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.
The Decline Stage
The last stage of the product life cycle for a product is the decline stage. This stage is often characterized by a significant loss of revenue accompanied with difficulties in trying to earn consistent revenue. This is all a result of an increased amount of saturation in the market. The reasons for the decline may range from consumers already having purchased the product (such as microwaves or ovens in the homes of many people) or because consumers are purchasing the products from competitors.
During the decline stage, products, such as The Bot, must seek to cushion the blow of the significant revenue loss. This can be done in various methods; one example is finding alternative uses for the product. In the case of The Bot, perhaps the organization can earn revenue at this stage by using its parts for other uses such as for scrap metal or parts for cars. This technique of attempting to get the most revenue from a product that is at the end of the product life cycle is known as harvesting.
Lesson Summary
The product life cycle can be defined as the entire existence of a product from its origins to its death. Every product goes through four stages. The introduction stage is where the product is introduced to the public through advertising and promotional activities. The growth stage reflects a significant increase in revenue due in part to more consumers knowing about the existence of the product. The maturity stage is when the product has matured to the point where sales growth has slowed and become stagnant (that is to say, non-moving). Market saturation begins to set in during this stage.
Lastly, the decline stage of the product life cycle is characterized by sales of the product becoming almost non-existent due to many consumers already having the product or purchasing it from competitors. During this stage, the organizations must partake in harvesting, which is a technique of attempting to get the most revenue from a product that is at the end of the product life cycle.
