What Is the Product Life Cycle? Stages and Examples

While some, incredibly expensive models, can achieve 8K resolution, the majority of sales and support are focused on 4K resolution. Depending on your market position, it may make sense to be the market leader and focus on high-end sales. On the other hand, if you deal in mid-range televisions and monitors, it likely makes more sense to keep your products at 4K output with a few options for 8K to test if it’s relevant.

The Product Life Cycle

Product managers create marketing mixes for their products as they move through the life cycle. The product life cycle is a pattern of sales and profits over time for a product (Ivory dishwashing liquid) or a product category (liquid detergents). As the product moves through the stages of the life cycle, the firm must keep revising the marketing mix to stay competitive and meet the needs of target customers.

Introduction: When a product enters the life cycle, it faces many obstacles. Although competition may be light, the introductory stage usually features frequent product modifications, limited distribution, and heavy promotion. The failure rate is high. Production and marketing costs are also high, and sales volume is low. Hence, profits are usually small or negative.

Growth: If a product survives the introductory stage, it advances to the growth stage of the life cycle. In this stage, sales grow at an increasing rate, profits are healthy, and many competitors enter the market. Large companies may start to acquire small pioneering firms that have reached this stage. Emphasis switches from primary demand promotion to aggressive brand advertising and communicating the differences between brands. For example, the goal changes from convincing people to buy flat-screen TVs to convincing them to buy Sony versus Panasonic or Sharp .

The graph shows sales and profits along the vertical left side. Moving left to right there are columns, and represent time moving. These are labeled introduction, then growth, then maturity, then decline. Below the graph, there are products labeled, each corresponding to one of the stages or columns above. In the introduction phase, sales are profits are low, money can be in the minus. Product is shown as Air waves vapor release chewing gum, a nasal decongestant. Next, in the growth phase the sales and profits increase. This is shown as an internet security software. Next, in the maturity phase sales and profits are at their highest; and this is shown as Coca cola. The area between growth and maturity is a check point. Next comes the decline, where total market sales drop, as do total market profits. This is shown as C B radios.

Distribution becomes a major key to success during the growth stage, as well as in later stages. Manufacturers scramble to acquire dealers and distributors and to build long-term relationships. Without adequate distribution, it is impossible to establish a strong market position.

Toward the end of the growth phase, prices normally begin falling, and profits peak. Price reductions result from increased competition and from cost reductions from producing larger quantities of items (economies of scale). Also, most firms have recovered their development costs by now, and their priority is in increasing or retaining market share and enhancing profits.

Maturity: After the growth stage, sales continue to mount—but at a decreasing rate. This is the maturity stage. Most products that have been on the market for a long time are in this stage. Thus, most marketing strategies are designed for mature products. One such strategy is to bring out several variations of a basic product (line extension). Kool-Aid, for instance, was originally offered in six flavors. Today there are more than 50, as well as sweetened and unsweetened varieties.

Decline (and death): When sales and profits fall, the product has reached the decline stage. The rate of decline is governed by two factors: the rate of change in consumer tastes and the rate at which new products enter the market. Sony VCRs are an example of a product in the decline stage. The demand for VCRs has now been surpassed by the demand for DVDs and online streaming of content. Sometimes companies can improve a product by implementing changes to the product, such as new ingredients or new services. If the changes are accepted by customers, it can lead to a product moving out of the decline stage and back into the introduction stage.

Each year Coca-Cola adds new drinks to its product portfolio. While some of these new beverages are close relatives of the original Coca-Cola Classic, others, such as Vitaminwater, constitute entirely new categories of soft drink. What challenges do new products such as Vitaminwater face during the introduction phase of the product life cycle? (Credit: kobakou/ Flickr/ Attribution 2.0 Generic (CC BY 2.0))

A photograph shows a person holding a bottle of Vitamin water. The label is written in both English and Japanese lettering.

The 4 Stages of the Product Life Cycle

The four stages of the product life cycle are introduction, growth, maturity, and decline.

1. Introduction

Once a product has been developed, it begins the introduction stage of the PLC. In this stage, the product is released into the market for the first time. The release of a product is often a high-stakes time in the product’s life cycle, although it does not necessarily make or break the product’s eventual success.

During the introduction stage, marketing and promotion are at a high, and the company often invests quite a bit of effort and capital in promoting the product and getting it into the hands of consumers. This is perhaps best showcased in Apple’s (AAPL) – Get Apple Inc. Report famous launch presentations, which highlight the new features of their newly (or soon-to-be) released products.

It is in this stage that the company is first able to get a sense of how consumers respond to the product, whether they like it, and how successful it may be. However, it is also often a heavy-spending period for the company with no guarantee that the product will pay for itself through sales.

Costs are generally very high during this stage, and there is typically little competition. The principal goals of the introduction stage are to build demand for the product and get it into the hands of consumers, hoping to later cash in on its growing popularity.

2. Growth

Other companies become aware of the product and its space in the market as it begins to draw more attention and pull in more revenue. If competition for the product is especially high, the company may still heavily invest in advertising and promotion of the product to beat out competitors. As a result of the product growing, the market itself tends to expand. Products are often tweaked during the growth stage to improve their functions and features.

As the market expands, more competition often drives prices down to make the specific products competitive. However, sales usually increase in volume and continue to generate revenue. Marketing in this stage is aimed at increasing the product’s market share.

3. Maturity

When a product reaches maturity, its sales tend to slow, signaling a largely saturated market. At this point, sales may start to drop. Pricing at this stage tends to get competitive, so profit margins shrink as prices begin to fall due to the weight of outside pressures like increased competition and lower demand. Marketing at this point is targeted at fending off competition, and companies often develop new or altered products to reach different market segments.

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In this stage, saturation is reached and sales volume is maxed out. Companies often begin innovating to maintain or increase their market share, changing or developing their product to satisfy new demographics or keep up with developing technologies.

The maturity stage may last a long time or a short time depending on the product. For some brands and products—like Coca-Cola (KO) – Get Coca-Cola Company Report —the maturity stage lasts a long time and is very drawn out.

4. Decline

In the decline stage, product sales drop significantly, and consumer behavior changes, as there is less demand for the product. The company’s product loses more and more market share, and competition tends to cause sales to deteriorate.

Eventually, the product is retired out of the market altogether unless it is able to redesign itself to remain relevant or in-demand. For example, products like typewriters, telegrams, and muskets are deep in their decline stages (and in fact are almost or completely retired from the market).

Sources:

https://opentextbc.ca/businessopenstax/chapter/the-product-life-cycle/
https://www.thestreet.com/markets/commodities/product-life-cycle-14882534
https://articles.bplans.com/what-is-a-product-life-cycle/

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