The demand for VCRs has now been surpassed by the demand for DVDs and online streaming of content. Sony VCRs are an example of a product in the decline stage. The rate of decline is governed by two factors: the rate of change in consumer tastes and the rate at which new products enter the market. Today there are more than 50, as well as sweetened and unsweetened varieties.ĭecline (and death): When sales and profits fall, the product has reached the decline stage. Kool-Aid, for instance, was originally offered in six flavors.
One such strategy is to bring out several variations of a basic product (line extension). Thus, most marketing strategies are designed for mature products. Most products that have been on the market for a long time are in this stage. Maturity: After the growth stage, sales continue to mount-but at a decreasing rate. Also, most firms have recovered their development costs by now, and their priority is in increasing or retaining market share and enhancing profits. Price reductions result from increased competition and from cost reductions from producing larger quantities of items (economies of scale). Toward the end of the growth phase, prices normally begin falling, and profits peak. Without adequate distribution, it is impossible to establish a strong market position. Manufacturers scramble to acquire dealers and distributors and to build long-term relationships. (Attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license.)ĭistribution becomes a major key to success during the growth stage, as well as in later stages. For example, the goal changes from convincing people to buy flat-screen TVs to convincing them to buy Sony versus Panasonic or Sharp. Emphasis switches from primary demand promotion to aggressive brand advertising and communicating the differences between brands. Large companies may start to acquire small pioneering firms that have reached this stage. In this stage, sales grow at an increasing rate, profits are healthy, and many competitors enter the market. Growth: If a product survives the introductory stage, it advances to the growth stage of the life cycle. Hence, profits are usually small or negative. Production and marketing costs are also high, and sales volume is low. Although competition may be light, the introductory stage usually features frequent product modifications, limited distribution, and heavy promotion. Introduction: When a product enters the life cycle, it faces many obstacles. As illustrated in (Figure), the product life cycle consists of the following stages:
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