Each product has a life cycle marked by a changing set of problems and opportunities. The product life cycle have five distinct stages such as product development, introduction, growth, maturity and decline stages.
i) Product development begins when the company finds and develops a new product idea. During product development, sales are zero and the company’s investment costs mount.
ii) Introduction is a period of slow sales growth as the product is being introduced in the market. Profit are non-existent in this stage because of the heavy expenses of product introduction.
iii) Growth is a period of rapid market acceptance and the raising profits.
iv) Maturity is a period of slow down in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing out lays to defined the product against competition.
v) Decline is the period when sales fall off and profit drop.
Certainly not all products go through exactly the same life cycle. There are variations in the time it takes for products to go through particular stages of the cycle.
The product life cycle is a key marketing planning tool because the relative importance of various elements of the marketing mix will shift at different stages in the life cycle. Price is often more important during the maturity stage than during the introduction stage. Communicating the availability and features of a new product through advertising and personal selling is essential in achieving buyers awareness during the early stages of the life cycles. The life cycle concept also emphasizes the need for a company to develop a stream of new and improved products so as to expand sales and profits over the long run.
The
exact pattern and timing of the life cycle for a product may be difficult to
predict. Life cycle patterns should be monitored and projections should be
revised on the basis of new information and experience.