SUO_MGT3059 W3 L1 Product Life Cycle

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Independence University *

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3059

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Management

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Nov 24, 2024

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pdf

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Uploaded by BailiffMusicMongoose34

Product Life Cycle Organizations are not required to follow a single strategy in pursuing their goals as an organization. Nike has been able to utilize multiple strategies when developing products. On the Nike website, you can design your own pair of sneakers called NIKEiD. NIKEiD shoes are delivered to the customer in four to six weeks. This process allows Nike to compete with its rivals on differentiation and response. Once an organization develops a new product, it is understood that demand for the product will not likely last forever. As an example, consider the portable cassette tape player that Sony once produced called the Walkman. As cassette tapes were replaced by compact discs (CDs), sales of the cassette tape players eventually fell to the point at which it was no longer profitable to produce them The journey that a product takes, from idea to discontinued product, is known as the product life cycle. For an organization, it is important to know where their products are within the product life cycle. In the 1970s, the Boston Consulting Group (BCG) developed a matrix, shown below, to help businesses analyze their product lines. To use the BCG matrix, you need to plot the position of products that your organization offers, based on market share and market growth. Market share refers to the portion of the market that your organization services. Market growth refers to the expected overall growth rate of the market. Essentially, this matrix is used to determine the profitability position of an organization.

Product Life Cycle There are four positions on the matrix: Star : A star product is one with high market share growth. The producing organization has a high proportion of the market share. Question Mark : A question mark is a product that may have potential, but it hasn’t been accepted by the market. Cash Cow : A cash cow is a product that has little potential for market share growth. However, it generates a large amount of money for the organization because it has a high market share. Dog : A dog is a product that has low growth and market share. Typically, this is a product that can be discontinued. In the product life cycle, a product starts as a question mark and then moves to the star category. Over a period of time, the product moves to the cash cow position as market growth deteriorates and eventually, it becomes a dog. Most organizations have products in all four quadrants of the BCG matrix. Organizations want to have their products spread out to help generate cash for new products under development. Page 2 of 2 Operations Management ©2017 South University

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