Product life cycle analysis is a technique organizations utilize to outline the progress of a product through its life span. Product life cycle analysis can be incorporated to assess a company’s products, type of product or an industry. Variations of the product life cycle analysis exists and and often includes four stages. The stages are:
Introduction Stage – This stage is often the most expensive for an organization launching a new product. In this stage, companies aim to build product awareness and create a market for the product.
Growth Stage – This stage is typically characterized by a solid growth in sales and profits and is when organizations aim to build brand preference and market share. At this stage, the organization begins to benefit from economies of scale in production and profit margins.
Maturity Stage – At this stage stage, the product is established and the goal of the organization is to retain the market share it has created. This stage is likely the most competitive time for most products. Organizations have to invest prudently in marketing and advertising. Companies must also think about any product changes or enhancements in the production process that may offer a competitive advantage.
Decline Stage – At some point, the product’s marketplace will begin to diminish This is called the decline stage. The decline could be because the market is saturated or because customers are using a different or new product. Though this decline may be unavoidable, it can still be possible for organizations to make some profit by using low cost production methods and less expensive markets.
All products go through all stages of the product life cycle. Weaker competitors may choose to exit the market during the final stage. Each phase needs a different marketing activities for maximum lifetime product profitability.