The product life cycle theory compares the stages of a product’s development and sales to the stages of organic life cycles, including birth, growth, maturity, and decline. Additional stages, such as saturation, can be included. The theory is based on the development of organic life, with a product’s birth being its introduction and its decline leading to market withdrawal.
Product life cycle theory uses an analogy between creating and creating a product for sale and a simplified view of organic life cycles. The cycle of life for living things can be seen in at least four basic and difficult stages: birth, growth, maturity and eventual decline ending in death. A simple analogy uses this cycle as a model for the stages a product goes through in a market: introduction, growth, maturity and then decline in market withdrawal. Additional stages can be included in the product life cycle theory, such as the “saturation” between the periods of maturity and decline.
The basic model used in product life cycle theory is quite simple and is based on the development of organic life, which begins with birth. After birth, a life form grows and develops, often aging and changing in various ways as it moves towards maturity. At a certain age, maturity is reached and the life form essentially peaks, sometimes maintaining that level on a plateau; this period can be short for some living beings. Maturity leads to an inevitable decline into old age, ultimately culminating in the death of the life form.
Product life cycle theory follows a very similar pattern, but is used to refer to a product or good that is developed and offered for sale to customers. The birth of a product is often referred to as its introduction, and this begins when it is first shown to potential users or customers. Growth of a product follows, as customers start buying it and sales start to balloon. This is a time of growing revenue on a regular basis, although it’s not the pinnacle of success.
At some point, according to product life cycle theory, this growth reaches a zenith and the product moves into maturity. This is the stage where sales are maximized and the item has actually hit an upper limit in terms of revenue and user base. At some point, however, the product is in decline, as sales decline due to loss of interest or a competing product. Ultimately, this ends in recall as the product is no longer considered profitable or desired and sales end.
Further steps can be added to the product life cycle theory, depending on the views of an analyst. “Saturation,” for example, is often thought of as a period of time after a product reaches maturity but before it begins to decline. This essentially represents a sales plateau that extends maturity as the market becomes saturated with the product.
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