Product Lifecycle of the MP3 Player Discusses: Nolan/Norton Technology Cost, Product Life Cycle, and Stages of Production.

1132 WordsFeb 29, 20045 Pages
Overall Classification Anytime a company develops a new product or service, it needs to be aware that the product and/or service will not last forever. This is important to recognize in the early stages of development so that a firm can maximize their profits during the product's life cycle. Albeit, no company can accurately predict the duration of a product or service, any product/service progresses through four distinct phases. Each phase is associated with different costs, profits and risks. Collectively, these phases are known as the Product Life Cycle (PLC) and are classified into: Introduction, Growth, Maturation, and Decline. The introduction phase is the first phase for all new businesses, products, and services. Any new idea,…show more content…
Profit maximization will not occur until marginal revenue = marginal cost, this typically does not occur until the start of the maturity phase. Product Life Cycle The introduction of the MP3 player a few years ago spawned a debate regarding sharing music and the music industry felt (still feels) severely threatened by this technology. However, this has not impacted the market or the consumer, in fact, there has been an influx of MP3 competitors on the market recently. Significant marketing costs are incurred (just take a look at TV commercials offering MP3 players) and increased distribution channels are used. The MP3 player is clearly still in growth phase of the product life cycle. Sales are continuing to increase and new competitors are still entering the market; however, with each new competitor entering the market, substantial diversification has occurred. MP3 players now come with AM/FM radios, CDs, extra memory, etc. Firms are beginning to focus on developing marketing strategies for specific individual segments such as the business traveler versus the college student. Average revenue is continuing to increase and is expected to increase through the end of the growth phase although marginal revenue began to decrease the minute the product entered the growth phase. Total revenue will climb through maturity and then begin to decline. The marginal product and marginal revenue follow a similar

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