Select your language

Suggested languages for you:
Log In Start studying!
StudySmarter - The all-in-one study app.
4.8 • +11k Ratings
More than 3 Million Downloads
Free

All-in-one learning app

  • Flashcards
  • NotesNotes
  • ExplanationsExplanations
  • Study Planner
  • Textbook solutions
Start studying

Product Life Cycle

Save Save
Print Print
Edit Edit
Sign up to use all features for free. Sign up now
X
Illustration You have already viewed an explanation Register now and access this and thousands of further explanations for free
Business Studies

Watch the product life cycle; but more important, watch the market life cycle.

— Philip Kotler

What exactly do we mean when we refer to the life cycle of a product? Why is it important to learn about product life cycles? What steps are to be taken at the different levels of the product life cycle? Read on for answers to these questions and more.

Product life cycle definition

Very much like our life cycle, products, too, have a life cycle. We refer to this as the product life cycle (PLC). (This is not the same as sell-by dates used for perishable food items.)

A product life cycle (PLC) is the period of time from when a product is introduced on the market until it is withdrawn from that market.

A product, once introduced, cannot stay in the market forever. It will have to be withdrawn once market trends change. Thus, the change in market trends and market life cycle are essentially one and the same.

A market life cycle refers to the period of time in which the majority of the market’s population is interested in purchasing a particular good or service.

Once consumer interest switches from one product to another, the former product is withdrawn from the market, as it can no longer be sold.

Stages of a product life cycle

A product goes through various stages in the life cycle process. There are four steps: introduction, growth, maturity, and decline.

Product Life Cycle: Introduction

This is the very first stage of a product's life cycle. It is mainly focused on capturing the target market’s attention with the product. It involves investing in product marketing and other marketing campaigns that help make people aware of the new product.

The sale of a new product tends to be slow, as people need time to learn about and understand the product. The brand needs to create a demand for the product, and the market needs to be convinced that it needs this product. The product should further have added value to attract customers. If the product fails to do this, it will fail on the market, and it may never enter the second stage of the life cycle - the growth phase.

Product Life Cycle: Growth

When a product has been successful in the product introduction stage, it moves on to the growth phase. This phase is characterized by an increase in demand for the product.

As there is a market for the product, competitors seize the opportunity and introduce their versions of it. This can be challenging, as customers are given more options for the same product to choose from.

Therefore, the customer’s purchase decision will depend on various factors such as value for money, quality, price, and other aspects depending on the product. As a result, the different brands will have to differentiate their product from the original product to make them stand out from the competition.

Product Life Cycle: Maturity

This stage is the beginning of market saturation. At this stage, the cost of production, as well as that of advertising, declines. This is therefore a very profitable stage, and the product, along with its variations from competitors, is now established in the market.

Product Life Cycle: Decline

This is the last phase, in which production is ultimately stopped and the product is removed from the market. As the competition in the market rises, competitors bring about more product differentiation. The product’s marketability will decline if and when new and better products are introduced into the market.

The market will then experience a higher demand for the newer product, and the former product’s demand will decline. Some brands that may have survived the market decline will continue production, but at a smaller scale, and with lower profit margins.

A graph depicting how the sales of a product change with time at various stages of a product life cycle is shown below in Figure 1:

Product Life Cycle Product life cycle stages graph StudySmarterFigure 1. Product life cycle graph, StudySmarter

Examples of products at various stages of the product life cycle

The products you have seen or see now in the market are in different phases of their life cycle. Given below, are the different stages of the product life cycle with examples.

Product Life Cycle: Introduction phase

The use of Virtual Reality or VR in many industries is still in the introductory phase. VR has been introduced in some areas in the healthcare industry where it is still working its way up in the market. Not many markets are familiar with this technology, but when the success and popularity of VR techniques increase, more businesses will be prompted to invest in and manufacture such products. An example of the use of VR is shown in the image below.

Product Life Cycle example of VR technology in the introduction phase StudySmarterVR technologies in the introduction phase of the product lifecycle, Wikimedia Commons

Product Life Cycle: Growth phase

Self-driving cars are in the growth phase of their life cycle. These cars have been introduced in the market and their popularity is increasingly growing. Many car companies have been introducing their versions of self-driving cars, but not all are popular. A man using a self-driving car can be seen in the image below.

Product Life Cycle self-driving car example StudySmarterA self-driving car in the growth phase of the lifecycle process, Wikimedia Commons

Product Life Cycle: Maturity phase

Coca-Cola is a good example of a firm with products in the maturity stage. The company is a market leader for soft drinks, which are very popular among consumers. At this stage, they also have established competitors such as Pepsi, which also has a strong foothold in the market.

Product Life Cycle: Decline

Typewriters are a good example of a product facing a decline in the market. The introduction of devices such as computers and laptops have made life easier, thereby decreasing the demand for typewriters. The market for typewriters is basically non-existent and continuously declining.

Product Life Cycle example of typewriter in decline stage StudySmarterA typewriter in the decline phase of the lifecycle process, Wikimedia Commons

Product life cycle strategies

It is unfortunate when businesses have to withdraw their products very soon from the market - in other words, when products go through their product life cycle very quickly. Therefore, to ensure a prolonged life cycle for products, businesses adopt certain strategies at every stage of the PLC.

Product Life Cycle: Strategies in the introduction stage

As products in the introduction phase need to capture the target group’s attention, it is important to focus on strategies that will help the brand achieve this goal. The following strategies are focused on the price and promotional levels.

  • Rapid skimming - this involves launching products at a high price and high promotional level.

  • Slow skimming - the strategy of introducing products at a high price and low promotional level.

  • Rapid penetration - the process of launching products at a low price with significant promotion.

  • Slow penetration - this involves launching the product at a low price with minimum promotion.

A matrix depicting the different strategies is shown in Figure 2.

Product Life Cycle PLC introduction strategy matrix StudySmarterFigure 2. PLC introduction strategy matrix, StudySmarter

Product Life Cycle: Strategies in the growth stage

The aim of the growth stage is to increase profits. Some strategies that help to achieve this are as follows:

  • Enhancing product quality

  • Introducing product variations

  • Expanding market presence

  • Lower prices if profits are low

Product Life Cycle: Strategies in the maturity stage

Market modification and product modification are two strategies that are used when products enter the maturity phase.

  • Market modification - this involves entering new markets, targeting new customers, and inviting non-users to use the product.

  • Product modification - this is the process of enhancing the existing product so as to attract more customers.

Product Life Cycle: Strategies in the decline stage

In this stage, companies try to reduce their expenditures as the product is bringing in very little to no revenue. Some strategies adopted by businesses at this stage include:

  • Reducing the number of distribution channels

  • Reduction in activities that create expenses, such as promotion

  • Lower prices to attract customers

The aforementioned are the different strategies used by businesses at different levels to prolong the life cycle of a product.

Product life cycle management

Product life cycle management is the process of managing products as they pass through each stage of the product life cycle.

Product life cycle management focuses on improving product quality and profitability. It involves taking steps to make the product the best in the market in order to be able to sell the products in the market longer.

This process helps the brand reduce production costs and production waste. Steps are taken to optimize the product and maximize sales. Businesses use software that helps them manage their product through the life cycle. This software helps them with processes such as tracking changes in product information, product integration, and maximizing collaboration opportunities.

Life cycle management plays an important role in helping the product remain on the market through innovation and product differentiation. This helps to maintain people's interest in the product. Analysing and understanding the phases of a product is important to keep the product relevant in the market.

Product life cycle - Key takeaways

  • A product life cycle is the period of time a product is introduced to the customers or the market up until it is withdrawn from the market.
  • A market life cycle refers to the period of time in which the majority of the market’s population is interested in purchasing a particular good or service.
  • The introduction phase is mainly focused on capturing the target market’s attention to the product.
  • If the product is successful in the product introduction stage, it moves on to the growth phase. This is characterized by the increase in demand for the product.
  • At the maturity phase, the cost of production, as well as that of advertising, declines, making this a very profitable stage. This is the last phase, in which production is ultimately stopped and the product removed from the market.
  • Product life cycle management is the process of managing products as they pass through each stage of the product life cycle.

Product Life Cycle

A product life cycle is the period of time from which a product is introduced to customers or the market until it is withdrawn from the market. A product goes through various stages in the life cycle process. These steps are introduction, growth, maturity, and decline.

A product goes through various stages in the life cycle process. These steps are introduction, growth, maturity, and decline.


Introduction: This is the very first step of a product life cycle. It is mainly focused on capturing the target market’s attention to the product. It involves investing in product marketing and other marketing campaigns that help to make people aware of the new product.


Growth: When the product is successful in the product introduction stage, it moves on to the growth phase. This is characterized by an increase in demand for this product. 


As there is now a market for this product, competitors seize the opportunity and introduce their versions of it. This can be challenging, as customers are given more options for the same product. 


Maturity: This stage is the beginning of market saturation. At this stage, the cost of production, as well as that of advertising, declines.  This is a very profitable stage. The product along with its variations from competitors are now established in the market. 


Decline: This is the last phase where the production of the products is ultimately stopped and the product is removed from the market. As the competition in the market rises, competitors bring about more product differentiation. The product’s market will decline if new and better products are introduced into the market. The market will then have a higher demand for the newer product, and the former product’s demand will decline. Some brands that may have survived the market decline will continue production, but at a smaller scale, with lower profit margins. 

Introduction phase: The use of Virtual Reality or VR in many industries is still in the introductory phase. VR in the healthcare industry are have been introduced in some areas and are still working their way up in the market. 


Growth phase: Self-driving cars are in the growth phase of their life cycle. These cars have been introduced in the market and their popularity is increasingly growing. Many car companies have been introducing their versions of self-driving cars, but not all are popular.


Maturity phase: Products from Coca-Cola are examples of products in the maturity stage. 


Decline: Typewriters are an example of a product facing a decline in the market. The introduction of devices such as computers and laptops have made life easier, thereby declining the demand for typewriters.

Product lifecycle management is the process of managing products as they pass through each stage of the product lifecycle. Product lifecycle management focuses on improving product quality and profitability. It involves taking steps to make the product the best in the market in order to be able to sell the products in the market longer.

A business can keep its products’ lifecycle going with the process of product lifecycle management as it is the main goal of the process. Product lifecycle management is the process of managing products as they pass through each stage of the product lifecycle.

Final Product Life Cycle Quiz

Question

Define product lifecycle.

Show answer

Answer

A product life cycle is the period of time a product is introduced to the customers or the market until it is withdrawn from the market. 

Show question

Question

Define market life cycle

Show answer

Answer

A market life cycle refers to the period of time in which the majority of the market’s population is interested in purchasing a particular good or service. 

Show question

Question

What are the stages of a product life cycle?


Show answer

Answer

Introduction, growth, maturity, and decline.


Show question

Question

What is the introduction phase in PLC?

Show answer

Answer

This is the very first step of a product life cycle. It is mainly focused on capturing the target market’s attention to the product. It involves investing in product marketing and other marketing campaigns that help to make people aware of the new product. 

Show question

Question

__________ phase of PLC is characterized by the increase in demand

Show answer

Answer

Growth

Show question

Question

Which is the most profitable stage?

Show answer

Answer

Maturity stage

Show question

Question

What is the decline phase?

Show answer

Answer

This is the last phase where the production of the products is ultimately stopped and the product is removed from the market. 

Show question

Question

According to the PLC graph, sales are highest at the ________ phase. 

Show answer

Answer

maturity

Show question

Question

Give an example of a product in the introduction phase in the market.

Show answer

Answer

The use of VR or visual reality

Show question

Question

What is an example of a product facing a decline in the market?

Show answer

Answer

Typewriters

Show question

Question

What are PLC strategies?

Show answer

Answer

They are the strategies adopted by businesses to prolong the product life cycles.

Show question

Question

What are some strategies adopted in the introduction phase of a product?

Show answer

Answer

  • Rapid skimming 
  • Slow skimming 
  • Rapid penetration
  • Slow penetration


Show question

Question

What is the aim of the growth phase`?

Show answer

Answer

The aim of the growth phase is to increase profits.

Show question

Question

Name a few growth phase strategies. 

Show answer

Answer

  • Enhancing product quality
  • Introducing product variations
  • Expanding market presence
  • Lower prices if profits are low.

Show question

Question

What are the strategies adopted in the maturity phase?

Show answer

Answer

  • Market modification - this involves entering new markets, targeting new customers, and inviting non-users to use the product. 
  • Product modification - this is the process of enhancing the existing product so as to attract more customers.


Show question

Question

Strategies in the decline phase include:

Show answer

Answer

  • Reduce the number of distribution channels.
  • Reduction in activities the product is causing expenses, such as promotion.
  • Lower prices to attract customers

Show question

Question

Define product life cycle management.

Show answer

Answer

Product lifecycle management is the process of managing products as they pass through each stage of the product lifecycle. 

Show question

Question

A product life cycle and market life cycle are terms that can be used interchangeably.

Show answer

Answer

False

Show question

Question

A ___ refers to the period of time in which the majority of the market’s population is interested in purchasing a particular good or service.


Show answer

Answer

market life cycle 

Show question

Question

A ___ is the period of time from when a product is introduced on the market until it is withdrawn from that market.


Show answer

Answer

product life cycle 

Show question

Question

What is the first stage of the product life cycle?

Show answer

Answer

Introduction

Show question

Question

This stage is the beginning of market saturation. What is it?


Show answer

Answer

Maturity

Show question

Question

In this phase, production is ultimately stopped and the product is removed from the market. What phase is it?

Show answer

Answer

Decline

Show question

Question

This phase involves investing in product marketing and other marketing campaigns that help make people aware of the new product. What is it?

Show answer

Answer

Introduction

Show question

Question

 If the product fails to attract customers, it will fail on the market, and it may never enter the second stage of the life cycle - the ___ phase. 


Show answer

Answer

growth 

Show question

60%

of the users don't pass the Product Life Cycle quiz! Will you pass the quiz?

Start Quiz

Discover the right content for your subjects

No need to cheat if you have everything you need to succeed! Packed into one app!

Study Plan

Be perfectly prepared on time with an individual plan.

Quizzes

Test your knowledge with gamified quizzes.

Flashcards

Create and find flashcards in record time.

Notes

Create beautiful notes faster than ever before.

Study Sets

Have all your study materials in one place.

Documents

Upload unlimited documents and save them online.

Study Analytics

Identify your study strength and weaknesses.

Weekly Goals

Set individual study goals and earn points reaching them.

Smart Reminders

Stop procrastinating with our study reminders.

Rewards

Earn points, unlock badges and level up while studying.

Magic Marker

Create flashcards in notes completely automatically.

Smart Formatting

Create the most beautiful study materials using our templates.

Sign up to highlight and take notes. It’s 100% free.