Understanding Product Life Cycle, Essay Example

Products and go through different stages, and these stages (their order and length) have an impact on strategic alternative selection. The product life cycle can be analyzed based on the market conditions (sales and profits), throughout the time when the product or service is available for customers. The benefit of using product life cycle assessment is improving the organization’s knowledge about the market conditions. However, the disadvantage is that the assessment is based on individual judgements and predictions of the future. There are many unexpected market trends that can affect the life cycle of the service.   The four stages of product life cycle are: introductory, growth, maturity, and decline. Profitability, external conditions, and demand are different during each stage of the life cycle. In the introduction stage, sales are low, and profits are negative. There are only a few competitors, and the cost to customers is high. In the growth stage, revenue grow rapidly, profits peak, and the number of competitors grows, which makes the organization reduce its prices. In the maturity stage, growth of revenues is low, cost to customers is reduced, and competition is increased, while profits remain high. In the decline stage of the product life cycle, sales start to decline, profits are low, and prices are low. The number of competitors is declining.

It is important for a health care organization to complete a product life cycle analysis in order to select the right market entry strategy. No matter which market entry strategy the organization chooses, it needs to know the product life cycle associated with the strategy.  A product life cycle analysis answers the questions managers might have related to the market entry strategy, such as:

1. Which stage of the cycle the organization’s products or services are
2. How long is the current stage (and the entire cycle) likely to last

The results of the external analysis and environmental analysis can help judge the likely scenario related to the life cycle of the product or service. As an example, if the product or service is in the maturity stage, some of the strategy choices most suitable are market development or product development, while related diversification is not recommended.

Works Cited

Swayne, Linda E., W. Jack Duncan, and Peter M. Ginter. Strategic management of health care organizations. John Wiley & Sons, 2012.