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What is the Product Life Cycle? - Definition & Examples

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  • 0:00 The Life of the…
  • 0:45 The Introduction Stage
  • 1:40 The Growth Stage
  • 2:15 The Maturity Stage
  • 3:15 The Decline Stage
  • 4:15 Lesson Summary
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Lesson Transcript
Instructor: LeRon Haire
When a new product is produced, it advances through a sequence of stages during its lifetime. In this lesson, we will define the product life cycle and use examples along with an illustration to show each stage of the product life cycle.

The Life of the Product Life Cycle

Have you ever had the opportunity to witness an object being manufactured on an assembly line? The product begins on a conveyor belt and slowly makes its way to different areas of the assembly line for processing. Ultimately, the product reaches its end and has been properly assembled. The product life cycle, which can be defined as the entire existence of a product from its origins to its death, is very similar to this process in the fact that it begins at a certain point and goes through different areas, which we will call stages. But just what happens during each of these stages? Let's take a look to get the answer to this question.

The Introduction Stage

Most things in life need some sort of introduction, and the product life cycle is no different. During the introduction stage, a product is being introduced into the market. Typically, the characteristics of this stage include a heavy influence of advertising to raise product awareness, along with less revenue being made at this time.

For example, let's say that we have a product called The Bot, which is a computerized robot that can assist with things such as household chores and cleaning. The introduction stage of the product life cycle for The Bot will primarily consist of an organization trying to educate the public about its existence through promotional activities, along with initially having high costs. Since the product is still being introduced into the market, it has not had the chance to earn sufficient revenue to offset the costs to produce it at this time.

The Growth Stage

The second stage of the product life cycle is the growth stage. This stage reflects the largest increase in profits during the product's entire cycle. Using our example, The Bot, it is during the growth stage that an organization begins to see their hard work pay off through increased sales of the product. This increase is due in part to a successful promotional awareness campaign from the introductory stage, causing more people to know about the product. The increase in sales can also be attributed to a reduction in costs due to the economies of scale.

The Maturity Stage

At some point during the product life cycle, the product enters a stage where its growth begins to level off and remain rather constant. This is the maturity stage. This stage is characterized by slower growth due to an increase in rivals and competitors entering the market. Products in this stage will first begin to encounter market saturation, which can be defined as when a product has reached its maximum level of productivity in the market. Simply stated, the product has reached its ceiling, revenue-wise.

During the maturity stage with The Bot, its parent company will expect to see a reduction in sales of the product due to market saturation. Organizations with products in the maturity stage must look to other avenues, such as unique product innovations or improvements, in order to make up for the stagnant market. For example, The Bot could possibly look to perform chores at a faster rate or perhaps improving it to perform more duties.

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