Product Life Cycle

What Is the Product Life Cycle?

The product life cycle is the length of time that a product is available to customers. It starts

when a product (a good or a service) is introduced into the market and ends when it's removed

from the shelves.

This concept is used by management and marketing professionals to make marketing and sales

decisions, such as whether or not to increase advertising, reduce prices, expand to new markets,

or redesign packaging.

How the Product Life Cycle Works?

A product begins with an idea. Within the confines of modern business, that idea isn't likely to

go further until it undergoes research and development (R&D). If the business finds that it

is feasible and potentially profitable, the product will be produced, marketed, and rolled out.

The life cycle of a product is broken into four stages:

 Introduction

 Growth

 Maturity

 Decline
Introduction Stage

The introduction phase is the first time customers are introduced to the new product. This stage

generally requires that the business make a substantial investment in advertising. At this point,

the marketing is focused on making consumers aware of the product and its benefits, especially

if it is broadly unknown what the item will do.

During the introduction stage, there may be little or no competition for a product, as competitors

may just be getting a first look at the new offering. Even if the business is offering a new

product or service in response to another business's sales, the marketing will still be focused on

introducing the new product rather than on differentiating it from competitors' products.

Companies often experience negative financial results at this stage. Sales tend to be lower,

promotional pricing may be low to drive customer engagement, marketing spending is high, and

the sales strategy is still being evaluated.

Growth Stage

If the product is successful, it then moves to the growth stage. This is characterized by:

 Growing demand

 Increase in production

 Expanded availability

During the growth phase, the product becomes more popular and recognizable. A

company may still choose to invest heavily in advertising if the product faces heavy

competition. However, marketing campaigns will likely be geared towards

differentiating its product from others as opposed to introducing the goods to the market.
 A company may also refine its product by improving functionality based on customer

feedback.

 Financially, the growth period of the product life cycle results in increased sales and

higher revenue. As peer businesses begin to offer rival products, competition increases,

potentially forcing the company to decrease prices and experience lower margins.

Maturity Stage

 The maturity stage of the product life cycle is the most profitable stage, the time when

the costs of producing and marketing decline. With the market saturated with the

product, competition is now higher than at other stages, and profit margins start to

shrink. Some analysts refer to the maturity stage as when sales volume is "maxed out."

 Depending on the good, a company may begin deciding how to innovate its product or

introduce new ways to capture a larger market presence. This includes getting more

feedback from customers and researching their demographics and their needs.

 During the maturity stage, competition is at the highest level. Rival companies have had

enough time to introduce competing and improved products, and competition for

customers is usually highest. Sales levels stabilize, and a company strives to have its

product exist in this maturity stage for as long as possible.

Decline Stage

As the product takes on increased competition and other companies emulate its success, the

product may lose market share. This is when the decline state begins.
Product sales begin to drop due to market saturation and alternative products. If customers have

already decided whether they are loyal to the product or prefer those of competitors, the

company may choose to not invest in additional marketing efforts. Should a product be entirely

retired, the company will stop generating support for it and will entirely phase out marketing

and production endeavors.

Alternatively, the company may decide to revamp the product or introduce a next-generation,

completely overhauled model. If the upgrade is substantial enough, the company may choose to

re-enter the product life cycle by introducing the new version to the market.

Microsoft's decision to stop Windows 8.1 in January 2023 was an example of the decline stage.

Consumers began receiving notifications the year before that Microsoft would no longer support

the product and instead would focus resources on newer technologies.