Verified Document

Relevance And Application Of The Product Life Essay

Relevance and Application of the Product Life Cycle Concept in Budgeting Company and business unit budgets often lend financial expression to strategy, inspire managers to attain generally understood targets and offer a logical framework for the analysis of outcomes. On the other hand, many companies suffer from badly conceived or incompetent budgeting processes which do not inspire accomplishment of targets and are of little value for operational management (Corporate Budgeting, n.d.).

Life cycle budgeting comprises approximations of a product's revenues and expenses over its complete life cycle starting with research and development, going through the introduction and growth stages, into the maturing stage, and in conclusion into the harvest or decline stage. Life cycle budgeting adopts a life cycle approach. It is planned to account for the expenses at all stages of the value chain. This knowledge is significant for pricing choices because revenues must cover expenses acquired in each stage of the value chain, not just manufacturing. Life cycle budgeting highlights the associations amid costs acquired at dissimilar value chain stages, for instance, condensed design expenses on future customer service costs (Siegel and Shim, 2006).

A product's life cycle (PLC) can be separated into a number of stages characterized by the income made by the product. The first stage is known as the introduction phase. When the product is first brought to market, sales will be low until consumers become conscious of the product and its benefits. A number of companies may announce their product prior to it is introduced, but such announcements also alert rivals and take away the...

Advertising expenses characteristically are high throughout this stage in order to quickly increase consumer consciousness of the product and to target the early adopters. Throughout the introductory stage the company is likely to acquire supplementary expenses connected with the initial delivery of the product. These higher costs joined with a low sales volume frequently make the introduction stage a stage of pessimistic profits (The Product Life Cycle, 2010).
In the introduction phase, sales are often sluggish as the corporation builds consciousness of its product amid possible consumers. Advertising is vital at this stage, so the marketing budget is frequently large. The kind of advertising depends on the product. If the product is planned to reach a large audience, than an advertising campaign built around one idea may be in order. If a product is specific, or if a business's capital are limited, than lesser advertising campaigns can be utilized that target very exact consumers. As a product matures, the advertising budget connected with it will most probably shrink since consumers are already conscious of the product (Product Life Cycle, 2011).

The second stage is the growth stage. The growth stage is a stage of rapid revenue growth. Sales swell as more consumers become conscious of the product and its benefits and supplementary market segments are targeted. Once the product has been established an achievement and consumers begin asking for it, sales will go up further as more retailers become interested in selling it. The marketing team may increase the distribution at this point. When rivals enter the market, frequently throughout…

Sources used in this document:
References

Corporate Budgeting. (n.d.). Retrieved February 26, 2011, from Web site:

http://www.pwc.com/en_UA/ua/assets/pwc_corporate_budgeting_eng.pdf

Product Life Cycle. (2011). Retrieved February 26, 2011, from Web site:

http://www.referenceforbusiness.com/small/Op-Qu/Product-Life-Cycle.html
http://www.netmba.com/marketing/product/lifecycle/
Cite this Document:
Copy Bibliography Citation

Related Documents

Life Cycle Costing Woodward 1997
Words: 2850 Length: 10 Document Type: Term Paper

The successful adaptation of life cycle costing to environmental accounting opens the door for the application of life cycle costing techniques to other emerging areas of managerial accounting. This paper will examine the usefulness of life cycle costing in the context of not only its existing uses but with respect to potential future uses as well. It is expected that this analysis will conclude that life cycle costing is

Life Long Learning
Words: 1495 Length: 5 Document Type: Essay

Life-Long Learning In discussing the strategies outlined in several of Malcolm Knowles books, one can clearly recognize adult learning theory as separate from traditional theories in education. In his book, Andragogy in Action, Knowles accurately predicted that by the end of the last century, education would become almost mobile as adults require educational resources that do not uniformly take place in buildings and on campuses but in places, at times and

Jung Test History and Application
Words: 865 Length: 3 Document Type: Essay

I have always thought of myself as fairly outgoing, and being labeled as an introvert seemed strange to me. When I though about it, though, I realized that the test was (of course) fairly accurate in this assessment; I even recalled a few individual items on the test that proved this point -- my need to "reenergize" with some alone-time after hanging out with friends for awhile, or my

Application of a Pedagogic Model to the Teaching of Technology to...
Words: 60754 Length: 230 Document Type: Dissertation

Pedagogic Model for Teaching of Technology to Special Education Students Almost thirty years ago, the American federal government passed an act mandating the availability of a free and appropriate public education for all handicapped children. In 1990, this act was updated and reformed as the Individuals with Disabilities Education Act, which itself was reformed in 1997. At each step, the goal was to make education more equitable and more accessible to

Rim Discuss This Product in Terms of
Words: 2239 Length: 6 Document Type: Essay

RIM Discuss this product in terms of its repositioned target market demographics using U.S. Census Data. In regards to U.S. Census Data, the target market demographic show promise. The repositioned product will focus on high level and medium income level people. These individuals tend to be high lifestyle and business professionals. The product is full of applications and latest operating system that is helpful for professionals and other business persons to accomplish

Work Life Balance - The Role of
Words: 7287 Length: 22 Document Type: Essay

Work Life Balance - the Role of HRM Human resources management come with massive demands chiefly in light of the fact that it involves dealing with people, a task that is complex in itself. To enhance organizational growth, pleasure on the part of workforce is very crucial. This is a necessity that human resources sectors in organizations have to grapple with on a day-to-day basis through the initiation and implementation of

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now