Life Cycle of a Production System

Life Cycle of a Production System

Product management is an organizational function within a company dealing with the planning or marketing of a product or products at all stages of the product lifecycle. Product Management is also a collective term used to describe the broad sum of diverse activities performed in the interest of delivering a particular product to market.

Understanding Product Life Cycle plays an important role in this.

---

Product Life Cycle Management is the succession of strategies used by management as a product goes through its product life cycle. The conditions in which a product is sold changes over time and must be managed as it moves through its succession of stages.

Product life cycle

The product life cycle goes through many phases and involves many professional disciplines and requires many skills, tools and processes. Product life cycle (PLC) has to do with the life of a product in the market with respect to business/commercial costs and sales measures; whereas product lifecycle management (PLM) has more to do with managing descriptions and properties of a product through its development and useful life, mainly from a business/engineering point of view.To say that a product has a life cycle is to assert four things that products have a limited life, product sales pass through distinct stages, each posing different challenges, opportunities, and problems to the seller,profits rise and fall at different stages of product life cycle, products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life cycle stage.

The different stages in a product life cycle are:

1. Market introduction stage

* cost high
* sales volume low
* no/little competition - competitive manufacturers watch for acceptance/segment growth losses
* demand has to be created
* customers have to be prompted to try the product

2. Growth stage

* costs reduced due to economies of scale
* sales volume increases significantly
* profitability
* public awareness
* competition begins to increase with a few new players in establishing market
* prices to maximize market share

3. Mature stage

* Costs are very low as you are well established in market & no need for publicity.
* sales volume peaks
* increase in competitive offerings
* prices tend to drop due to the proliferation of competing products
* brand differentiation, feature diversification, as each player seeks to differentiate from competition with "how much product" is offered
* Industrial profits go down

4. Decline or Stability stage

* costs become counter-optimal
* sales volume decline or stabilize
* prices, profitability diminish
* profit becomes more a challenge of production/distribution efficiency than increased sales