Perantonaki Eleni T, 230
Explain the product Life Cycle using examples of hotels at different stages of the life cycle. You should include details of each hotel and explain why you consider it is that change of the life cycle.
We define a product as anything that is capable of satisfying customer needs. The product has five different stages of life style: The product development, the introduction, the growth, the maturity and the decline.
1. The first stage of the product cycle is the product development that begins when the company finds and develops a new product idea. During this stage the company's sales are zero but the investments costs are high. An example of a hotel on this stage of life style is the new hotel. An example of hotel in this stage was the Courtyard by Marriot in 1983. The Courtyard hotels were founded by Marriot, its version of a moderately priced hotel chain. When it went after this niche opportunity, Marriott did a good job of identifying customer needs and wants. It empowered a cross-functional team to develop the new product, which first appeared as a prototype hotel in Gaithersburg, Maryland. After a successful test marketing of the new hotels in Atlanta, Courtyard has become an important addition to the Marriott product line, with more than 200 units around the country. I categorize Courtyard hotel in the production development stage because it begins when Marriot finds and develop a new product idea.
2. The second stage of the product cycle is the introduction that is a period of slow sales growth as the product is being introduced into the market. Marketing costs may be high in this stage in order to test the market. During this stage it is unlikely that business will make profits. Products during the introduction must be carefully monitored to make sure that they start increase. An example of this stage of product cycle is the the Rose Rayhaan by Rotana that is located on Dubai Zayed road. The hotel it is 333-metre tall, 72-storey building and is the world's tallest hotel building. The Rose Rayhaan hotel is in a period that is being introduced into the market.
3. After the introduction stage the product comes on the growth stage that is a period of rapid market acceptance, growth in sales and profits. Investigation costs are decreased and the profits arise due to an increase in output. An example of a hotel in the growth stage is the Address Hotels and Resorts, the hotel brand of Emaar Hospitality Group that is seeking to expand in Europe and Asia following the successful roll out of its hotels in Dubai. In 2008 the brand has opened the Address Dubai Mall and the Address Dubai Marina. The brand has quick achieved high occupancy figures with high room rates. The company following the successful open in Dubai is looking to branch more hotels all-over the world. I use this hotle at this stage because of the rabid market acceptance and the growth that the company has in sales and profits.
4. Next stage is the Maturity of the product that is a period of slowdown in sales growth because the product has achieved acceptance by most of its potential buyers. It is the most common stage for all markets. The maturity stage is the time when most profit it is earned by the market to the company. It is in this stage that competition is most intense as companies fight to maintain their market share. In this stage I will use as an example the Hilton Hotels that is an international chain of hotels and resorts founded by Conrad Hilton. The Hilton Hotels are either owned, managed, or franchised to independent operators by the Hilton Hotels Corporation. As of 2008[update] there are 533 Hilton branded hotels across the world. Hilton Hotels became the first coast-to-coast hotel chain of the United States in 1943. The original price for an overnight stay in 1943 was around $20. I used these hotels for this stage because of their profitability during the years. Hilton Hotels are maintaining their market share in order to avoid losing business by competitors.
5. The last stage of the life cycle of a product is the decline that is the period when sales fall off quickly and profits fall too. In the Decline Stage, we have reduction in market and as a result a reducing to the overall profit. At this stage, great care and important decisions has to be taken to manage the product carefully. For example sell the product. An example of this stage of product life is the Aquila Rithimna Beach hotel that is located in Rethymno in Crete. Rithimna has won more awards from guests and international organizations than any other hotel in Greece. It was a part from Grecotel chain for 30 years since the owners separate their fortune. The Rithimna hotel that since then was a five star hotel of Grecotel now is a four star hotel of Aquila. From that time and on the Rithimna reservations are falling and also its profits.
- Product life cycle/ http://tutor2u.net/business/marketing/products_lifecycle.asp, Accessed at 18/02/10, 23:00 pm
- The hotel life cycle /http://cqx.sagepub.com/cgi/pdf_extract/25/4/10 /Accessed at 18/02/10, 23:00 pm
- Fast New-Product Development at Service-Sector Companies/ http://www.qualitydigest.com/apr/newprod.html / Accessed at 18/02/10, 23:00 pm