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Decline Stage of the Product Life Cycle: Examples & Overview

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  • 0:01 Decline Stage Defined
  • 1:16 Characteristics
  • 2:03 Example
  • 3:22 Lesson Summary
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Lesson Transcript
Instructor: James Carnrite

A marketing, communications, and supply chain professional who has a masters degree in IT Mangement. Has been working with young professionals to develop their leadership styles.

We have all heard the phrase, 'What goes up, must come down.' The life cycle of a product has similar attributes. This lesson outlines the decline stage of the product life cycle and looks at some examples.

Definition

A decline is a fall or descent and, in the product life cycle, the decline stage represents similar behavior for products. The decline stage in the product life cycle is when a product dissolves as a result of decreased or negative growth.

The introduction and growth stages provided the strength for the success of the product to this point, and with most products the decline stage is a result of lower demand, which ultimately results from new inventions and technology advancements. For the company, profitability will decrease to a level at which it is no longer sensible to produce and distribute the product and production activities will cease.

For many of us as consumers, this activity offers some benefits, since companies that cannot maintain the product will slash the prices to eliminate inventories or discontinue the product altogether, which creates promotional 'sales' and 'clearances' for the consumers.

Decline Stage of Product Lift Cycle

As competition in the market increases and multiple companies start to dominate the market, it is hard for the struggling companies to maintain acceptable sales and growth. Buyer preferences also change with the advancements of new technologies which in the end may make products obsolete.

Characteristics of the Decline Stage

There are some distinct characteristics of the decline stage:

  • A decrease in sales can be seen as competition increases, and preference for the product falls.
  • A decrease in sales price leads to lower profits, and, in some cases, losses for the company.
  • For the company, making a profit is a challenge and the cost of production and supply chain increases while sales do not.
  • A decrease in advertising as companies funnel these funds into other products that provide the business with better return on investment (ROI).

We see many products follow this path, and it is critical to understand that the decline stage does not mean the end of the cycle. In a lot of cases this is the end to a specific entrant and other components of the business continue with no interruption.

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