What Is a Product Life Cycle?
The term product life cycle refers to the length of time a product is introduced to consumers into the market until it's removed from the shelves. The life cycle of a product is broken into four stages—introduction, growth, maturity, and decline. This concept is used by management and by marketing professionals as a factor in deciding when it is appropriate to increase advertising, reduce prices, expand to new markets, or redesign packaging. The process of strategizing ways to continuously support and maintain a product is called product life cycle management.
- A product life cycle is the amount of time a product goes from being introduced into the market until it's taken off the shelves.
- There are four stages in a product's life cycle—introduction, growth, maturity, and decline.
- The concept of product life cycle helps inform business decision-making, from pricing and promotion to expansion or cost-cutting.
- Newer, more successful products push older ones out of the market.
How Product Life Cycles Work
Products, like people, have life cycles. A product begins with an idea, and within the confines of modern business, it isn't likely to go further until it undergoes research and development (R&D) and is found to be feasible and potentially profitable. At that point, the product is produced, marketed, and rolled out.
As mentioned above, there are four generally accepted stages in the life cycle of a product—introduction, growth, maturity, and decline.
- Introduction: This phase generally includes a substantial investment in advertising and a marketing campaign focused on making consumers aware of the product and its benefits.
- Growth: If the product is successful, it then moves to the growth stage. This is characterized by growing demand, an increase in production, and expansion in its availability.
- Maturity: This is the most profitable stage, while the costs of producing and marketing decline.
- Decline: A product takes on increased competition as other companies emulate its success—sometimes with enhancements or lower prices. The product may lose market share and begin its decline.
When a product is successfully introduced into the market, demand increases, therefore increasing its popularity. These newer products end up pushing older ones out of the market, effectively replacing them. Companies tend to curb their marketing efforts as a new product grows. That's because the cost to produce and market the product drop. When demand for the product wanes, it may be taken off the market completely.
While a new product needs to be explained, a mature one needs to be differentiated.
The stage of a product's life cycle impacts the way in which it is marketed to consumers. A new product needs to be explained, while a mature product needs to be differentiated from its competitors.
Product Life Cycle
Companies that have a good handle on all four stages can increase profitability and maximize their returns. Those that aren't able to may experience an increase in their marketing and production costs, ultimately leading to the limited shelf life for their product(s).
Back in 1965, Theodore Levitt, a marketing professor, wrote in the Harvard Business Review that the innovator is the one with the most to lose because so many truly new products fail at the first phase of their life cycle—the introductory stage. The failure comes only after the investment of substantial money and time into research, development, and production. And that fact, he wrote, prevents many companies from even trying anything really new. Instead, he said, they wait for someone else to succeed and then clone the success.
Examples of Product Life Cycles
Many brands that were American icons have dwindled and died. Better management of product life cycles might have saved some of them, or perhaps their time had just come. Some examples:
- Oldsmobile began producing cars in 1897 but the brand was killed off in 2004. Its gas-guzzling muscle-car image lost its appeal, General Motors decided.
- Woolworth's had a store in just about every small town and city in America until it shuttered its stores in 1997. It was the era of Walmart and other big-box stores.
- Border's bookstore chain closed down in 2011. It couldn't survive the internet age.
To cite an established and still-thriving industry, television program distribution has related products in all stages of the product life cycle. As of 2019, flat-screen TVs are in the mature phase, programming-on-demand is in the growth stage, DVDs are in decline, and the videocassette is extinct.
Many of the most successful products on earth are suspended in the mature stage for as long as possible, undergoing minor updates and redesigns to keep them differentiated. Examples include Apple computers and iPhones, Ford's best-selling trucks, and Starbucks' coffee—all of which undergo minor changes accompanied by marketing efforts—are designed to keep them feeling unique and special in the eyes of consumers.