Product Life Cycle is an important concept in marketing that provides important information about product competitive dynamics.
Each product has a life cycle marked by a changing set of problems and opportunities. During its life of a product move through four Stages namely, Introduction Stage, Growth Stage, Maturity Stage, and Decline Stage.
As the product moves through different stages of its life-cycle, not only profit and sales volume change from the stage to stage, But also the management emphasis on the marketing-mix elements undergo substantial changes from stage to stage.
A style has a cycle showing several periods of renowned interest as a result of the sales decline because of style it can improve by introducing the new product in new market areas. Fashion trends to grow slowly. In case of fashion product, the demands for the product, the demands for the product increases at a faster rate, reaches to its top and with the change in fashion the product life cycle enter to decline stage.
According to Philip Kotler :
“Product Life Cycle is an attempt to recognize distinct stages in the sales history of the product.”
The various stages of the product life cycle are as follows :
1. Introduction Stage
The introduction stage starts when the new product is launched. It takes time to roll out the product in several markets and to fill dealer’s pipelines, so sales growth is to be slow. In this stage, profit is negative or low because of the low sales and heavy distribution and promotion expenses.
2. Growth Stage
The growth stage is marked by a rapid climb in sales. The early adopters of the product like the product and the middle majority of consumers start buying the product. New competitors enter the market, attracted by the opportunities for large scale production and profit. They introduce new product features and this move further expands the market.
Under this stage, when the demand expands rapidly, prices fall competition increases, and distribution increases. The firm focuses on improving the market share by deeper penetration into the existing market or to enter into the new market.
Sometimes major improvement takes place in the product during this stage. The promotional expenses remain high all through the ratio of promotional expenses to sales volume is less. This ratio is an important contribution to high profit during this stage.
3. Maturity Stage
When the competition increases and market growth saturated, the product enters the stage of Maturity. In this stage due to stiff competition profits get reduced and firms start spending more on marketing. Due to high competition, the prices of the product also decrease. So the rate of sales growth will slow down.
4. Decline Stage
In this stage, the product starts fading. The sales of most products and brands eventually decline. The product loses the majority of customers without replacing them. Both sales and profits go down steadily. Sales decline for a number of reasons including Technological Advances, consumer shifts in tastes and preferences, etc.
As sales and profit decline, some firms withdraw from the market. Those remaining may reduce the number of product offerings.