Name and Description of the Five Stages of the Product Life Cycle
Products go through a life cycle, which includes five stages: development, introduction, growth, maturity and decline. While the length of the life cycle will vary depending on the product, knowledge of the cycle is important to develop appropriate marketing strategies for each stage and to compare products at the same stage in the life cycle, according to Net MBA, the website for the Internet Center for Management and Business Administration.
The development stage is the period from idea until the product is released to the market. This can last years, depending on the product, and there are no sales during this period. The experts at Net MBA describe this as the "incubation" phase.
Introduction is the phase during which a product is launched into the market. The company tries to build brand awareness and a market for the product. Pricing during this time might be low to build market share rapidly or high to recover development costs, according to Quick MBA. Promotion is aimed at early adapters and distribution is selective, according to Net MBA.
In the growth stage, the firm continues to grow market share and brand awareness. According to Quick MBA, quality is maintained, and additional features might be added. Distribution channels are increased and promotion is aimed at a wider audience. Price may be maintained if demand is high or lowered if necessary to capture additional market share. When competitors enter the market, often during the later part of the growth stage, price competition or increased promotional costs may be required to convince consumers that the firm's product is better than that of the competition, according to Net MBA.
The maturity stage is usually the most profitable, says Net MBA. Sales continue to increase but at a slower rate. Promotion costs are less, because brand awareness is already strong. Price reductions may be needed to retain share against competition, and incentives may be required to retain shelf space. Product features may be enhanced to differentiate it from competitors, and advertising will emphasize this differentiation, Net MBA says.
Eventually, sales decline as consumer tastes change or the product becomes obsolete. As sales decline, the firm has several options, according to Net MBA. It can maintain the product, possibly rejuvenating it by adding new features and finding new uses; it can harvest the product, reducing costs and continuing to offer it, possibly to a loyal niche segment; or it can discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product.