Describe waht is Product life cycle and explain its stages.
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In today's world, where market is unpredictable, strategies play crucial role in defending a firm's product position. "The main reason why companies must continually develop new products is because products have life cycle", (Bittel, 1980). Just as operation managers must be prepared to develop new products, they must also be prepared to develop strategies for both new and existing products. First and foremost, before proceeding into the product life cycle strategies, lets define what a product life cycle is. According to Griffin and Ebert (2002), a product life cycle is a series of stages through which it passes during its profit -producing life. Depending on the product's ability to attract and keep customers over time, a product life…show more content… Also, customers who have tried the product earlier may remain loyal. In the face of such opportunity, new competitors will start entering the market and they will introduce new product features and hence, expanding the market, leaving the product's price constant or fall slightly. Here, a company, in order to stay competitive in the market, should keep on promoting its product. In addition, profits start to increase. The firm has several strategies to stay in the rapid growing market as long as possible. Also, the firm improves the product quality, adds more distribution channels, changing the advertising theme - from promoting the product to the market to reminding the market on the availability of the product as well as to increase awareness. The firm also lowers the price in order to attract more buyers.
During this stage, usually firms that have successfully passed their product's introduction stage have high market share and are highly profitable. On the whole, as said by Smith et al - 1997, this phase is represented by:
- sales and profits growth;
- more widespread usage;
- development of the market;
- high market share;
- Increasing competition.
The third stage for a product to go. As stated by Pride et al, (1988), sales are still increasing at the beginning of the maturity stage, but the rate of increase has slowed. Later in this stage, the sales curve peaks and begins to decline. Many