The Product Life Cycle

The life of a product

Every product goes through a life cycle, and knowing the stage helps a business plan. First comes research and development, before any sales, when the product is designed and tested. Then introduction, when it launches and sales are low. In growth sales rise quickly as the product catches on. At maturity sales peak and level off, and competition is fierce, so a strong product needs a unique selling point, a feature that sets it apart. Finally comes decline, when sales fall as newer products appear. A business does not have to let a product die. Extension strategies, such as a new version, new packaging or fresh advertising, can lengthen the mature stage. This module covers the stages and how to act on them.

Product life cycle words

Learn these before you read any curve, and remember the stage decides what a business should do next.

Growth against decline

Two stages sit on opposite sides of the curve, and a business acts very differently in each.

How to read the life cycle

Never recommend an action before you know the stage. Look at the sales curve first. Rising steeply means growth, so keep supplying and building the brand. A flat top means maturity, the moment to reach for an extension strategy before sales slip. A falling line means decline, when a business chooses whether to refresh the product or let it go. Name the stage the data shows, then match the action to it, rather than guessing.

Match the stage to what happens

Which stage is this?

A product that has sold well for years now sees its sales dropping month after month as rival products take over. Which stage is it in?

• Decline.
• Growth.
• Introduction.
• Maturity.

Extension strategies

Select the TWO genuine extension strategies for a mature product.

• Release a new version, flavour or design
• Advertise to reach new customers
• Stop making the product at once
• Do nothing and let sales slide

Sales after an extension

A product sells 40 thousand units a month at maturity. A successful extension strategy lifts this by 15 thousand units a month. Add these to find the new monthly sales, in thousand units.

Plot the product life cycle

Monthly sales in thousands are shown by stage. Introduction and growth are given at 10 and 30. Plot maturity at 50, then the decline at 40 and 20.

Order the life cycle

Put the stages of the product life cycle in order, earliest first.

• Research and development, before any sales
• Introduction, when the product launches
• Growth, when sales rise quickly
• Maturity, when sales peak and level off
• Decline, when sales fall away

Complete the facts

The stage before any sales, when a product is designed, is research and _____. The stage when a product launches and sales are low is _____. The stage when sales peak and level off is _____. A way to lengthen that stage and keep sales up is an _____ strategy.

Spot the true life cycle facts

Tap the TWO statements that are true about the product life cycle.

• At maturity sales peak and level off
• An extension strategy can lengthen the mature stage
• In growth, sales fall steadily
• A product can never reach a decline stage

Manage the product

Read each case and choose the best response, with a reason.

• A sales chart shows a product has just launched and sales are still very low. Which stage is it in?
• A firm sees a long-selling product reach maturity, with sales flat and about to dip. What should it do?
• A student recommends an extension strategy without first saying which stage the product is in. How could the answer be improved?

Explain the product life cycle

A snack brand has a product whose sales chart shows a long flat peak just beginning to dip. Explain the product life cycle and what the firm should do.

• Name the stages of the product life cycle in order
• Explain how to read the stage from a sales curve
• Identify the stage this product has reached from the description
• Recommend a suitable extension strategy for that stage
• Finish with a judgement on why identifying the stage first matters