A product life cycle is a concept describing the stages a product goes through during its market circulation time. Using this framework helps the companies to successfully manage their products. The concept is used to make the decisions about which resources and specialists to involve in the work, how exactly, and in what quantities, depending on the product’s status.

The product life cycle is usually divided into four stages: introduction into the market, growth, maturity and decline. 

In this Article, we’ll explain how this theory appeared, why it’s important to understand the product life cycle and how it can help to develop the successful products.

What are the stages of the product life cycle?

The stage of introduction into the market includes the development and testing phases, as well as initial marketing efforts. The product is also demonstrated to the first customers. The main goal is to achieve maximum product recognition in the market.

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The growth stage begins after the product starts thriving in the market and growing. Another characteristic of this stage is emergence of the first competitors with similar products. This is when the most intensive marketing efforts take place.

At the maturity stage, maximum market size is reached. Competition is very high and the market players work to increase customer loyalty. Here, service quality, price policy and the product’s differentiation from the competitors’ offers become crucial.

The decline stage begins when the sales fall and profitability declines. The reasons are often emergence of new or replacement products. For example, iPhone simultaneously opened up the smartphone market and “killed” the market of push-button phones.

It is worth noting that the concept of the product life cycle is also subject to criticism, since in many cases it is quite difficult or even impossible to determine the product’s current stage; furthermore, not all products go through the identified cycles.

Why is it important to know about the product life cycle?

The idea that every product goes through the life stages first emerged in 1931. This was discussed by Otto Klepner, a founder of an advertising agency, in his classic text ‘Advertising Procedure’. He referred to the stages as “novelty,” “competition” and “in memory”.

Later, the economists expanded this concept, and in 1965, economist Theodore Levitt published Exploit the Product Life Cycle. He insisted that understanding the product life cycle allowed the companies to plan specific actions and decisions in a timely manner to sustain the growth and profitability of their products.

In his opinion, understanding the life cycle enables a shift toward a proactive product policy rather than a reactive one. This is how 3M, the company that invented adhesive tape, operated. Initially, the product was intended to protect the parts of the car body from being splattered with paint of a different colour, but 3M then took a range of the steps to expand the potential market. This led to development of transparent and coloured adhesive tapes, as well as a series of the dispensers to make the adhesive tape easier to use. The product became so successful that the word “Scotch” (from ‘Scottish’ or “stingy”) is now used to refer to adhesive tape, even though it was originally a brand name.

“Understanding the need to extend the product’s lifespan compels a company to act systematically: anticipate the competitors’ steps, consider potential shifts in consumer response to the product and determine the necessary sales actions that best use these contingent events,” Theodore Levitt shares.

The expert believes it is crucial to take the right actions at the right time — when the customers are ready for them or when these actions will yield the maximum effect. In other words, promotion expenses should be maximum during the introduction phase and decrease during the decline phase. In addition, the steps must be taken to identify new market niches for the product. And to do this, the product must be viewed as broadly as possible.

Thus, in his view, by developing adhesive for Scotch tape, 3M became a technological expert in “connecting one thing to another”. And this broader perspective helped the company to create electronic recording tape (connecting the electronic materials with the tape) and Thermofax (connecting the heat-sensitive materials with paper).

“Thinking through new product strategy in advance helps management to avoid other traps. For example, the advertising campaigns that appear successful in the short term can be detrimental in the next stage of the life cycle. 

For example, if Jell-O (a popular gelatin dessert in the U.S.) had been initially marketed as a diet product, it would have had far less chance of making a significant impact on the gelatin dessert market,” the expert writes.

What stage of the life cycle is the product currently at?

Let’s look at some modern examples. iPhone was at the stage of introduction into the market in 2007 and it served up a revolution in the mobile phone industry. Apple used an aggressive marketing strategy to draw attention to its product.

The growth stage is well illustrated by Instagram, which collected millions of the users in just a few years and attracted the attention of major brands and investors. 

We can see maturity in such products like Facebook, which continues dominating the social media market but faces serious competition and market saturation.

The products like DVD players, which have been displaced by the streaming services and more modern technologies, can be considered the examples of the decline stage.

Below, you can find a check list that will help you to determine your product’s life cycle stage.

1. What stage of the life cycle is your product at?
   1. If the product has only recently entered the market, it is at the introduction stage. This is confirmed by a small customer base and active marketing efforts.
   2. If there is rapid growth in the users number and revenue, this indicates the growth stage.
   3. When growth stabilizes and competition intensifies, the product enters the maturity stage.
   4. A decline in revenue and loss of market share, coupled with emergence of new replacement products, indicates the decline stage.
2. What should you do at the growth stage?
   1. Increase the marketing budgets and efforts to capture a larger market share.
   2. Invest in product improvements to keep it competitive.
3. How to sustain a product at the maturity stage?
   1. Maintain customer loyalty through the loyalty programs and improved service.
   2. Seek the opportunities for innovation and release of new features or products to prevent stagnation.
4. How to minimize the losses at the decline stage?
   1. Consider the options for product diversification or implementation of new technological solutions.
   2. Plan for a phased withdrawal of the product from the market or transition to serving the niche segments.
5. When and how should a new product be developed?
   1. The basis for new products can be found in current market needs or user requests.
   2. Analyse the successful and unsuccessful aspects of the current product life cycle to avoid repeating the mistakes and use the strengths for new developments.

The product life cycle is a complex process that requires a careful approach at each stage. Managing a product throughout all stages of its life cycle allows the companies to remain competitive, adapt to the market changes and create the successful products that meet the customer needs.

A product life cycle is a concept describing the stages a product goes through during its market circulation time. Using this framework helps the companies to successfully manage their products. The concept is used to make the decisions about which resources and specialists to involve in the work, how exactly, and in what quantities, depending on the product’s status.

The product life cycle is usually divided into four stages: introduction into the market, growth, maturity and decline. 

In this Article, we’ll explain how this theory appeared, why it’s important to understand the product life cycle and how it can help to develop the successful products.

What are the stages of the product life cycle?

The stage of introduction into the market includes the development and testing phases, as well as initial marketing efforts. The product is also demonstrated to the first customers. The main goal is to achieve maximum product recognition in the market.

The growth stage begins after the product starts thriving in the market and growing. Another characteristic of this stage is emergence of the first competitors with similar products. This is when the most intensive marketing efforts take place.

At the maturity stage, maximum market size is reached. Competition is very high and the market players work to increase customer loyalty. Here, service quality, price policy and the product’s differentiation from the competitors’ offers become crucial.

The decline stage begins when the sales fall and profitability declines. The reasons are often emergence of new or replacement products. For example, iPhone simultaneously opened up the smartphone market and “killed” the market of push-button phones.

It is worth noting that the concept of the product life cycle is also subject to criticism, since in many cases it is quite difficult or even impossible to determine the product’s current stage; furthermore, not all products go through the identified cycles.

Why is it important to know about the product life cycle?

The idea that every product goes through the life stages first emerged in 1931. This was discussed by Otto Klepner, a founder of an advertising agency, in his classic text ‘Advertising Procedure’. He referred to the stages as “novelty,” “competition” and “in memory”.

Later, the economists expanded this concept, and in 1965, economist Theodore Levitt published Exploit the Product Life Cycle. He insisted that understanding the product life cycle allowed the companies to plan specific actions and decisions in a timely manner to sustain the growth and profitability of their products.

In his opinion, understanding the life cycle enables a shift toward a proactive product policy rather than a reactive one. This is how 3M, the company that invented adhesive tape, operated. Initially, the product was intended to protect the parts of the car body from being splattered with paint of a different colour, but 3M then took a range of the steps to expand the potential market. This led to development of transparent and coloured adhesive tapes, as well as a series of the dispensers to make the adhesive tape easier to use. The product became so successful that the word “Scotch” (from ‘Scottish’ or “stingy”) is now used to refer to adhesive tape, even though it was originally a brand name.

“Understanding the need to extend the product’s lifespan compels a company to act systematically: anticipate the competitors’ steps, consider potential shifts in consumer response to the product and determine the necessary sales actions that best use these contingent events,” Theodore Levitt shares.

The expert believes it is crucial to take the right actions at the right time — when the customers are ready for them or when these actions will yield the maximum effect. In other words, promotion expenses should be maximum during the introduction phase and decrease during the decline phase. In addition, the steps must be taken to identify new market niches for the product. And to do this, the product must be viewed as broadly as possible.

Thus, in his view, by developing adhesive for Scotch tape, 3M became a technological expert in “connecting one thing to another”. And this broader perspective helped the company to create electronic recording tape (connecting the electronic materials with the tape) and Thermofax (connecting the heat-sensitive materials with paper).

“Thinking through new product strategy in advance helps management to avoid other traps. For example, the advertising campaigns that appear successful in the short term can be detrimental in the next stage of the life cycle. 

For example, if Jell-O (a popular gelatin dessert in the U.S.) had been initially marketed as a diet product, it would have had far less chance of making a significant impact on the gelatin dessert market,” the expert writes.

What stage of the life cycle is the product currently at?

Let’s look at some modern examples. iPhone was at the stage of introduction into the market in 2007 and it served up a revolution in the mobile phone industry. Apple used an aggressive marketing strategy to draw attention to its product.

The growth stage is well illustrated by Instagram, which collected millions of the users in just a few years and attracted the attention of major brands and investors. 

We can see maturity in such products like Facebook, which continues dominating the social media market but faces serious competition and market saturation.

The products like DVD players, which have been displaced by the streaming services and more modern technologies, can be considered the examples of the decline stage.

Below, you can find a check list that will help you to determine your product’s life cycle stage.

1. What stage of the life cycle is your product at?
   1. If the product has only recently entered the market, it is at the introduction stage. This is confirmed by a small customer base and active marketing efforts.
   2. If there is rapid growth in the users number and revenue, this indicates the growth stage.
   3. When growth stabilizes and competition intensifies, the product enters the maturity stage.
   4. A decline in revenue and loss of market share, coupled with emergence of new replacement products, indicates the decline stage.
2. What should you do at the growth stage?
   1. Increase the marketing budgets and efforts to capture a larger market share.
   2. Invest in product improvements to keep it competitive.
3. How to sustain a product at the maturity stage?
   1. Maintain customer loyalty through the loyalty programs and improved service.
   2. Seek the opportunities for innovation and release of new features or products to prevent stagnation.
4. How to minimize the losses at the decline stage?
   1. Consider the options for product diversification or implementation of new technological solutions.
   2. Plan for a phased withdrawal of the product from the market or transition to serving the niche segments.
5. When and how should a new product be developed?
   1. The basis for new products can be found in current market needs or user requests.
   2. Analyse the successful and unsuccessful aspects of the current product life cycle to avoid repeating the mistakes and use the strengths for new developments.

The product life cycle is a complex process that requires a careful approach at each stage. Managing a product throughout all stages of its life cycle allows the companies to remain competitive, adapt to the market changes and create the successful products that meet the customer needs.