Product Life Cycle

Product Life Cycle

Introduction

  • The Product Life Cycle is a concept that defines the stages a product goes through from when it is introduced into the market until it is removed.
  • It contrasts the sales volume and the profitability of the product over time.
  • The lifecycle consists of four main stages: introduction, growth, maturity, and decline.

Introduction Stage

  • The introduction stage starts with the launch of the product.
  • Typically, sales volume is low due to lack of awareness and acceptance by the market.
  • This stage is usually characterised by heavy promotion and high costs with low profits.
  • The focus at this stage is to inform the market about the product and create demand.

Growth Stage

  • In the growth stage, the product is accepted by the market and sales start to grow.
  • The firm might start seeing profits as the economies of scale come into play.
  • The business could consider improving the product or adding new features to capitalise on the growth.
  • New competitors may enter the market attracted by the growing sales.

Maturity Stage

  • The maturity stage is when the product reaches peak sales.
  • The product has achieved acceptance from mainstream buyers and the market becomes saturated.
  • Profit margins may start to decline.
  • Marketing activities might be focused on maintaining market share and extending the product life.

Decline Stage

  • The decline stage is when both sales and profits start to fall.
  • The product becomes less relevant as new, more innovative products are introduced or customer preferences change.
  • The options for the business at this stage include withdrawing the product, harvesting it (reducing costs and continue offering the product), or revamping it.

Significance of Understanding the Product Life Cycle

  • Understanding the Product Life Cycle helps the business make strategic decisions about product planning, marketing strategies, and resource allocation.
  • It enables firms to identify opportunities for extension strategies like product updates, market segmentation, and price revisions.
  • Not every product follows the classic life cycle curve; some products may skip a stage or fluctuate between stages.