A model that divides the period from a product's launch to its disappearance from the market into four stages (introduction, growth, maturity and decline) to consider how sales and profit change and which strategies suit each stage.
Japanese name: プロダクトライフサイクル
Product life cycle appears in 1 practice question across 1 topic, including Business Strategy and Accounting Basics.
In the introduction stage, the product has just been launched; awareness is low, sales are small, and development and promotion costs make profit hard to earn. In the growth stage, sales rise rapidly and new competitors enter. In the maturity stage, sales growth slows and many competitors make price competition fierce, and in the decline stage demand falls and withdrawal or the end of production is considered.
In the introduction stage, the focus is on making the product known and winning early adopters; in the growth stage, production capacity and sales channels are expanded to win share. In the maturity stage, profit is secured through product improvement, differentiation and cost reduction, and in the decline stage, investment is held back to secure profit from the remaining demand, or the company withdraws. In pricing, price skimming, which recovers development costs quickly with a high price at introduction, and penetration pricing, which gains share at once with a low price, are used as appropriate.
Semiconductors for PCs and smartphones tend to have short life cycles because generations change quickly. Semiconductors for automotive and industrial equipment, on the other hand, are used in products with long lives, so the same parts must be supplied over long periods. When a manufacturer ends production, it is common to issue an end-of-life notice and give customers a last chance to buy in bulk (a last-time buy).
Answer: B. Maturity stage
The product life cycle divides the time from a product's launch to its disappearance from the market into four stages: introduction, growth, maturity and decline. In the maturity stage, sales growth slows and many competitors offer similar products, so price competition intensifies, and securing profit through product improvement, differentiation and cost reduction becomes important. The growth stage is when sales grow rapidly and new competitors enter, and the decline stage is when sales fall and withdrawal or the end of production is considered.
On receiving an end-of-life notice, they consider buying the required quantity in a final bulk purchase or redesigning to use a substitute part. For long-lived products, they prepare from the design stage by choosing parts with long-term supply plans or parts that can be bought from several suppliers.
The model shows a typical pattern, and not every product follows it. Some products stay in maturity for a long time through improvements and new applications, while others are replaced by new technology partway through growth. It is used as a guide for judging which stage a product is in and planning strategy.
The product life cycle divides the time from a product's launch to its disappearance from the market into four stages: introduction, growth, maturity and decline.
In the product life cycle, which is the stage at which sale…As an Amazon Associate I earn from qualifying purchases.
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