Product Life Cycle The product life cycle of the self-service vending machine is dependent upon many variables compared to the human condition of aging. The vending machine will be born or introduced into new markets in order for the organization to expand its sales volume and ultimately its profit. The company will focus on differentiating its new product from others by promoting its two main attributes; convenience and saving the end-user money. The company will promote its products in the new markets by advertising.
Companies use the approach to create brand awareness and entice independent distributors to purchase the machines and in turn lease them to the public. The self-service vending machine will have its birth announcement in each new market and price setting will be commensurate with demand. With any newborn the next stage will involve growth. The authors of this paper are taking the position this product will be successful in its new markets. The manufacturer will raise prices because of increased demand. The demand from new distributors will increase and this will in turn increase lease rates at the end-user level.
Both the distributor and the manufacturer will have additional funds for advertising to build brand preference. The manufacturer will focus its distribution channels to equipment wholesale distributors who in turn will focus their distribution channels on the vending machine operator or the vending machine site owner. The manufacturer estimates the growth stage duration to be short as the product is not complex and the end-user receives an immediate economic benefit. The maturity stage also known as the “over forty crowd” to some records sales at a more slowly pace. The vending machine no longer requires an extensive promotional push.
The brand is well known and advertising costs can shrink. Reduced costs result in greater profits. The manufacturer will focus on modifications to the vending machines such as becoming Energy Star compliant and possibly forming partnerships with utility companies and create rebate programs. The introduction of new products will inevitably create competition if it is a profitable item and rebate inducements are meant to create and maintain customer loyalty. The manufacturer has determined from the historic data provided by refrigerator sales that the maturity will be very long. Refrigerators, as a product category, have exhibited a very long and relatively stable maturity phase due to the fact that they fill a substantial, on-going market need” (Thompson, 1999, p. 4). In the decline stage also known as the retirement stage the vending machine will no longer be innovative and the market saturated. The manufacturer will continue to produce the machine and at the same time reduce promotional costs until eventually a profit can no longer be achieved. No profit equals discontinued product. Thompson, Dr. K. N. (1999). Product life cycles. Denton, TX: University of North Texas.