product life cycle

successful production and distribution of goods depends on many factors, from the cost of raw materials and ending with the quality of advertising.In order to promote the product on the market and obtain maximum profit from this, it is necessary to know what the life cycle of the product and how to manage it.

To begin with I would like to define what goods.Economists describe him as absolutely any thing participating in a kind of exchange for other things, including money.

Product Life Cycle - a length of time for which the product passes a certain number of stages, from the development, the appearance on the market, to the complete withdrawal from it.It is worth noting that in some cases, have hit the market, the goods are not sold and no longer produce.In this situation, the product life cycle is zero.

There are certain criteria that determine at what stage is currently in goods:

• profit;
• trade;
• price;
• costs;
• inventories.

Based on the availability and value of each indicator, providing 4 stages of product life cycle.Different sources may have different names, but, in fact, are no different.

1. Implementation.Customers evaluate the quality of a new product, price, etc.As a rule, sales of small and grow slowly.This period is characterized by some loss-making, because the costs exceed income.
2. growth.Consumers are actively buying goods.Profit starts to increase significantly.
3. maturity.The most stable period.The pace of company sales slowed.This product has won its place in the market and regular customers.Gains are generally stable high.During this period, especially the risk of competitive products.
4. decline.Reduced profits and sales.Without any emergency measures (advertising, packaging change, discounts, etc.) product will soon have to withdraw from circulation.

concept of the product life cycle is formed in 1965. The well-known economist Theodore Levitt of America.They were first clearly described the reasons that any product has to leave the market:

1. With the development of science, new trends of fashion goods loses relevance and replaced by the newer, improved.
2. Product life cycle is divided into several periods, each of which solves certain problems, problems.
3. each stage is also characterized by a certain level of profit.
4. There are specific strategies in production, finance, marketing, personnel management, specific to each particular stage of the product life cycle.

Often, the sales volume depends not only on product quality, but also on competent and intelligent marketing strategies.They help to increase the life cycle of the product and get the desired profit.

In the first stage (introduction), the main task for any company - market penetration.Given the level of price and promotion activity, you can use the following strategies:

1. slow penetration - low price, promotion inactive.
2. Fast penetration - low price, the active promotion.
3. Rapid skimming - the price is high, the promotion of very active.
4. Slow skimming - the price is high, advancement inactive.

In the second stage (growth) firm seeks to strengthen the position of the goods and if possible to conquer new territory.Will be effective the following strategies:

1. new advertising.
2. improve products, upgrade.
3. Issue related products, diversification, development of new models.

third stage (maturity) is to receive the maximum profit.This period is characterized by the following:

1. struggle with competitors.
2. Leverage.
3. Increased production.
4. Increased margins.

fourth stage (the decline) is final.Goods can be left if it is necessary for the promotion of something new.The following strategies:

1. Reduced investment or phase-out of unprofitable product.
2. increased investment to strengthen its position in the existing market.
3. Failure to produce old goods, sale of fixed assets and profit.