how the product life cycle works
products like people have life cycles the life cycle of a product is broken into four stages introduction growth maturity and decline a product begins with an idea and within the confines of modern business it isn t likely to go further until it undergoes research and development r d and is found to be feasible and potentially profitable at that point the product is produced marketed and rolled out some product life cycle models include product development as a stage though at this point the product has not yet been brought to customers as mentioned above there are four generally accepted stages in the life cycle of a product here are details about each one the introduction phase is the first time customers are introduced to the new product a company must generally includes a substantial investment in advertising and a marketing campaign 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 is often little to no competition for a product as competitors may just be getting a first look at the new offering however companies still often experience negative financial results at this stage as sales tend to be lower promotional pricing may be low to drive customer engagement and the sales strategy is still being evaluated if the product is successful it then moves to the growth stage this is characterized by growing demand an increase in production and expansion in its availability the amount of time spent in the introduction phase before a company s product experiences strong growth will vary from between industries and products 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 competition begins to offer rival products competition increases potentially forcing the company to decrease prices and experience lower margins 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 now higher than at other stages and profit margins starting 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 a new product needs to be explained while a mature product needs to be differentiated as the product takes on increased competition as other companies emulate its success the product may lose market share and begin its decline product sales begin to drop due to market saturation and alternative products and the company may choose to not pursue additional marketing efforts as customers may already have determined whether they are loyal to the company s products or not 