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Product Life Cycle
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The product life cycle has 4 clearly-defined stages, each with its own characteristics that mean different things for businesses that are trying to manage the lifecycle of their particular products.
Introduction Stage
This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product, can be very high, especially if it’s a competitive sector.
Growth Stage
The growth stage is typically characterized by rapid growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in promotional activity to maximize the potential of this growth stage.
Maturity Stage
During the maturity stage, the product is established and the aim for the manufacturer now is to maintain the market share they have built up. This is the most competitive time for most products, and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process, which might give them a competitive advantage.
Decline Stage
Eventually, the market for a product will start to shrink, and this is what is known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already bought it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.
Product Life Cycle Examples
It is possible to provide examples of various products to illustrate the different stages of the product life cycle more clearly. Here is an example of watching recorded television and the various stages of each method:
- Introduction – 3D TVs
- Growth – Blue-ray discs/DVR
- Maturity – DVD
- Decline – Videocassette
The idea of the product lifecycle has been around for some time, and it is an important principle that manufacturers need to understand in order to make a profit and stay in business.
However, the key to successful manufacturing is not just understanding this lifecycle, but also proactively managing products throughout their lifetime, applying the appropriate resources and sales and marketing strategies, depending on what stage products are at in the cycle.