Product Life Cycle

Product life cycle is the stages that a product will go through in its lifetime

Development - negative cash flow due to the market research and research and development (R&D) no sales revenue before launch

Introduction- production and promotion costs can be high

Growth- sales revenue increases but as more units are sold production costs also increase. However, there will be economies scale

Maturity- sales stabilise and the product acts as cash flow

Decline- at some point the product will start to loose sales

Extension Strategies- many products are adapted and given a new lease of life

NPD ( new product development)

The process of bringing a new product or service to the market

  1. Generating ideas through different methods like brainstorming

  1. screening the ideas to come up with a specific idea

  2. development and testing concept

  3. analysis of costs, sales and forecasts and likely proofs

  4. market testing o the concept

  5. product launch

Impacts

  1. no prior data to work on

  2. lots of investment

  3. less reliable sales forecast

  4. takes a lot of time to invest

  5. opportunity cost

Benefits

  1. expand market share

  2. gaps in market

  3. brings in new customers

Influences on NPD

advances in technology have seen incredible changes especially in the last 30 years. The internet and mobile phones have made communications and the exchange of information is way more quicker and the micro-chip have revolutionised manufacturing.

  1. brought economies of scale to businesses

  2. made the world of global market through communication systems

  3. seen the rapid development of both new and innovative products

competitors actions

firms faced with increasing competitive markets , they are competing with those

round the global also. They need to keep a close eye on competition or try to be proactive with new products before their competitors do.