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crm:metrics:lifetime_duration
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Lifetime duration

In general lifetime duration describes the period of time over which an item is developed, brought to market and eventually removed from the market. First, the idea for a product has to be development. If the idea is resolute to be likely and possibly profitable, the product will be produced, advertised and then rolled out. Assuming the product becomes a positive marked feedback, its production will grow until the product becomes generally available. Eventually, demand for the product will decline and it will become outdated.

At the beginning of a product life, there is not much competition in the market until competitors start to grow when it shows signs of success. When the product becomes more successful, it will face increasing numbers of competitors and may lose market share. The stage of its life cycle the product is currently in will impact the way it is marketed to consumers. For example, a brand-new product needs to be explained to consumers, but a product that is further along in its lifetime duration will need to be differentiated from its competitors. 1

Steps during the lifetime duration for a product:

1. Research Stage

In the research stage the company starts to look in their field of vision and their customers’ needs to find new ideas and opportunities for their business.

2. Growth Stage

“The growth stage is when product sales start to grow extremely, especially when the product is one in high demand. During this stage, the competition will grow and they will develop competitive products. The market leader or first company in the industry to create the product will usually maintain its starting price as the price is obviously acceptable to consumers if sales are increasing.

3. Saturation Stage

Competition will eventually start reaching a saturation point over time. Companies will vie for a position in the market to compete with leading company. At this point, it will be difficult for new competitors to enter into the market. Some may even go out of the business. The Market saturation will eventually force companies to lower prices. During this stage the consumer research is extremely important. A company want to determine what features, styles or flavors of the product in question consumers want so it can differentiate its product from competitors. A company may also discover that the consumers want additional or ancillary products. Hence, the company's best strategy is to extend its product line to include these additional products.

4. Declining Sales Stage

Eventually, product sales will start declining unless a company finds new uses or markets for its product. The decline stage may be precipitated by new technology that replaces the outmoded product. The company may also cut back on advertising during the decline stage.

5. Exit Strategy

If a company decides to discontinue a product during the decline stage, it can either sell any product-related inventory or assets, or sell the product to another company. The decision will often be contingent on which strategy is best for the shareholders and company.” ²

It can be assumed that the demand for a product passes of the introduction of the product on the market up to the time on which it disappears of the market through different phases. The course arises from a variety of individual effects, like the amount of purchases per purchase, the re-purchase rate, the purchase frequency, the price level or the competition behavior.

Scientific studies and publications,

1 Gabler Verlag (Herausgeber), Gabler Wirtschaftslexikon, Stichwort: Lebenszyklus, online im Internet: http://wirtschaftslexikon.gabler.de/Archiv/55241/lebenszyklus-v9.html

2 http://smallbusiness.chron.com/product-life-cycle-definition-3395.html

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crm/metrics/lifetime_duration.txt · Last modified: 2013/05/22 19:46 (external edit)