During development, a product/service may never move onto the next stage because you may decide that the risk is too high to launch the product/service. It is important that you recognize any risk during this time as small businesses will be affected if the product/service does not prove to be successful once introduced: the costs of development and introduction may never be recovered where larger companies can usually compensate for unsuccessful products. Within this stage, the product has not yet been introduced to the market and consequently there are no sales. The expenditure of development has also created a loss. Stage 2: Introduction It is arguable that this stage can influence the length of the PLC and so the product/service should be introduced in the market as effectively as possible. This is the time when the product/service is new in the market and a high degree of marketing will be needed such as promotions and advertising to increase commercial awareness. Sales will be slow during the introduction stage and so you should not become impatient and spend more money than necessary to try to increase the speed of sales: it will take time for people to use and trust your product/service. Page 61 of 92
As you begin to make sales, the money used for developing and introducing the product/service may not be fully recovered (i.e. break-even) until late in the introduction stage. Once you begin to make profit, you may decide to re-invest the money back into promoting the product/service in an attempt to stimulate future sales (and profit). Stage 3: Growth Once your product/service has become established in the market, you can expect the number of sales to increase rapidly and marketing expenditure may now be used for brand building. This is the stage where you will benefit from high profits but this is also the stage where your profits will peak. Services over products will generally have far longer periods of growth (usually years) where products, particularly those that are new, will soon attract the attention of competitors. Once competitors join the bandwagon, the sales will gradually slow down and force you into marketing new prices: consequently resulting in fewer profits. If you have released your own version of an existing product (making you the competitor), then the growth stage may be short depending on how long the existing product has been available in the market. Stage 4: Maturity The stage of maturity begins when the product/service sales peak and become stable mainly due to the introduction of competitors during the end of the growth stage (influencing the move into the maturity stage). As pricing becomes more competitive (resulting in even less profits), many businesses, commonly the smaller businesses, cannot compete and consequently withdraw their product/service from the market.
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- Marketing, ........., C2C