Product development allows expansion into new markets, gaining market share, selling more items, and generating more income by developing new products. Meanwhile, revamping current things allows for cost reduction, margin expansion, and higher profitability. Small businesses that do well proactively plan and manage their product development efforts. It is crucial to realize that product development involves some risk. If done incorrectly, it could have severe repercussions for a small firm, as “product failures have significant impacts on customers, employees, profitability, market share, brand equity, investors, and the economy at large” (Iheanachor et al., 2021). There are two main ways of obtaining new products: acquiring and creating new goods.
The acquisition primarily involves purchasing another business. Some people sell their goods and have a patent to keep rivals out. They frequently find marketing too challenging and end up selling their patent, hoping someone else will take on the responsibility. Most developers prefer to pitch their ideas to large corporations, leaving them in charge of the intricate financial and marketing processes. Following the conventional path while creating an original creation is part of new product development. Because the product has not yet been tested on the market, the investor’s risk is increased in this situation. The business can set the product’s pricing in advance. It is feasible to introduce a product that is highly similar to one of the current items under the guise of a new brand. Profits will not decline in the process. Contrarily, introducing the same product under a new name will increase consumers’ interest.
Business owners and marketers developers can more clearly comprehend how each product or brand fits into a company’s portfolio thanks to the product life cycle, making it possible for the business to internally reallocate resources to particular goods based on those products in the product life cycle.
The first stage is the introduction phase. In general, a business must make a sizable expenditure on marketing initiatives to educate consumers about the product and its advantages, especially if its potential uses are not widely known. Since sales are typically lower at this point, there may not be enough special pricing to encourage customer participation. The product then enters the growth stage, “in the case of a product launched successfully, the sales stars picking or rise more rapidly” (Prasad et al., 2019). The stage is characterized by a rise in demand, an expansion in supply, and a surge in production. Depending on the industry and the product, a company may spend a different period in the introduction phase before experiencing rapid growth. The product gains in popularity and recognition throughout the growth phase.
If a product is subject to intense competition, a corporation may decide to invest extensively in advertising. While production and marketing costs decrease, the mature stage of a product’s life cycle is the most lucrative. Some researchers refer to the maturity stage as the point at which sales volume peaks because the market is flooded with the product, competition is more significant than at earlier stages, and profit margins are beginning to decline. The call reaches its peak and plateaus during the decline phase. Purchases from new clients are few, and recurring business is lost. Due to fierce competition and enterprises’ battles to keep market share or replacement sales, prices continue to decrease. Without significant product or cost improvements, sales and earnings will decline. Ultimately, the company discontinues the product to utilize its resources best. Newer, more inventive items replace abandoned products as consumer preferences evolve. The product is rescinded when the deterioration happens quickly. It is possible to introduce new goods with distinctive qualities. Some businesses sell out because they are unable to take the loss.
A rigorous and routine evaluation known as a product life-cycle analysis gives a profile of a product’s position. Although the product life cycle idea explains how all products behave, it may be challenging to forecast when each stage will occur. A product’s shelf life can be increased or altered by creating new applications, lowering pricing, utilizing aggressive promotion, modifying the package, brand, or label, or improving the item itself.
References
Iheanachor, N., Umukoro, I. O., & David-West, O. (2021). The role of product development practices on new product performance: Evidence from Nigeria’s financial services providers. Technological Forecasting and Social Change, 164.
Prasad, R. K., Manoj, J. & Sanjeev, V. (2019). A Comparative study of product life cycle and its marketing applications. Journal of Marketing and Consumer Research, 63, 62-69.