A beginner’s guide to Product Life-Cycle


The product life cycle is an important concept in marketing. It describes the stages a product goes through from when it was first thought of until it finally is removed from the market. Not all products reach this final stage. Some continue to grow and others rise and fall. An organization’s positioning and differentiation strategy must change as the product, market and competitor change over the product life cycle (PLC).

Product Life Cycle

The main stages of a product life cycle can be illustrated using a bell curve as shown in the figure below:

Figure 1: Product Life Cycle (Source: Kotler & Keller, 2011)

The first phase of the PLC is introduction. This is the period when the product is launched in the market. There is low level of sales, capital utilization and usually negative cash flow because of the high investment in product introduction. The distributors may be reluctant to accept an unproven product and a heavy promotion is required to create awareness among the consumers.

If the product is popular with in the consumers then the sales starts to increase substantially in growth phase. Along with the high sales, the companies see high level of capital utilization, growing acceptance among consumers and eventually with a positive cash flow. This phase can also see the challenge coming from introduction of competitors with the similar product.

Next phase known as maturity is observed with slowdown in sales growth because the product has achieved acceptance by most potential buyers. Another reason for slowdown is often seen as intense competition for the market share. Profits and price usually fall during this phase of the PLC. Weaker competitors also start to leave the market during this stage.

The last stage of PLC is known as decline where the sales and profile starts to decline. Although more and more competitors leave the market during this stage, the cash flow and capital utilisation decline as well. It is often a signal to start looking for an alternative product or to re-incarnate the existing product to the next level.

Common Product Life-Cycle Patterns

The PLC can be used to analyse a product category for e.g. liquor, software and garments etc. It is important to note that not all products follow the bell curve as illustrated in previous chapter.

Figure 2: Common Product Life-Cycle Patterns (Source: Kotler & Keller, 2011)

A product can follow a pattern known as growth-slump-maturity pattern. This kind of pattern usually encounters a rapid growth in the beginning and after later sales decline with a stabilization at a certain level. One of the examples of such product group is kitchen appliances where the late adopters purchase a new product while the early adopters end up replacing their old appliances.

The cycle-recycle pattern usually starts with a period of growth which is followed by decline. Another phase of growth is triggered by promotion of the product which see a lesser growth as compared to the primary cycle. A typical example of this pattern can be seen in pharmaceutical industry where sales start declining the company gives the drug another push, which produces a second cycle.

Another common pattern is called scalloped pattern. Sales observe a succession of growth periods based on the discovery of new product characteristics, uses, or users. Nylon sales, for example, display a scalloped pattern because, over time, new and a new uses have been discovered -parachutes, hosiery, shirts, carpeting, etc.

Style, Fashion, and Fad Life Cycles

It is important to discuss another type of life cycles. The first one is called style. It is basic and distinctive mode of expression. Once invented, styles can last for generations, going in and out of vogue. This is usually seen in products such as homes, clothing and art etc.

Figure 3: Style, Fashion, and Fad Life Cycles (Source: Kotler & Keller, 2011)

Fashion is currently accepted or popular style in a given field. Fashions pretty much follow the typical bell-shaped product lifecycle curve. The length of fashion cycles is difficult to predict as the consumers soon start to look for the missing attributes.

Fads are fashions that come quickly into public view, are adopted with great zeal, peak early, and decline very fast. Their acceptance cycle is short, and they tend to attract only a limited following who are searching for excitement or want to distinguish themselves from others.