The period of time over which an item is developed, brought to market and eventually removed from the market. First, the idea for a product undergoes research and development. If the idea is determined to be feasible and potentially profitable, the product will be produced, marketed and rolled out. Assuming the product becomes successful, its production will grow until the product becomes widely available. Eventually, demand for the product will decline and it will become obsolete.
Product
life cycle is a business analysis
that attempts to identify a set of common stages in the life of commercial
products, for example, introduction, promotion, growth, maturity and decline. The stages of a product's lifecycle can be classified
as follows:
Introduction
The
introduction stage is characterized by low growth rate of sales as the product
is newly launched in the market. Monopoly can be created, depending upon the
efficiency and need of the product to the customers. A firm usually incurs
losses rather than profit. If the product is in the new product class, the
users may not be aware of its true potential. In order to achieve that place in
the market, extra information about the product should be transferred to
consumers through various media. The stage has the following characteristics:
1. Low competition 2. Firm mostly incurs losses and not profit.
Growth
Growth
comes with the acceptance of the innovation in the market and profit starts to
flow. If the monopoly exists, companies can experiment with new ideas and
innovation in order to maintain the sales growth. This stage is the best time
to introduce new effective products in the market thus creating an image in the
product class in the presence of its competitors who try to copy or improve the
product and present it as a substitute.
Maturity
In
the maturity stage, the end of stage of the growth rate and sales slowdown as
the product has already achieved acceptance in the market. New firms start
experimenting in order to compete by innovating new models of the product. With
many companies in the market, competition for customers becomes fierce, despite
the increase in growth rate of sales at the initial part of this stage.
Aggressive competition in the market results in profits decreasing at the end
of the growth stage thus beginning the maturity stage. In addition to this, the
maturity stage of the development process is the most vital.
Decline
The decline stage is where most of the product class usually dies due to low growth rate in sales. A number of companies share the same market, making it difficult for all entrants to maintain sustainable sales levels. Not only is the efficiency of the company an important factor in the decline, but also the product category itself becomes a factor, as the market may perceive the product as "old" and may not be in demand. It is not always necessary that a product should go through these stages. it depends on the type of product, its competitors, scope of the product, etc.