Product Life Cycle

Product Life Cycle

Product life cycle model is a theoretical model that identify the product stages and predicts it as well.

It can be very helpful in making decisions on positioning your product, targeting, managing product portfolio, investment, and forecasting sales trends.

It can also be applied to a broad category of products and even on a brand.

It consists of the following stages:

Development phase:

At this stage, you will be developing the product itself, which will be consuming lots of resources without any profits at all.

At this stage as an entrepreneur, you will be keeping your “maker” thinking on, focusing all your time and energy on producing your product or service.

Make sure you don’t fall into the trap of perfection, which can hold you from launching your offering.

An entrepreneur typically seeks the perfect product that can reflect the innovation in the main idea behind the product.

Launching what’s done already can be good enough to give a little taste to your audience and get a hit of feedback to improve.

Keep in mind that it’s a very time and resources consuming stage, so releasing beta and testing is beneficial for setting you on the right path as early as possible.

Lunch phase:

Usually, the product launches with a low amount of sales, low awareness from the clients, heavy marketing spending on awareness with low cash flow.

You would encourage customer awareness of your products, mostly “early adopters” will be your main source of cash.

Preferably use either skimming pricing to only focus on the available profits even if you facing low demand, or penetration pricing to get into the market with relatively low price as far as you can as a start.

It’s the phase where you get to know whether the market would accept your product or not.

Growth phase:

Sales grow much faster with positive cash flow.

The cost per unit drops down due to the scale, but it will also attract the new competitors.

You would improve your distributions and maximize your outlets, target wider base and of course work on improving the product quality and features.

Maturity phase

The sales growth rate declines and stabilizes, while the profits increase with the market share and the weaker competitors leave the market.

Prices start to fall while the cost per unit reaches its lowest and most efficient.

You would focus on attracting more new and late users and repositioning in the market.

Most of the marketing budget would go for the differentiation in the market.

Decline phase

The market becomes saturated, while the profits drop rapidly.
It can happen because of the change in customers’ taste, technological advance, or increased competition.

Before reaching this phase you be having a plan for what’s the next product or service you might be able to offer to your current clients base, you can have sub-brand, new product or service, or even pivot your current business.

You would minimize your marketing spendings, maintain your loyal customers and if it all won’t work out, you can only sell out or even shut down.


It might be hard to identify the current phase of the product, and even to predict the length of the phase.

However, once you identify the current product phase, you will be able to benefit a lot of that valuable information, from targeting, investing, positioning, and predicting sales trends.

Related Articles

This site uses Akismet to reduce spam. Learn how your comment data is processed.