The product life-cycle

When we buy a product we need to know how long it will last. Perishable goods, like fruit and vegetables, have a short lifespan. Durables like a car have a longer lifespan. Different products last for different lengths of time but their life-cycles have elements in common and follow this curve:

The product life-cycle

Introduction

The product is tested and developed before it is launched. Initial sales will be low until the consumer starts buying. At this point, production costs are much higher than the revenue from sales.

Growth

As sales increase production becomes more profitable. The early development costs can be recovered. The success of the product can lead to brand loyalty [Brand loyalty: Choosing and continuing to buy your favourite brand. ] and repeat sales [Repeat sales/business: Customers returning to buy from the same business. ].

Maturity

The product reaches its peak of sale and is at its most profitable point for the company. Competitors have now entered the market which may reach saturation point [Saturation point: When the market is full of similar products it becomes difficult for a product to make additional profits. ].

Decline

As new models and designs come out, or fashions change, a product may become obsolete [Obsolete: A product that is outdated or one which has been replaced by another. ]. Sales fall, as does revenue. It is no longer profitable to produce it.