Explain the stages of ‘Product Life Cycle’.
The product life cycle is a concept that describes the stages a product goes through from its introduction to its eventual decline in the market. It helps businesses understand the typical pattern of sales and profitability for a product over time and enables them to develop appropriate marketing strategies for each stage. The product life cycle consists of four main stages:
1. Introduction: This is the initial stage when the product is first launched into the market. Sales are often slow in this stage as consumers are unaware of the product and its features. Marketing efforts are focused on creating awareness and generating demand. Companies may also face high costs due to product development and initial market penetration.
2. Growth: In this stage, sales start to increase rapidly, and the product gains wider acceptance in the market. Profitability improves as economies of scale are achieved and consumers become more aware of the product's benefits. Competitors may enter the market, leading to increased competition and the need for differentiation. Companies may also invest in expanding their production capacity and distribution channels to meet growing demand.
3. Maturity: At this stage, sales reach their peak, and the product becomes well-established in the market. The market becomes saturated, and competition intensifies. Companies may focus on maintaining market share, improving profitability through cost reductions, and enhancing the product's features to differentiate it from competitors. Pricing strategies may become more aggressive, and marketing efforts may focus on customer retention and loyalty.
4. Decline: In the decline stage, sales start to decline as consumer preferences shift, new technologies emerge, or competitors offer superior alternatives. Companies may face diminishing profits and declining market share. Strategies in this stage may involve cost-cutting, streamlining operations, or exploring new markets or product variations. Ultimately, if the product's decline is inevitable, companies may decide to discontinue it.
It's important to note that the length of each stage and the overall life cycle of a product can vary depending on various factors such as industry dynamics, technological advancements, and consumer behavior. Additionally, some products may experience a renewed growth stage through repositioning, rebranding, or modifications.