Product Life Cycle Meaning
Human beings have a life cycle and we go through various stages of life right from birth to getting young and then eventually getting old before our death. In the case of products also they have a life cycle which begins with the introduction phase and goes through growth and maturity phase before going into the last phase which is a declining phase. The only notable difference between human and product life cycle is that while the physical appearance of humans keep changing in every stage of life while the physical appearance of the product remains the same throughout its life cycle. In order to understand more about this one should look at some of the important characteristics of the product life cycle –
Characteristics of Product Life Cycle
Four stages
In case of a product life cycle, there are four stages, the first stage is called introduction stage product is introduced in the market and it finds low acceptance from the consumers while the second stage is called growth stage in which company finds many customers for the product due to product becoming popular. The third stage is called maturity stage where the product does not find enough growth rather it sustains its growth and the last stage is called declining stage where the customers ignore the product and company find it very difficult to keep the product in the market.
Profits and Sales Difference
In case of product life cycle in the introduction stage sales are low and due to it profits are low or even negative but as product reaches growth stage its sales begin to rise exponentially which give company abnormal profits for some time till competitors appear, while in maturity stage sales remain constant and profits began to decline due to company incurring more expenses on marketing and then comes the declining stage in which sales, as well as profits, go down drastically forcing company to discontinue the product and look for new products.
Diverse Strategy for Different Stages
In case of introduction stage company requires more marketing as well as innovation so as to lure customers towards the new product besides production cost tend to be high due to lack of optimum production whereas in case of growth stage due to higher sales and increased product visibility company has to incur less on marketing besides company enjoy economies of scale due to higher production. In case of maturity stage company has to concentrate on retaining its customers and keeping an eye on competitors rather than doing marketing as companies seldom do marketing of established products. In the declining stage, the company due to declining sales and profits company resorts to production cuts and other cost-saving measures to remain profitable apart from making back up plan which may include discontinuation of product and introduction of new products in the market.
Lifespan of Stages
As far as lifespan of each stage is concerned, the introduction stage lasts for few months till the product gets established and then comes the growth stage which too does not lasts for long because competitors jump in and they makes sure that company do not earn abnormal profits for long period of time than comes the maturity stage which is the longest stage of product life cycle and lastly comes the declining stage the lifespan of which depends on company because some companies keep the product in the market even when it is in declining stage while some companies discontinue the product in quick time.
Completion of Stages not Necessary
It is not necessary that every product goes through all stages of the product life cycle because some products may fail in introduction stage forcing company to discontinue the product immediately while some products due to their special status or monopoly conditions may remain in growth for a very long period of time and so on.
As one can see from the above that product life cycle has unique characteristics and every product goes through this cycle which is the reason why any company should carefully read above features as it can be of great help to the company while deciding whether to manufacture a product or not.