Describe each stage in the product life cycle
A Product life cycle has four stages: Introduction, growth, maturity and decline.
Introduction: This is the stage when a business introduces a new product into the market. There are a lot of expenses involved here in setting up production facilities and the accompanying infrastructure. Consumers do not know about the product and they have to be informed about it with a lot of advertising and promotion. Sales are very low in the introduction stage. There are small, if any, profits made here.
Growth: In this stage, the product's sales increase as consumer awareness is increased. Costs come down due to economies of scale as production is increased. The longer this stage lasts, the higher are the profits made with the product.
Maturity: Here, the product has reached the maximum sales volume and it does not increase further. The profits made are relatively stable and start to decrease as the entry of new competitors in the market decreases the product's price. The business has to alter the product and improve it to counter the moves of competitors.
Saturation or Decline: This is the final stage of a product life cycle. Here sales volumes start to decrease. The profits made are also reduced as the total revenue drops. Once the saturation stage is reached, the business has to prepare for the introduction of new products as this no longer remains viable.