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TOPIC:
PRODUCT LIFE
CYCLE
AND
COST
CONTROL
product life cycle and cost control
product life cycle and cost control
INTRODUCTION
STAGE:
 This stage of the cycle could be the most
expensive for a company launching a new
product. The size of the market for the
product is small, which means sales are
low, although they will be increasing. On
the other hand, the cost of things like
research and development, consumer
testing, and the marketing needed to
launch the product can be very high,
especially if it’s a competitive sector.
product life cycle and cost control
GROWTH
STAGE:
 The growth stage is typically
characterized by a strong growth in sales
and profits, and because the company can
start to benefit from economies of scale in
production, the profit margins, as well as
the overall amount of profit, will
increase. This makes it possible for
businesses to invest more money in the
promotional activity to maximize the
potential of this growth stage.
product life cycle and cost control
MATURITY
STAGE:
 During the maturity stage, the product is
established and the aim for the
manufacturer is now to maintain the
market share they have built up. This is
probably the most competitive time for
most products and businesses need to
invest wisely in any marketing they
undertake. They also need to consider
any product modifications or
improvements to the production process
which might give them a competitive
advantage.
product life cycle and cost control
DECLINESTAGE:
 Eventually, the market for a product
will start to shrink, and this is what’s
known as the decline stage. This
shrinkage could be due to the market
becoming saturated (i.e. all the
customers who will buy the product
have already purchased it), or because
the consumers are switching to a
different type of product. While this
decline may be inevitable, it may still be
possible for companies to make some
profit by switching to less-expensive
production methods and cheaper
markets.
product life cycle and cost control
COST
CONTROL:
Cost control by management means
a search for better and more
economical ways of completing each
operation. Cost control is simply the
prevention of waste within the
existing environment. This
environment is made up of agreed
operating methods for which
standards have been developed.
Aspectsof Cost
Control:
(i) Planning:
Initially a plan or set of targets is established in
the form of budgets, standards or estimates.
(ii) Communication:
The next step is to communicate the plan to those
whose responsibility is to implement the plan.
(iii) Motivation:
After the plan is put into action, evaluation of the
performance starts. Costs are ascertained and
information about achievements is collected and
reputed. The fact that the costs are being reported
for evaluating performance acts as a prompting
force.
Aspectsof Cost
Control:
(iv) Appraisal:
Comparison has to be made with the predetermined
targets and actual performance. Deficiencies are noted
and discussion is started to overcome deficiencies.
(v) Decision-making:
Finally, the reported variances are received. Corrective
actions and remedial measures are taken or the set of
targets is revised, depending upon the administration’s
understanding of the problem.
The management and control of the resources used in
most commercial organizations leaves a great deal to be
desired. Waste is growing at such an enormous rate that
it has spawned a new industry for recycling and
extracting useful materials.
product life cycle and cost control

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product life cycle and cost control

  • 4. INTRODUCTION STAGE:  This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector.
  • 6. GROWTH STAGE:  The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.
  • 8. MATURITY STAGE:  During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.
  • 10. DECLINESTAGE:  Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.
  • 12. COST CONTROL: Cost control by management means a search for better and more economical ways of completing each operation. Cost control is simply the prevention of waste within the existing environment. This environment is made up of agreed operating methods for which standards have been developed.
  • 13. Aspectsof Cost Control: (i) Planning: Initially a plan or set of targets is established in the form of budgets, standards or estimates. (ii) Communication: The next step is to communicate the plan to those whose responsibility is to implement the plan. (iii) Motivation: After the plan is put into action, evaluation of the performance starts. Costs are ascertained and information about achievements is collected and reputed. The fact that the costs are being reported for evaluating performance acts as a prompting force.
  • 14. Aspectsof Cost Control: (iv) Appraisal: Comparison has to be made with the predetermined targets and actual performance. Deficiencies are noted and discussion is started to overcome deficiencies. (v) Decision-making: Finally, the reported variances are received. Corrective actions and remedial measures are taken or the set of targets is revised, depending upon the administration’s understanding of the problem. The management and control of the resources used in most commercial organizations leaves a great deal to be desired. Waste is growing at such an enormous rate that it has spawned a new industry for recycling and extracting useful materials.