√ prices tend to drop due to the proliferation of competing products
√ brand differentiation, feature diversification, as each player seeks to differentiate from
√ competition with "how much product" is offered
√ very profitable

4. Decline or Stability stage
√ costs become counter-optimal
√ sales volume decline or stabilize
√ prices, profitability diminish
√ profit becomes more a challenge of production/distribution efficiency than increased sales