The decline stage is the final stage of a product’s life cycle, characterized by reduced revenue due to waning appeal. Reasons for decline include technological innovation, changes in consumer tastes, increased competition, and government regulations. Companies must decide whether to retool, change marketing tactics, or abandon the product.
A stage of decline is a component of what is known as a product life cycle. Considered the final stage of the product life cycle, this period refers to a time when the appeal of the good or service is waning, resulting in reduced revenue. As a product enters this particular stage, companies must decide whether to try to retool the product, change marketing tactics in an effort to tap into new consumer markets, or abandon the product in favor of a new good or service.
There are several reasons why a product may enter a phase of decline. One of the most common has to do with the fact that new products grab consumers’ attention and offer benefits that the old product cannot offer. This is often due to technological innovations making the older product obsolete and no longer desirable in the eyes of consumers.
Another common reason for the onset of the decline phase involves changes in consumer tastes. For example, a particular style of clothing may be extremely popular for a certain amount of time, but over time, the design that was once considered attractive and cutting-edge starts to feel a bit mundane. In this case, consumers turn their attention to new fashion designs and the demand for the once popular product starts to subside.
Increased competition in the market can also lead to a decline for a particular product. In this scenario, as more companies offer similar products, often at lower price points, consumers shift their attention to competitors to meet their needs. When this happens, the company must fight the sales downturn by lowering prices to compete or discontinue product in order to produce something new that the competition doesn’t already offer.
There are also cases where the decline is hastened by the advent of new government regulations that have to do with the manufacture of certain products. When and as such regulations trigger factors that make products less profitable to manufacture, or limit in any way the range of outlets that consumers can use to purchase products, sales and revenues are likely to decline. Unless the product can be modified to comply with these new regulations and be permitted to re-enter such former outlets, it may be in the best interests of the company to lower or discontinue the good or service in favor of other products which it can be sold in a wider range of outlets to consumers.
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