Derivates Play an Important Role in the Life Cycle of a Product

Decent Essays

Advantages of using derivatives in a product life cycle Product lifecycle is the stages a product passes through from when it is developed till its decline. First an extensive market research is carried out to determine whether there exists a need or want of the consumers for the product being developed and then a prototype is developed to determine the appearance, weight etc of the product. It is to be noted that there are no sales at this moment and no income is being received. Once the aspects of this stage are covered then the production is started and it is launched into the market. There are few sales at the starting point because very few potential consumers are aware of its existence and the company is using informative advertisement to make the potential consumers aware of the product. The price charged may be low for a new product to capture market share from its competitors or in some cases it may be high if the product is targeting the upper middle class or upper class because consumers perceive high price as the product being of high quality. Then after the product awareness is developed in market then the product moves to the growth stage. This is the stage when product sales rise very quickly and a lot of persuasive as well as some informative advertisement expenditure is done to maintain high sales. Once the product is well established and widely satisfied the consumers’ sales then begin to slow down and become stagnant at some point. New competitors begin to

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