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Product Life Cycle Explained: Stage and

Examples
3 minute and 40 second read time
By CAROL M. KOPP Updated August 09, 2022

Reviewed by AMY DRURY

Fact checked by ARIEL COURAGE

Investopedia / Xiaojie Liu

What Is the Product Life Cycle?

The term product life cycle refers to the length of time a product is introduced
to consumers into the market until it's removed from the shelves. This concept

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to consumers into the market until it's removed from the shelves. This concept
Related Terms
is used by management and by marketing professionals as a factor in deciding
when it is appropriate to increase advertising, reduce prices, expand to new
Industry Life Cycle
markets, or redesign packaging. The process of strategizing ways to
The industry life cycle traces the evolution of a given industry based on the business
continuously support and
characteristics commonly maintain
displayed a product
in each phase. is called product life cycle
more
management.
Life Cycle: Definition in Business, Types, and Examples
A life cycle for a business follows a growth to maturity pattern of a product or company,
fromKEYexistence to eventual critical mass and decline. more
TAKEAWAYS

• A product
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• Sales
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with high market share and low market growth. more
• The concept of product life cycle helps inform business decision-
making, from pricing and promotion to expansion or cost-cutting.
Industry Life Cycle Analysis
Industry life cycle analysis is part of the fundamental analysis of a company involving
examination of the stage an industry is in at a given point in time. more

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How the Product Life Cycle Works
Products, like people, have life cycles. The life cycle of a product is broken into
four stages—introduction, growth, maturity, and decline.

A product begins with an idea, and within the confines of modern business, it
isn't likely to go further until it undergoes research and development (R&D) and
is found to be feasible and potentially profitable. At that point, the product is
produced, marketed, and rolled out. Some product life cycle models include
Related
product Articles as a stage, though at this point, the product has not yet
development
been brought introduced
A businessman to customers.
ENTREPRENEURS

pointing an arrow How Entrepreneurs Make Money

graph.
As mentioned above, there are four generally accepted stages in the life cycle of
a product—introduction, growth, maturity, and decline.
woman engineer SECTORS & INDUSTRIES
working on circuit Electronics Sector
Introduction
board Stage
The introduction phase is the first time customers are introduced to the new
product. A company must generally includes a substantial investment in
STOCKS
advertising and a marketing campaign focused on making consumers aware of
A Checklist for Medical Technology Investments
the product and its benefits, especially if it broadly unknown what the good will
do.

During the introduction stage, there is often little to no competition for a

STARTUPS
Companies
product as other competitors That
may be Succeeded
getting With
a first look Bootstrapping
at rival products.
However, companies still often experience negative financial results at this
stage as sales tend to be lower, promotional pricing may be low to drive
customer engagement, and the sales strategy is still being evaluated.
Businessman and TECH STOCKS
worker in high tech A Primer on Investing in the Tech Industry
Growth Stage
enterprise
If the product is successful, it then moves to the growth stage. This is
characterized by growing demand, an increase in production, and expansion in
Man sitting at desk SMALL BUSINESS
its availability. The amount of time spent in the introduction phase before a
7 Popular Marketing Techniques for Small
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its availability. The amount of time spent in the introduction phase before a
7 Popular Marketing Techniques for Small
company's product experiences strong growth will vary from between
Businesses
industries and products.

During the growth phase, the product becomes more popular and recognizable.
A company may still choose to invest heavily in advertising if the product faces
heavy competition. However, marketing campaigns will likely be geared
towards differentiating their product from others as opposed to introducing
their goods to the market. A company may also refine their product by
improving functionality based on customer feedback.

Financially, the growth period of the product life cycle results in increased sales
and higher revenue. As competition begins to offer rival products, competition
increases, potentially forcing the company to decrease prices and experience
lower margins.

Maturity Stage
The maturity stage of the product life cycle is the most profitable stage, while
the costs of producing and marketing decline. With the market saturated with
the product, competition now higher than at other stages, and profit margins
starting to shrink, some analysts refer to the maturity stage as when sales
volume is "maxed out".

Depending on the good, a company may begin deciding how to innovate their
product or introduce new ways to capture a larger market presence. This
includes getting more feedback from customers, their demographics, and their
needs.

During the maturity stage, competition is now the highest. Rival companies
have had enough time to introduce competing and improved products, and
competition for customers is usually highest. Sales levels stabilize, and a
company strives to have their product exist in this maturity stage for as long as
possible.

Important: A new product needs to be explained, while a mature

product needs to be differentiated.

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product needs to be differentiated.

Decline Stage
As the product takes on increased competition as other companies emulate its
success, the product may lose market share and begin its decline. Product sales
begin to decline due to market saturation and alternative products, and the
company may choose to not pursue additional marketing efforts as customers
may already have determined themselves loyal to the company's products or
not.

Should a product be entirely retired, the company will stop generating support
for the good and entirely phase out marketing endeavors. Alternatively, the
company may decide to revamp the product or introduce it with a next
generation, completely overhauled item. If the upgrade is substantial enough,
the company may choose to re-enter the product life cycle by introducing the
new version to the market.

The stage of a product's life cycle impacts the way in which it is marketed to
consumers. A new product needs to be explained, while a mature product
needs to be differentiated from its competitors.

Advantages of the Product Life Cycle

The product life cycle better allows marketers and business developers to
better understand how each product or brand sits with a company's portfolio.
This enables the company to internally shift resources to specific products
based on those products positioning within the product life cycle.

For example, a company may decide to reallocate market staff time to products
entering the introduction or growth stages. Alternative, it may need to invest
more cost of labor in engineers or customer service technicians as the product
matures.

The product life cycle naturally tends to have a positive impact on economic
growth as it promotes innovation and discourages supporting outdated
products. As products move through the life cycle stages, companies that use
the product life cycle can realize the need to make their products more

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the product life cycle can realize the need to make their products more
effective, safer, efficient, faster, cheaper, or conform better to client needs.

Limitations of the Product Life Cycle

Unfortunately, the product life cycle doesn't pertain to every industry, and it
doesn't pertain consistently across all products. Consider popular beverage
lines whose primary products have been in the maturity stage for decades,
while spin-off or variations of these drinks from the same company fail.

The product life cycle may be artificial in industries with legal or trademark
restrictions. Consider the new patent term of 20 years from which the
application for the patent was filed in the United States. [1] Though a drug may
be just entering their growth stage, it may be adversely impacted by
competition when its patent ends regardless of which stage it is in.

Another unfortunate side effect of the product life cycle is prospective planned
obsolescence. When a product enters the maturity stage, a company may be
tempted to begin planning its replacement. This may be the case even if the
existing product still holds many benefits for customers and still has a long shelf
life. For producers who tend to introduce new products every few years, this
may lead to product waste and inefficient use of product development
resources.

FAST FACT
Notification messages such as Microsoft's alert that Windows 8.1
will be sunset January 2023 is an example of decline. [2] Due to
obsolescence of the operating system, Microsoft is choosing to no
longer support the product and instead focus resources on newer
technologies.

Product Life Cycle vs. BCG Matrix

A similar analytical tool to determine the market positioning of a product is the
Boston Consulting Group (BCG) Matrix. This four-square table defines products
based on their market growth and market share:

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• "Stars" are products with high market growth and high market share.
• "Cash cows" are products with low market growth and high market share.
• "Question marks" are products with high market growth and low market
share.
• "Dogs" are products with low market growth and low market share.

Although there is no direct relationship between the matrix and the product life
cycle concept, both analyze a product's market growth and saturation.
However, the BCG Matrix does not traditionally communicate the direction in
which a product will move. For example, a product that has entered the
maturity stage of the product life cycle will likely experience decline next; the
BCG Matrix does not communicate this product flow in their visual depiction.

Special Considerations
Companies that have a good handle on all four stages can increase profitability
and maximize their returns. Those that aren't able to may experience an
increase in their marketing and production costs, ultimately leading to the
limited shelf life for their product(s).

Back in 1965, Theodore Levitt, a marketing professor, wrote in the Harvard

Business Review that the innovator is the one with the most to lose because so
many truly new products fail at the first phase of their life cycle—the
introductory stage. The failure comes only after the investment of substantial
money and time into research, development, and production. This fact
prevents many companies from even trying anything really new. Instead, he
said, they wait for someone else to succeed and then clone the success. [3]

To cite an established and still-thriving industry, television program distribution

has related products in all stages of the product life cycle. OLED TVs are in the
mature phase, programming-on-demand is in the growth stage, DVDs are in
decline, and the videocassette is extinct.

Many of the most successful products on earth are suspended in the mature
stage for as long as possible, undergoing minor updates and redesigns to keep
them differentiated. Examples include Apple computers and iPhones, Ford's
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them differentiated. Examples include Apple computers and iPhones, Ford's

best-selling trucks, and Starbucks' coffee—all of which undergo minor changes
accompanied by marketing efforts—are designed to keep them feeling unique
and special in the eyes of consumers.

Examples of Product Life Cycles

Many brands that were American icons have dwindled and died. Better
management of product life cycles might have saved some of them, or perhaps
their time had just come.

Oldsmobile
Oldsmobile began producing cars in 1897. After merging with General Motors in
1908, the company used the first V-8 engine in 1916. By 1935, the one millionth
Oldsmobile had been built. In 1984, Oldsmobile sales peaked, selling more cars
in this year than any other year. By 2000, General Motors announced it would
phase out the automobile and on April 29th, 2004, the last Oldsmobile was
built. [4]

Woolworth Co.
In 1905, Frank Winfield Woolworth incorporated F.W. Woolworth Co., a general
merchandise retail store. By 1929, Woolworth had about 2,250 outlet stores
across the United States and Britain, Decades later, due to increased
competition from other discount retailors, Woolworth closed the last of its
variety stores in the United States in 1997 to increasingly focus on sporting
goods. [5]

Coca-Cola
On April 23, 1985, Coca-Cola announced a new formula for its popular beverage,
referred to as "new Coke". Coca-Cola's market share lead had been decreasing
over the past 15 years, and the company decided to launch a new recipe in
hopes of reinvigorating product interest. After its launch, Coca-Cola's phone
line began receiving 1,500 calls per day, many of which were to complain about
the change. Protest groups recruited 100,000 individuals to support their cause
of bringing "old" Coke back. [6]

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79 days after its launch, the full product life cycle was complete. Though "new
Coke" didn't experience much growth or maturity, its introduction to the
market was met with heavy protest. Less than three months after it announced
its new recipe, Coca-Cola announced it would revert its product back to the
original recipe.

What Are the Stages of the Product Life Cycle?

The product life cycle is defined as five distinct stages: product development,
market introduction, growth, maturity, and decline. The amount of time spent
in each stage will vary from product to product, and different companies have
different strategic approaches about transitioning from one phase to the next.

What Are Product Life Cycle Strategies?

Depending on the stage a product is in, a company may adopt different
strategies along the product life cycle. For example, a company is more likely to
incur heavy marketing and R&D costs in the introduction stage. As the product
becomes more mature, companies may then turn to improving product quality,
entering new segments, or increasing distribution channels. Companies also
strategically approach divesting from product lines including the sale of
divisions or discontinuation of goods.

What Is Product Life Cycle Management?

Product life cycle management is the act of overseeing a product's performance
over the course of its life. Throughout the different stages of product life cycle, a
company enacts strategies and changes based on how the market is receiving a
good.

Why Is Product Life Cycle Important?

Product life cycle is important because it informs management of how its
product is performing and what strategic approaches it may take. By being
informed of which stage its product(s) are in, a company can change how it
spends resources, what products to push, how to allocate staff time, and what
innovations they want to research next.

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What Factors Impact a Product's Life Cycle?

There's countless factors that impact how a product performs and where it lies
within the product life cycle. In general, the product life cycle is heavily
impacted by market adoption, ease of competitive entry, rate of industry
innovation, and changes to consumer preferences. If it is easier for competitors
to enter markets, consumers change their mind frequently on the goods they
consume, or the market becomes quickly saturated, products are more likely to
have shorter lives throughout a product life cycle.

The Bottom Line

Broadly speaking, almost every product sold undergoes the product life cycle.
This cycle of market introduction, growth, maturity, and decline may vary from
product to product or industry to industry. However, this cycle informs a
company of how to best utilize its resources, what the future outlook of their
product is, and how to strategically plan for bringing new products to market.

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