The four fundamental stages in a product cycle include introduction, growth, maturity, and decline. All these stages are pertinent to the development of a company. The value of having a product life cycle in an organization is to ensure that the firm understands that its products have a limited lifespan (Saaksvuori 2014). Thus, the company will be forced to invest deeply in new product development for the survival of the business.
The product life cycle is important in ensuring that a firm maintains its competitive edge in the market (Niemann 2009). The product life cycle is also an important principle that manufacturers need to comprehend to make profits and survive in the business. Each stage is strategically important to an organization. The introduction stage deals with the launching of the product. During this time, the size of the market is small. Thus, the firm is not expected to make much revenue. Also, in the introduction phase, firms incur costs in research and development. Other expenses are experienced in product testing and market studies.
This stage is critical to a company as it facilitates investment in the best method to reach the consumers. In the growth stage, business experiences a steady increase in revenues from sales and profits. Additionally, the company enjoys benefits from economies of scale and profit margins. The increase in revenue would be pertinent to the respective business to invest in promotional activities (Wang 2011). The promotional activities are geared towards the maximization of the potential of the particular growth stage. Once a firm majors in a particular promotional medium, it will be able to use it next time it introduces a product in the market.
In the maturity phase, the product becomes established. In this phase, the focus of the business is to retain the market share captured (Stark 2011). In addition, a firm must devise the most appropriate competitive method to prevent the operations of its competitors. Thus, the focus shifts to marketing. The company also engages in product modifications to increase its competitive edge.
The significance of the maturity stage is that a company can determine the marketing strategies that are best to use when a product reaches maturity (Saaksvuori 2014). In the decline stage, the product has reached the final stage. In this phase, the market shrinks slowly. One reason behind the shrinkage is that the market becomes saturated with the product. Besides, clients might be switching to the closest substitutes (Giordano 2012). Not only could the consumers be switching to substitutes, but also the different types of products.
Phases in the Product cycle are evaluated based on the outcome of each phase. The phases are used to indicate the next line of action to take. For instance, the introduction phase gives a clue on how an organization is going to handle the growth phase. In the end, the level of customer satisfaction, the number of customers attracted, and the revenues realized indicate how the stages are important. The most crucial stage is the decline stage.
This stage is inevitable. Most firms counteract the repercussions of this stage by switching to cheaper markets or less-expensive production techniques (Niemann 2009). The importance of this phase is that it enables a firm to be adaptive to negative market shocks such as a decline in sales and a reduction in the number of customers. Focus on innovation makes certain that there is product achievement in the development of the other components. Also, a focused attention design-manufacturing interface is significant for less effective marketing methods.
ADNOC (Abu Dhabi National Oil Company) is a firm in the UAE that has utilized the concept of product life cycle. The firm majors in the marketing and distribution of refined products (Abu Dhabi National Oil Company 2016). The products are meant to satisfy petroleum-product users in the UAE. Once the company realized that the market was saturated with its products, it resulted in modifying them. The firm introduced different packaging of the petroleum products using branded containers (Field 2008). In addition, the company lowered the prices of the products to continue holding the attracted market share by its side.
Conclusion
In conclusion, it can be indicated that the product lifecycle is important to understand the growth of a firm. The cycle enables a firm to change policies and tactics to address the outcome of each stage. If a firm successfully comprehends and address each stage successfully, profits and increased sales will be realized.
References
Abu Dhabi National Oil Company (ADNOC) 2016. Web.
Field, F 2008, China, India and the United States: competition for energy resources. Abu Dhabi, The Emirates Center for Strategic Studies and Research. Web.
Giordano, M 2012, Product Life-Cycle Management Geometric Variations. London, Wiley. Web.
Niemann, J 2009, Design of Sustainable Product Life Cycles. Berlin, Springer. Web.
Stark, J 2011, Product Lifecycle Management 21st Century Paradigm for Product Realisation. London, Springer. Web.
Saaksvuori, A 2014, Product Lifecycle Management. Berlin, Heidelberg, Springer Berlin Heidelberg. Web.
Wang, H 2011, Green Supply Chain Management: Product Life Cycle Approach. New York, McGraw-Hill. Web.