Product Life Cycle
To be able to market its product properly, a firm must be aware of the product life cycle of its product. The standard product life cycle tends to have five or six phases:
- Development
- Introduction
- Growth
- Maturity
- Decline
It can also be shown graphically. The graph often has two lines - one to show the level of profit, and one to show the level of sales:
Firms will often try to use extension strategies. These are techniques to try to delay the decline stage of the product life cycle. The maturity stage is a good stage for the company in terms of generating cash. The costs of developing the product and establishing it in the market are paid and it tends to then be at a profitable stage. The longer the company can extend this stage the better it will be for them.
