The Product Life Cycle

The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

In theory it’s the same for a product. 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is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn.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.

A company which introduces a new product naturally hopes that the product will contribute to the profits and provide consumer satisfaction for a long period of time. This however, does not always happen in practice. So, progressive organizations try to remain aware of what is happening throughout the life of the product in terms of the sales and the resultant profits.

Product Lif Cycle


At this stage the product or service is new to the market. Since the product has been just introduced and it is natural to expect that it will take some time before the sales pick up. The need for immediate profit is not a pressure. The risk of failure is high and any initial sales are likely to be slow. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution. Money spent during this phase should be regarded as an investment in the future.


Provided the product or service meets customer needs and there is a favorable market reaction, sales begin to accelerate as news of the product permeates the market. Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilize.

Attracted by sales growth and potential profit, new competitors enter the market, often offering variations on the original product to encourage brand loyalty or to avoid patent infringement.

As the volume of production is increased, the manufacturing cost per unit tends to decline. Thus, from the point of view of product strategy, this is a very critical stage.


It is too optimistic to think that sales will keep shooting up. At this stage, it is more likely that the competitors become more active. Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilize. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.

A number of factors contribute to this process:

Approaching market saturation: Quite simply, there remain fewer and fewer potential customers left still to purchase the product as it is diffused through the market. Eventually, only replacement sales are made with comparatively few new customers left to purchase for the first time.

Customer boredom/desire for novelty: Customers are fickle when it comes to their appetite for new products. Customers who initially purchased the new product may become bored and switch to other products or brands.

New products/technological change: Successful new products carry within them the seeds of their own destruction. As sales and profits grow, competition is attracted to the market. Often they can only gain entry and market share by developing new or improved versions of the original product. If successful, new products and changes in technology begin to supersede the original product and sales begin to slow.


Eventually, forces and factors which contribute to the onset of maturity will erode the market to an extent that sales begin to diminish. At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

Sometimes decline is rapid, as in fashion markets, or when a major technological breakthrough occurs. In contrast, the rate of decline may take many years e.g. when a hard core of loyal customers refuse to switch product category or brand.

Problems with Product Life Cycle

In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Remember that PLC is like all other tools. Use it to inform your gut feeling.

Product Lif Cycle 02


The product life cycle proposes that like all life forms, products have finite lives. Hence, once a product is introduced to the market it enters a ‘life cycle’ and will eventually fade from the market.

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