The product lifecycle refers to all parts of a product's life from introduction through to decline.There is no set time period for the product lifecycle, and each phase may be different lengths of time. Modern product lifecycles are becoming shorter and shorter as products are being renewed by market segmentation. Companies want to maximize profit and revenues over the entire lifecycle of a product by squeezing the most out of the front end in order to recoup development and advertising costs.
There are four stages in the product lifecycle:
First Stage - the Introduction: is characterized by a low growth rate. The product has just been launched and loses money rather than makinga profit. There are exceptions to this rule, one being Apple Inc. products where the introduction phase is skipped. The introduction also sees a huge marketing campaign in order to get customers informed and excited about the new product being launched.
Second Stage - Growth phase: Growth comes with the acceptance of the innovation or new product. This is the best stage of a product to introduce updates and upgrades in order to show that your company is the most unique and innovative.
Third Stage - Maturity: Sales begin to slow down as the product has already been purchased by the majority of those who want to buy it. New firms begin to enter the market to copy the product; this means a huge increase in competition for existing customers. Maturity is the vital stage where it is chosen to either let a product slip into decline or to reinvent the product to start anew.
Fourth Stage - Decline: Growth is very slow and the product usually dies at the end of this cycle. Additionally, many companies share the same market, making it hard for new entrants to enter the market.