Product life cycle
All products go through distinct phases or stages. Together these are known as the The theory that a product moves through different stages: introduction, growth, maturity, and decline.
The number of sales and the length of a product life cycle might be different for different products but they all share a general pattern of growth and decline. This cycle can be shown on a graph of sales over time.
Many businesses record and track sales information like this to help them know when to adjust costs and price, to boost sales and to extend the life of the product.
- Research and development (R&D)– Product is not on the market yet. Research and development and testing take place. Testing includes product and market testing. Prototypes are built and modified before a product is ready for launch. No sales are made. R&D costs will need to be recovered later.
- Introduction– Product is launched on the market. Promotional costs will be high in order for the product to get noticed.
- Growth– Sales begin to rise. Promotional costs are still high. A profit may be made, if all research and development and promotional costs have been recouped.
- Maturity– Sales are at their peak. Promotional costs must be sustained to maintain this level of sales.
- Decline– Sales begin to fall due to rival products entering the market or changes in customer needs and wants. A business may choose to withdraw the product or apply extension strategies to breathe new life - sales - into the product.
