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THE PRODUCT LIFECYCLE THEORY Assessing the true operational cost.

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Presentation on theme: "THE PRODUCT LIFECYCLE THEORY Assessing the true operational cost."— Presentation transcript:

1 THE PRODUCT LIFECYCLE THEORY Assessing the true operational cost

2 LEARNING OBJECTIVES …to identify different types of merchandise included in the fashion range …to understand the impact of product lifecycle on the fashion operation

3 COST vs. SERVICE LEVEL COST: to be the cheapest in the marketplace SERVICE LEVEL: to be committed, responsive and reliable STRATEGIC EFFECTIVENESS doing the right things OPERATIONAL EFFECTIVENESS doing the right things right INNOVATION: to be the only one in the marketplace

4 THE PRODUCT LIFECYCLE THEORY Stages Features IntroductionGrowthMaturityDecline DemandLowRisingSteadyFalling Product DesignChangingSome ChangeStandardAdjustments ProcessSmall ScaleLarger ScaleMass ProductionAdjustments Selling PriceHighFairly HighLowerLow Total RevenueLowRisingPeaksFalls Unit CostsHighFallingLowerVariable ProfitLowRisingPeaksFalls Number of Competitors FewRisingStableFalling Focus on Operations Flexibility, Reliability Scheduling, Capacity Cost Reduction, Productivity Cost Control, New Products Source: Waters, 2000

5 THE FASHION CYCLE Introduction Rise in popularity of new fashion Mass sales of new fashion Decline in popularity of new fashion Obsolesce and abandonment

6 FASHION FAD OR LASTING TREND? LONG RUN Basic, classic or staple fashion Rise to a peak of quick popularity, slow to decline Slow rise to popularity, require familiarisation period before acceptance SHORT RUN Fashions have fast acceptance and fast decline Fads or short season garments

7 TIME DEMAND Basic garments Seasonal garments Short- season garments

8 THE FASHION MERCHANDISE RANGE Basic Products generally sold throughout the year Seasonal Products shelf life of weeks Short-Season Products shelf life of 6-10 weeks or less (Lowson, 2003)

9 Stages Features IntroductionGrowthMaturityDecline DemandLowRisingSteadyFalling Product DesignChangingSome ChangeStandardAdjustments ProcessSmall ScaleLarger ScaleMass ProductionAdjustments Selling PriceHighFairly HighLowerLow Total RevenueLowRisingPeaksFalls Unit CostsHighFallingLowerVariable ProfitLowRisingPeaksFalls Number of Competitors FewRisingStableFalling Focus on Operations Flexibility, Reliability Scheduling, Capacity Cost Reduction, Productivity Cost Control, New Products THE PRODUCT LIFECYCLE THEORY

10 PRODUCTION REQUIREMENTS IntroductionGrowthMaturityDecline Basic Products: Lean Seasonal Products: AgileLean Agile Short season Products: Agile---


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