Discuss how the different stages of the product life cycle can affect a business�s �

Discuss how the different stages of the product life cycle can affect a business�s �

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Discuss how the different stages of the product life cycle can affect a business’s ‘cost recovery’ performance? Use extended examples. The product life cycle can be defined as the five stages the sales of a certain product go through. These five stages are: development (when the product is being developed) introduction (when the product is introduced to the market, sales begin to slowly increase), growth (after the product is introduced, sales begin to grow a lot), maturity (when sales begin to stabilize) and decline (when the sales begin to decrease). In my essay I will analyze and discuss how these various stages affect a business’s cost recovery. Cost recovery is a strategy used by businesses to recover the purchase price of an asset or capital. The main two ways to recover costs is by increasing sales or reducing costs and there are various ways to achieve this (moving up or down market, offer an improved product, offer more varieties of products, etc) In the first stage of the product life cycle, It is impossible to recover cost by increasing sales because the good hasn’t been introduced into the market. It is also difficult to reduce costs because money is being spent in research and development, market studies and a lot of money is spent in the initial investment in machinery, etc… In the second stage of the product life cycle, introduction it is still very difficult to recover costs by increasing sales because the market is still not aware of the product, therefore there is not a lot of demand, but if the company markets the
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This note was uploaded on 03/28/2011 for the course MN 1015 taught by Professor Evangelos during the Spring '08 term at Royal Holloway.

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Discuss how the different stages of the product life cycle can affect a business�s �

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