First of all “The phase of product introduction on the market represents the product launching phase. It is preceded by a period of conceiving ideas, design and production it is characterized by high costs, as a result of the slow mastering of the production process, greater spending of materials and longer time of production.
Production capacities are still not sufficiently used, since the initial series are small. This phase of the product life cycle is also characterized by high costs of sales and distribution. The product is insufficiently known on the market, so large investment is required for its promotion and faster market penetration” (Milićević, Ilić, & Cvetković, February 18th, 2010)
Also it’s important to highlight that “The introduction phase of a product includes the product launch with its requirements to getting it launch in such a way so that it will have maximum impact at the moment of sale…This period can be described as a money sinkhole compared to the maturity phase of a product. Large expenditure on promotion and advertising is common, and quick but costly service requirements are introduced. A company must be prepared to spend a lot of money and get only a small proportion of that back.” (KOMNINOS, 2002)
Some important facts that can be understood after reading the characteristics given by the authors cited above are: in this phase the costs are high due the different details that must be developed at the moment of not just launching but also manufacturing the products that are going to be launched then. Also the costs of the distribution and sales represent a huge currency spending, highlighting the investment on promotion that is realized in order the product gets to be known by the customers.
In contrast with the phase of introducing the product the growth phase has as an important fact, the decreasing of costs because of the “Well-established production, falling costs per product unit and rising profits. However, due to increasing competition, the price is lowered while total profits rise, which is a result of higher production and sales.” (Milićević, Ilić, & Cvetković, February 18th, 2010)
In addition, the advertising and promotional campaigns keep being developed but in a smaller percentage in comparison with the introduction one, also it “Is oriented to the task of market leadership and not in raising product awareness. A good practice is the use of external promotional contractors. This period is the time to develop efficiencies and improve product availability and service. Cost efficiency and time-to-market and pricing and discount policy are major factors in gaining customer confidence. Good coverage in all marketplaces is worthwhile goal throughout the growth phase” (KOMNINOS, 2002). As read in the last cite the advertising is more focused on seeking a better positioning in the customer’s top of mind than just in introduce itself as it did in the last phase, here the product is already known by the consumers.
On the other hand, the maturity stage is characterized by being a profitable but not as it used to be on the growing phase, the customers start to interest in other products with the same characteristics. Also it can be described like: “In the phase of maturity, up to a certain level, buyer interest and sales growth exist for all products. When sales growth is slow or sales are stagnating, that is reflected in lower prices and reduced total profits.” (Milićević, Ilić, & Cvetković, February 18th, 2010)
In this Phase the product becomes obsolete and therefore the sales drop dawn, leaving as a consequence the reduction of the profitability of the company, that’s when the idea of taking out the product of the market surges.
“The decision for withdrawing a product seems to be a complex task and there a lot of issues to be resolved before with decide to move it out of the market. Dilemmas such as maintenance, spare part availability, service competitions reaction in filling the market gap are some issues that increase the complexity of the decision process to withdraw a product from the market” (KOMNINOS, 2002)
Along with the said above, it’s obvious that taking out a product from the market is a tough decision because the company needs to take into account in which moment the product actually stops giving any profit to the organization and therefore stop being enough to cover the costs of production, distribution, publicity etc.
On the other hand, if the company makes a huge investment in research and development in order to improve, and the product starts to sale again it can start again in the first phase.
On the other hand, for every phase of the product life cycle, there is the existence of some strategies for each one of the stages in order to maintain its position or improve it.
