Multiple alternative Questions

Multiple choice questions

Multiple choice questions

Introduction

Understanding the Product Life Cycle (PLC) is of critical importance to a firm launching a new product.  It helps a firm to manage the risk of launching new merchandise more competently, whilst simultaneously maximizing the sales and profits that could be achieved all through the product's life cycle. 

 

What is the merchandise life cycle?

The PLC indicates that products have four things in common: (1) they have a restricted lifespan; (2) their sales pass through a number of distinct stages, each of which has distinct characteristics, challenges, and opportunities; (3) their profits are not static but increase and decrease through these stages; and (4) the financial, human resource, manufacturing, marketing and purchasing strategies that products need at each stage in the life cycle varies (Kotler and Keller, 2006).  Whilst there is a widespread pattern to a product's life cycle, which is bell-shaped in nature, this pattern does vary counting on the specific characteristics of a granted product.  These life cycle patterns are illustrated and discussed in the subsequent section.

 

What are the main aspects of the merchandise life cycle?

The typical PLC consists of five main aspects: (1) merchandise development; (2) introduction; (3) growth; (4) maturity; and (5) decline.  In the diagram underneath, the respective sales (in red) and profits (in blue) across these five stages are illustrated. 

The PLC begins with product development, throughout which time the firm devises and creates a new product.  Whilst the end aim of this development process is to have a profitable, well-performing merchandise on the market, this initial stage is characterised by none sales, the firm bearing the costs of such development, typically resulting in negative profitability (Kotler and Armstrong, 2004).  Recent merchandise developments encompass the likes of the iPod by Apple and the Serene by Bang and Olufsen. However, despite the importance of the merchandise development process, the PLC literature tends to focus on the subsequent four stages, which are discussed in more detail below.

The introduction of new merchandise up on the market is typically characterised by very slow sales, which may augment only very slightly over a long time span of time.  Whilst profits will gradually advance throughout this stage, it may take until near the culmination of the introductory stage in the PLC before the company witness's positive profitability.  The reason for such reduced profitability throughout this stage is not so much the restricted success of the merchandise ...