Stages of Product Life Cycle

Stages of Product Life Cycle

The lifetime of every product is typically divided into four Product Life Cycle Stages:
Introduction: A period of slow sales growth as the product is introduced in the market. Profits are non-existent because of heavy expenses incurred in connection with product introduction.
Growth: A period of rapid market acceptance and substantial profit improvement.
Maturity: A period of a slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased competition.
Decline: The period when the sales show a downward drift and profits set eroded/plateau off.

Product Life Cycle Stages

Introduction Stage in Product Life Cycle Stages

After successful test marketing of a new product, the company introduces the product in the market with the full-scale marketing program. The introductory stage is viewed as fairly risky and quite expensive because large amounts of money are spent on advertising and other tools of marketing communications to create consumer awareness in sufficiently large numbers and encourage trial. For truly new products, any direct competition may be very little or non-existent and the company’s primary objective is demand stimulation for the category rather than its brand. Profits are mostly negative in this stage, or in some exceptional cases, they may be very little.

Growth Stage in Product Life Cycle Stages

The growth stage of life cycle is characterized by a sharp rise in sales. Only a small percentage of new products introduced survive to reach the growth stage. Important improvements in the product continue, but at reduced rate. Increased brand differentiation is attempted primarily by adding new features. Product line expands to attract new customer segments. The intensity of competition increases and competitors offer increased choices to consumers in terms of features, packaging and price. During the later part of growth stage, market share leader particularly endeavors to lengthen the period of growth stage by improving product quality, adding new features, lowering costs, adding new segments, and trying to increase product usage rate. Due to the combined total efforts of all competing companies, the market expands and more customers start buying the product. Seeing the trends of increasing demand, more resellers are willing to carry the product and generally prices are reduced.

Maturity Stage in Product Life Cycle Stages

Most products after surviving competitive battles, winning customer confidence and successful through growth phase enter their maturity stage. The sales plateau and this flattening of sales usually last for some time because most products in the category have reached their maturity stage, and there is stability in terms of demand, technology, and competition. Sales slow down, competition is intense; price and promotional wars erupt, and profits decline. The demand for the category is at its highest during maturity. Strong market leaders manage to gain high profits and large positive cash flows because they have the advantage of lower-cost and have no need to expand their facilities. In general, if the maturity stage is protracted, a company cannot ignore the possibility of changes in the marketplace, the product, the distribution, production processes, and the nature and structure of competition.

Decline Stage in Product Life Cycle Stages

Decline stage sets in when customer preferences change due to the availability of technologically superior products and consumers’ shift in values, beliefs, and tastes to products offering more value. The number of competitors dwindles and generally few product versions are available. Those who stay, may cut their promotional budgets and further reduce their prices. The onset of decline stage may be gradual or fast. There may still be a small residual segment that remains loyal to the product.


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