The product life cycle has five stages that include introduction, growth, maturity, and decline stage. Each of the stages has strategies that enhance the activities of the organization.
The first stage is the introduction stage, and it is the stage where a new product is introduced in the market. The business strategy in this stage is selling a new product with a lot of spending on marketing and promotion. The business strategy in the introduction strategy is a launch strategy to create brand awareness. The company does not generate profit at this stage.
The second stage is the growth stage when the company experiences an increase in sales and profit. The stage is also characterized by competition because of the launch of similar products in the market. The business strategy in this stage is maximizing the market share. The business strategy in this stage is enhancing the quality of the product. The business also attracts new market segments through product diversification and modification. Marketing activities also increase to strengthen brand awareness and product conviction.
The third stage is the maturity stage, where the growth in sales slows down. The business has high sales representing the peak of the business. The business strategy is to maintain the stage when both sales and profits are high. There are low marketing costs because the majority knows the product of the consumers. The business increases product development costs to produce a better version of the current product. The slow growth in sales results in a decline in profits. A business uses a marketing mix that reduces marketing costs and increases sales. Some businesses might exit the market because of stiff competition.
The fourth and last stage is the decline stage. In this stage, the sales of the business reduce significantly. The market has new alternative products making the old products obsolete. New technology also affects the production approaches of mature enterprises. The operational cost, such as marketing and logistical costs, are high because of reduced sales. The business strategy in this stage is reducing the costs. A business can reduce costs through selective distribution, target marketing, and phasing out obsolete products. The company only sells its products to loyal customers. Persistent of the decline stage influence an exit in the market.