Problem
Vehicles are a great example because their sales life cycle is planned from the beginning. There is term, planned obsolescence, that is sometimes used. It refers to products whose end is planned before it is even introduced. With vehicles this is not an issue because consumers know that updated models are introduced every year. However, it can be a problem if a company knows that their product will not last as long as consumers anticipate. Can you think of other products that you know will be replaced in a given amount of time?
During the life cycle of a product the sales and profits may go up and down at different times. For example, in the introduction phase, hopefully, sales will begin to rise, but there will probably not be any profits because so much money is being spent on the product development and marketing to introduce the product. As the product moves into the growth phase, sales will be increasing rapidly and costs should start coming down. This allows for a rise in profits as well. Class, can you explain what will happen in the maturity and decline phases?