Product life cycle

Product Life cycle

Introduction

The establishment stage is characterized by low growth rate of sales as the product is newly launched in the market. Monopoly can be created, depending upon the efficiency and need of the product to the customers. Firms usually incur losses rather than profit turning this stage. If the product is in the new product class, the users may not be aware of its true potential. In order to achieve that place in the market, extra information about the product should be transferred to consumers through various media

Growth

Growth comes with the acceptance of the innovation in the market and profit starts to flow. If the monopoly exists, companies can experiment with new ideas and innovation in order to maintain the sales growth. This stage is the best time to introduce new effective products in the market thus creating an image in the product class in the presence of its competitors who try to copy or improve the product and present it as a substitute.

Maturity

In the maturity stage, the end of stage of the growth rate and sales slowdown as the product has already achieved acceptance in the market. New firms start experimenting in order to compete by innovating new models of the product. With many companies in the market, competition for customers becomes fierce, despite the increase in growth rate of sales at the initial part of this stage. Aggressive competition in the market results in profits decreasing at the end of the growth stage thus beginning the maturity stage. In addition to this, the maturity stage of the development process is the most vital.

Decline

The decline stage is where most of the product class usually dies due to low growth rate in sales. A number of companies share the same market, making it difficult for all entrants to maintain sustainable sales levels. Not only is the efficiency of the company an important factor in the decline, but also the product category itself becomes a factor, as the market may perceive the product as "old" and may not be in demand. It is not always necessary that a product should go through these stages. it depends on the type of product, its competitors, scope of the product, etc. and free from tax perks.