After launching a new product, the company is naturally eager to
see it enjoy a long and profitable life. It is difficult to forecast how long
the public will go on liking a product. Public tastes change very quickly.
Even if a product is successful at first, this may not last for very long, as
rival products may begin flooding the market or another manufacturer
may produce a more advanced product. Few products last forever. Most
go through a product life cycle, passing through four distinct stages in
sales and earnings: introduction, growth, maturity, and decline.
The amount of time that elapses during any one of the stages depends
on consumer needs and preferences, economic conditions, the nature
of the product itself, and the manufacturer’s marketing strategy. A basic
product that serves a real need is likely to show steady growth for quite
a few years before leveling off. In contrast, some high-technology items
and many fashions generally have relatively short life cycle.
The first stage in the product life cycle is the introductory stage, dur-
ing which the producer tries to stimulate demand. Typically, this stage
involves an expensive advertising and promotional campaign, plus re-
search and development costs. Products in the introductory phase
generally require large investments to cover the costs of developing the
product, building distribution systems, and educating the public about
the product’s benefits. The producer is not likely to make a great profit
during this phase.
Next comes growth stage, marked by a rapid jump in sales – and,
usually, in the number of competitors – as the introductory effort starts
paying off. As the product enters the growth phase, competition increas-
es and the war for market share begins, creating pressure to maintain
large promotional budgets and reduce prices. This competitive warfare is
expensive, and often the small, weak firms do not survive. The remaining
participants divide the market, and competition diminishes.
During the maturity stage, sales begin to level off or show a slight
decline in unit terms. This slowdown may result in overcapacity in the
industry, prompting producers to cut prices. Nevertheless, mature prod-
ucts are a primary source of profits for most companies, since the matu-
rity phase is typically the longest phase in the product life cycle.
Although maturity can be extended for many years, eventually most
products enter the decline phase, when sales and profits begin to slip and
eventually fade away. Declines occur for several reasons: changing de-
mographics, shifts in popular taste, and advances in technology. When a
product reaches this phase, the company must decide whether to remain
in the game or discontinue the product and focus on newer items.
Read the text. In each paragraph, find the topic phrase or sentence and those related
and unrelated to it.