What does Product Life Cycle mean?
The product life cycle is a marketing theory cycle or succession of strategies experienced by every product which begins with a product’s introduction, sometimes referenced as research and development, followed by its sales growth, then maturity and finally market saturation and decline.
The product life cycle parallels and is analogous with that of human beings and animals, i.e. from birth to growth to maturity to decline and eventually to death. For products this involves many disciplines, skills, tools and processes as the product goes through market forces involving raw materials, parts, various business processes, costs, distribution to markets and sales.
Techopedia explains Product Life Cycle
The four phases of the Product Life cycle are as follows:
Market Introduction Stage - The new product idea is processed through research and development (R & D). Costs are high with usually little competition (unless the competition is simultaneously doing their R & D); marketing personnel start creating customer demand/desire for the product; and sales are all in the future.
Growth - The new product begins to sell and revenues increase as new competition often enters the market. Efforts are made to expand distribution as innovative features and capabilities of the product take precedence over price. Successful products see high profit levels at this stage as costs decrease with economies of scale and product public awareness increases. As competition increases still further price becomes more critical and it starts to decrease; to a small degree or large, a price war is present as competing products fight for their market share.
Maturity - The new product becomes somewhat less new as it is now standardized, well known and established and increasingly distributed to larger markets with national or even international dimensions . Cost wars intensify and production facilities are streamlined and sometimes even moved to locations having cheap labor to control costs. Sales volume is maximized as market saturation is reached; then price competition forces process down still lower. Public consumption becomes dependent upon brand preference and feature diversification and the company, and its competition, struggle to maintain or increase market share. Near the end of this stage profits will decrease.
Decline - The once new product is now rapidly becoming obsolete as low income consumers enter the market and/or the product is imported into developing countries. Efforts are made to cut production and distribution costs which become the main concerns as sales and profit margins decline even further. Profits become too little to be viable and the product is eventually retired, marking the end of the product’s life cycle.
The life cycle for technology products is no different than any other industry, although one could argue that the speed at which a product becomes obsolete is much greater.