Just about all manufactured products have a limited life, and during this life they will pass through four product life cycle stages; Introduction, Growth, Maturity and Decline. In each of these stages manufacturers face a different set of challenges. Product life cycle management is the application of different strategies to help meet these challenges and ensure that, whatever stage of the cycle a product may be going through, the manufacturer can maximize sales and profits for their product.
Product Life Cycle Management
To effectively manage the product life cycle, organisations need to have a very strong focus on a number of key business areas:
Development: Before a product can begin its life cycle, it needs to be developed. Research and new product development is one of the first and possibly most important phases of the manufacturing process that companies will need to spend time and money on, in order to make sure that the product is a success.
Financing: Manufacturers will usually need significant funds in order to launch a new product and sustain it through the Introduction stage, but further investment through the Growth and Maturity stages may be financed by the profits from sales. In the Decline Stage, additional investment may be needed to adapt the manufacturing process or move into new markets. Throughout the life cycle of a product, companies need to consider the most appropriate way to finance their costs in order to maximize profit potential.
Marketing: During a product’s life, companies will need to adapt their marketing and promotional activity depending on which stage of the cycle the product is passing through. As the market develops and matures, the consumers attitude to the product will change. So the marketing and promotional activity that launches a new product in the Introduction Stage, will need to be very different from the campaigns that will be designed to protect market share during the Maturity Stage.
Manufacturing: The cost of manufacturing a product can change during its life cycle. To begin with, new processes and equipment mean costs are high, especially with a low sales volume. As the market develops and production increases, costs will start to fall; and when more efficient and cheaper methods of production are found, these costs can fall even further. As well as focusing on marketing to make more sales and profit, companies also need to look at ways of reducing cost throughout the manufacturing process.
Information: Whether it’s data about the potential market that will make a new product viable, feedback about different marketing campaigns to see which are most effective, or monitoring the growth and eventual decline of the market in order to decide on the most appropriate response, information is crucial to the success of any product. Manufacturers that efficiently manage their products along the product life cycle curve are usually those that have developed the most effective information systems.