Product Life Cycle Explained: Stage and Examples (2023)

What Is the Product Life Cycle?

The term product life cycle refers to the length of time from when a product is introduced to consumers into the market until it's removed from the shelves. This concept is used by management and by marketing professionals as a factor in deciding when it is appropriate to increase advertising, reduce prices, expand to new markets, or redesign packaging. The process of strategizing ways to continuously support and maintain a product is called product life cycle management.

Key Takeaways

  • A product life cycle is the amount of time a product goes from being introduced into the market until it's taken off the shelves.
  • There are four stages in a product's life cycle—introduction, growth, maturity, and decline.
  • A company often incurs higher marketing costs when introducing a product to the market but experiences higher sales as product adoption grows.
  • Sales stabilize and peak when the product's adoption matures, though competition and obsolescence may cause its decline.
  • The concept of product life cycle helps inform business decision-making, from pricing and promotion to expansion or cost-cutting.

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Product Life Cycle

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 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.

(Video) Product Life cycle, 4 stages of product life Cycle

Introduction Stage

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.

Growth Stage

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.

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 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.

(Video) Product Life Cycle Explained | Apple iPhone & Coca Cola Examples

Decline Stage

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.

Should a product be entirely retired, the company will stop generating support for it and will entirely phase out marketing 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.

The stage of a product's life cycle impacts the way in which it is marketed to consumers. A new product needs to be explained, while a mature product needs to be differentiated from its competitors.

Advantages of Using the Product Life Cycle

The product life cycle better allows marketers and business developers to better understand how each product or brand sits with a company's portfolio. This enables the company to internally shift resources to specific products based on those products' positioning within the product life cycle.

For example, a company may decide to reallocate market staff time to products entering the introduction or growth stages. Alternatively, it may need to invest more cost of labor in engineers or customer service technicians as the product matures.

The product life cycle naturally tends to have a positive impact on economic growth, as it promotes innovation and discourages supporting outdated products. As products move through the life cycle stages, companies that use the product life cycle can realize the need to make their products more effective, safer, efficient, faster, cheaper, or better suited to client needs.

Limitations of Using the Product Life Cycle

Despite its utility for planning and analysis, the product life cycle doesn't pertain to every industry and doesn't work consistently across all products. Consider popular beverage lines whose primary products have been in the maturity stage for decades, while spin-offs or variations of these drinks from the same company have failed.

The product life cycle also may be artificial in industries with legal or trademark restrictions. Consider the new patent term of 20 years from which the application for the patent was filed in the United States. Though a drug may be just entering their growth stage, it may be adversely impacted by competition when its patent ends regardless of which stage it is in.

Another unfortunate side effect of the product life cycle is prospective planned obsolescence. When a product enters the maturity stage, a company may be tempted to begin planning its replacement. This may be the case even if the existing product still holds many benefits for customers and still has a long shelf life. For producers who tend to introduce new products every few years, this may lead to product waste and inefficient use of product development resources.

Notification messages such as Microsoft's alert that Windows 8.1 will sunset on January 2023 is an example of decline. Due to obsolescence of the operating system, Microsoft is choosing to no longer support the product and instead focus resources on newer technologies.

(Video) Product Life Cycle (With Real World Examples) | Strategic Management | From A Business Professor

Product Life Cycle vs. BCG Matrix

A similar analytical tool to determine the market positioning of a product is the Boston Consulting Group (BCG) Matrix. This four-square table defines products based on their market growth and market share:

  • "Stars" are products with high market growth and high market share.
  • "Cash cows" are products with low market growth and high market share.
  • "Question marks" are products with high market growth and low market share.
  • "Dogs" are products with low market growth and low market share.

Although there is no direct relationship between the matrix and the product life cycle concept, both analyze a product's market growth and saturation. However, the BCG Matrix does not traditionally communicate the direction in which a product will move. For example, a product that has entered the maturity stage of the product life cycle will likely experience decline next; the BCG Matrix does not communicate this product flow in its visual depiction.

Introduction and Maturity: Special Considerations

Companies that have a good handle on all four stages can increase profitability and maximize their returns. Those that aren't able to may experience an increase in their marketing and production costs, ultimately leading to the limited shelf life for their product(s).

Back in 1965, Theodore Levitt, a marketing professor, wrote in the Harvard Business Review that the innovator is the one with the most to lose because so many truly new products fail at the first phase of their life cycle—the introductory stage. The failure comes only after the investment of substantial money and time into research, development, and production. This fact prevents many companies from even trying anything really new. Instead, he said, they wait for someone else to succeed and then clone the success.

To cite an established and still-thriving industry, television program distribution has related products in all stages of the product life cycle. OLED TVs are in the mature phase, programming-on-demand is in the growth stage, DVDs are in decline, and the videocassette is extinct.

Many of the most successful products on earth are suspended in the mature stage for as long as possible, undergoing minor updates and redesigns to keep them differentiated. Examples include Apple computers and iPhones, Ford's best-selling trucks, and Starbucks' coffee—all of which undergo minor changes accompanied by marketing efforts—are designed to keep them feeling unique and special in the eyes of consumers.

Examples of Product Life Cycles

Many brands that were American icons have dwindled and died. Better management of product life cycles might have saved some of them—or perhaps their time had just come.

Oldsmobile

Oldsmobile began producing cars in 1897. After merging with General Motors in 1908, the company used the first V-8 engine in 1916. By 1935, the one millionth Oldsmobile had been built. In 1984, Oldsmobile sales peaked, selling more cars in that year than any other year. By 2000, General Motors announced it would phase out the automobile and, on April 29th, 2004, the last Oldsmobile was built.

Woolworth Co.

In 1905, Frank Winfield Woolworth incorporated F.W. Woolworth Co., a general merchandise retail store. By 1929, Woolworth had about 2,250 outlet stores across the United States and Britain, Decades later, due to increased competition from other discount retailors, Woolworth closed the last of its variety stores in the United States in 1997 to increasingly focus on sporting goods.

Coca-Cola

On April 23, 1985, Coca-Cola announced a new formula for its popular beverage, referred to as "new Coke." Coca-Cola's market-share lead had been decreasing over the past 15 years, and the company decided to launch a new recipe in hopes of reinvigorating product interest. After its launch, Coca-Cola's phone line began receiving 1,500 calls per day, many of which were to complain about the change. Protest groups recruited 100,000 individuals to support their cause of bringing "old" Coke back.

(Video) Product Life Cycle Explained

A stunning 79 days after its launch, "new Coke's" full product life cycle was complete. Though the product didn't experience much growth or maturity, its introduction to the market was met with heavy protest. Less than three months after it announced its new recipe, Coca-Cola announced it would revert its product back to the original recipe.

What Are the Stages of the Product Life Cycle?

The product life cycle is defined as four distinct stages: product introduction, growth, maturity, and decline. The amount of time spent in each stage will vary from product to product, and different companies have different strategic approaches to transitioning from one phase to the next.

What Are Product Life Cycle Strategies?

Depending on the stage a product is in, a company may adopt different strategies along the product life cycle. For example, a company is more likely to incur heavy marketing and R&D costs in the introduction stage. As the product becomes more mature, companies may then turn to improving product quality, entering new segments, or increasing distribution channels. Companies also strategically approach divesting from product lines including the sale of divisions or discontinuation of goods.

What Is Product Life Cycle Management?

Product life cycle management is the act of overseeing a product's performance over the course of its life. Throughout the different stages of product life cycle, a company enacts strategies and changes based on how the market is receiving a good.

Why Is Product Life Cycle Important?

Product life cycle is important because it informs management of how its product is performing and what strategic approaches it may take. By being informed of which stage its product(s) are in, a company can change how it spends resources, which products to push, how to allocate staff time, and what innovations they want to research next.

Which Factors Impact a Product's Life Cycle?

Countless factors can affect how a product performs and where it lies within the product life cycle. In general, the product life cycle is heavily impacted by market adoption, ease of competitive entry, rate of industry innovation, and changes to consumer preferences. If it is easier for competitors to enter markets, consumers change their mind frequently about the goods they consume or the market becomes quickly saturated. Then, products are more likely to have shorter lives throughout a product life cycle.

(Video) Product Life cycle - Stages of PLC explained with examples

The Bottom Line

Broadly speaking, almost every product sold undergoes the product life cycle. This cycle of market introduction, growth, maturity, and decline may vary from product to product—or industry to industry. However, this cycle informs a company of how to best utilize its resources, what the future outlook of their product is, and how to strategically plan for bringing new products to market.

FAQs

What are the stages of product life cycle with example? ›

The product life cycle is the progression of a product through 5 distinct stages—development, introduction, growth, maturity, and decline. The concept was developed by German economist Theodore Levitt, who published his Product Life Cycle model in the Harvard Business Review in 1965. We still use this model today.

Which product life cycle stage is the most essential explain your answer? ›

The maturity stage of the product life cycle is the most profitable stage, the time when the costs of producing and marketing decline.

What are the 7 steps of product life cycle? ›

Product management life cycle in seven main stages: Idea generation and management, research and analytics, planning, prototyping, validation, delivery, and finally, launch.

What are the 4 levels of product explain with example? ›

Four Levels of the Product. There are four levels of a product (shown in the figure below): core, tangible, augmented, and promised. Each is important to understand in order to address the customer needs and offer the customer a complete experience.

What are examples of life stages? ›

Life stages
  • Prenatal/infancy. From conception through the earliest years of life or babyhood. ...
  • Early childhood. The time in a child's life before they begin school full-time. ...
  • School age. The years from kindergarten through middle school. ...
  • Transition to adulthood. ...
  • Adulthood. ...
  • Aging.

What are some examples of products in the introduction stage? ›

Some great sales strategies to succeed in the market introduction stage are: Free trials/samples.
...
Some of the most popular products in the development and introduction phase today are:
  • Self-driving cars.
  • Artificial intelligence applications.
  • Smart glasses.
  • Foldable and rollable smartphones and TVs.
Oct 14, 2022

What is the importance of product life cycle give Example *? ›

The product life-cycle is an important tool for marketers, management and designers alike. It specifies four individual stages of a product's life and offers guidance for developing strategies to make the best use of those stages and promote the overall success of the product in the marketplace.

Which stage of life is the most important explain? ›

The most important phase of life is the first few years when you are a child. That's when the brain grows really fast – faster than any other time in our life. The brain makes [more than 1 million] new connections every second!

What is product life cycle explain with diagram? ›

The product life cycle concept indicates that the product is born or introduced, grows, attains maturity and the point of saturation in that market and then sooner or later it is bound to enter its declining stage e.g., decay in its sales (history).

What is an example of product development? ›

Product development can often be as simple as taking an existing product, modifying it slightly and selling it into your existing market. This adds value for customers, who may well buy your new product, even though they have the current version. Apple is a prime example of this.

What are the 8 stages in the new product development process? ›

What are the 8 steps of successful new product development?
  • Idea generation.
  • Idea screening.
  • Concept development and testing.
  • Marketing strategy development.
  • Business analysis.
  • Product development.
  • Test marketing.
  • Commercialisation.
Jan 20, 2022

What are five levels of product explain with examples? ›

He defines a product as anything that can meet a need or a want, and his Five Product Levels Model provides a way to show the different levels of need customers have for a product, such as: Core benefit, Generic Product, Expected Product, Augmented Product and Potential Product.

What are the three levels of product and give each an examples? ›

There are three levels of product in marketing: the core product, the actual product, and the augmented product. The core product is the first level. This is the basic need or wants that the customer is trying to satisfy.

What is the best example of a life stage? ›

12 Examples of a Life Stage
  • Childhood. Children fully depend on their parents or guardians and are to be protected from aggressive marketing or invasions of privacy.
  • Teenagers. ...
  • College Students. ...
  • Gap Year. ...
  • Single Adults. ...
  • Parasite Singles. ...
  • Childless Couples. ...
  • Young Families.
May 26, 2020

How do you explain stages? ›

a raised platform or floor, as for speakers, performers, etc. Theater. the platform on which the actors perform in a theater. this platform with all the parts of the theater and all the apparatus back of the proscenium.

What were the four stage of life answer? ›

Āśrama (Sanskrit: आश्रम) is a system of stages of life discussed in Hindu texts of the ancient and medieval eras. The four asramas are: Brahmacharya (student), Gṛhastha (householder), Vanaprastha (forest walker/forest dweller), and Sannyasa (renunciate). The Asrama system is one facet of the Dharma concept in Hinduism.

What are the five stages of the project life cycle with example? ›

According to the PMBOK Guide (Project Management Body of Knowledge) by the Project Management Institute (PMI), a project management life cycle consists of 5 distinct phases including initiation, planning, execution, monitoring, and closure that combine to turn a project idea into a working product.

What are the 5 major stages of product development discuss in details with examples for each stage? ›

All of which can help you successfully launch your next product.
  • Idea generation (Ideation) The initial stage of the product development process begins by generating new product ideas. ...
  • Product definition. ...
  • Prototyping. ...
  • Initial design. ...
  • Validation and testing. ...
  • Commercialization.
Apr 18, 2022

What is the example of product life cycle management? ›

To that end, established products like Starbucks coffee and Apple iPhones are examples of good product life cycle management as well. The product is constantly updated to make it feel fresh to consumers, beating the competition and postponing the transition to the decline stage of the life cycle.

What is the product life cycle of Coca Cola? ›

PLC has 4 stages which include; Introduction stage. Growth stage. Maturity stage.

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