Life Cycles of Products The definition of a product is "anything that is capable of satisfying
customer needs", this includes both physical products, like cars, cell
phones, machines, as well as services like banking, and insurance.
Businesses manage and modify their products over time so that they
constantly meet the changing demands of their customers, the methods
used to manage a number of brands and product lines is known as
Portfolio Managing. The different stages through which these
individual products develop in time in terms of the sales they
generate is known as Product Life Cycle.
A product life cycle is based on the biological life cycle. For
example, when a seed is planted in the soil, it is the introduction
phase, then it starts to sprout, which is the growth stage, the next
stage is maturity, where it grows leaves and roots, finally after a
long period it begins to shrink and eventually dies out, which is the
decline stage. In theory, a product goes through the same stages.
After a period of development it is introduced or launched into the
market; it gains more and more customers as it grows; eventually the
market stabilizes and the product becomes mature; then after a period
of time the product is overtaken by development and the introduction
of superior competitors, it goes into decline and is eventually
withdrawn. However, most products fail in the introduction phase.
Others have very cyclical maturity phases where declines see the
product promoted to regain customers.
The first stage is known as the Introduction Stage. In this stage, the
main goal of the organization is to commercialize the product, and
make potential buyers aware of its existence. At this point, the sales
generated are usually low and the profits are typically low or none at
all. Due to the fact that the company is paying a lot for advertising
and brand building, the customer pays a high price for the product.
This stage is also characterized by high distribution costs. At this
point of time the product offered is still in its most basic form. A
good example of a product in this stage currently is the new DVD
Writer for computers, which enables users to store up to five times
more information as compared to a compact disc. Currently, they are
extremely expensive, the speeds at which they can be "written" at are
relatively slow compared to the traditional compact disc. There is
also a heavy advertising campaign by manufacturers in all computer
The second stage is known as the Growth Stage. This stage is mainly
characterized, for successful products, by a tremendous increase in
sales. New customers are added while existing customers are making
repeated purchases. By now however, competitors have...