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New product development and product life cycle are intricately linked, because most times companies and organizations embark of the development of a new product based on the application of the principles of the product life cycle. The product life cycle is a business principle that delineates the four stages that a new product goes through. These stages include the initial stage or introduction phase, followed by a phase of growth and then a subsequent phase of maturity on the market. The last stage of decline is the part that necessitates the development of a new product in order to replace the one that has worn out its market value.
The link between new product development and product life cycle can be viewed from angle of the necessity of replacing a product that has reached the end of its product life cycle with a new product. This process of replacing the old product might simply require the application of a completely new product, or it might merely require an upgrade of the old product. Deciding on the exact approach depends on the recommendations of the new product development manager in consonance with the management of the company.
An example of the application of the connection between new product development and product life cycle can be seen in the case of smartphones. Some well-known brand name smartphone companies apply the principle of new product development and product life cycle effectively in order to maintain a loyal consumer base who remain faithful to their products. When they release a new smartphone into the market, they allow it to go through the natural product life cycle, starting from the initial euphoria in which the product is received by the consumers and ending with the inevitable decline of the product. The causes of the decline include intense rivalry in the smartphone market environment and the constant innovation and new technology that is constantly replacing the old.
Where the phone in the market has started its decline, the company will wait until it has reached a certain point in the decline process, as determined by sales and completion, before introducing a newer version. The new smartphone might have additions in the form of better screen resolution, more megapixels on the camera, and a bigger screen size. An exact time for the introduction is not a constant, mainly due to external forces on the market, in addition to the internal forces within the company. As such, a new smartphone might be introduced after a year, while another will be introduced after two years.