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Product Life Cycle Concept Usefulness and Limitations


Product life cycle is a model that describes the phases taken by products from the time they are launched by a company to the time they decline or die. Products have the life cycle that is similar to that of human beings. They are born, they grow and then it reaches a time when they start declining. Just like human beings, product life cycle can not be predicted because it differs from one product to another.

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They are products that can take decades before they die whereas they are others which are prone to dying soon after they are launched into the market. The period taken by products to mature and finally die depends on a company’s processes, skills, and marketing strategies put in place. Products need to be nurtured properly if they are to remain competitive in the market. They also need to be modified as the market grows so that they are able to compete in the drastically changing market.

By understanding the product life cycle, it becomes easy to decide the material flow, technology to use, process selection, inventory required, and the capital needed. Employees play the biggest role in production processes, their skills, knowledge, and abilities should be put into consideration. This concept simply means taking inputs and producing output through some operations or processes.

The process of production to be adopted by any organization depends on the type of products that an organization specializes in and the volume of process to be used to produce these products. The whole process applied by the operation management department in production from raw materials to finished products is referred to us as the definite life cycle. This is because the life cycle of the production of any product is comparable to that of any living thing. This paper looks at the stages of product life cycle and it tries to explain what goes on in each stage. It also gives the usefulness of the life cycle and some of the major limitations of the model.

Stages in Product Life Cycle

There are four main phases in the life cycle of a product (i.e. Introduction, growth, maturity, and decline stage). During the introduction stage, products are launched into the market to create awareness of to potential customers. This is actually the most expensive stage in the product life cycle because a lot of money has to be used in terms of promotions, free samples, among other marketing strategies. This is the stage when the product is moved to the customer and a company uses all means available in order to create its own demand.

This stage is associated with very low returns or none at all because the main purpose of this stage is not to make money but to create awareness. The growth stage follows the introduction stage. This is the stage in which a company expects to receive some returns and competition is expected to increase. During this stage, a company makes profits and starts enjoying economies of scale. Through competition a company is forced to lower its prices although it is still guaranteed of profits. However, this stage cannot be a success if the introduction stage was not successful (Westkämper, 2000:520).

During the maturity stage, a company starts to sell its products in big volumes at reduced profits. It enjoys economies of scales although not as much as in the growth stage. At same points, sales volumes start to decrease due to increased competition. New brands enter the markets forcing a company to differentiate its products in order to retain its market share and still earn a profit. The decline or saturation stage is the last in the product life cycle. During this stage, a company experiences a decline in its sales volume followed by a decline in its profit margin. A company is faced with the challenge of retaining its market share as it tries to concentrate on its distribution and marketing strategies. It is at this stage that some products die completely while others may withstand the challenge and production continues.

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Usefulness of the Product Life Cycle

One major advantage of the product life cycle is that it helps a company to understand its current market position and be able to see what lies ahead. It is through the product cycle that a business or a company can forecast sales by scrutinizing what is currently going in the market. The introduction stage forms a good basis, for the business to understand its customer and how the market functions. By involving itself in vigorous promotion strategies, a business is able to explore the market and identity areas in which to concentrate on, in marketing its products.

A good marketing strategy to use during this stage would be the direct sales because the sales representatives get a chance to interact directly with potential customers and they can use this opportunity to learn more about their preference and what they would expect in terms of quality and prices. This is the time when the sales representative can learn about the shortcomings of other brands in the market which they can present to the company to be worked on. If the introduction stage is not conducted properly, a business/company cannot be able to enter into the growth stage and its product may die even before reaching maturity (Anon. “Product life cycle” 1995).

During the growth stage, a business understands it demand, and is able to concentrate on the areas which looks promising. It is at this stage that marketing strategies are designed and used in order to compete in the competitive market. If a company does not understand where its demand is coming from, then further strategies would be a waste of time and money because they will not yield the desired results.

If the introduction stage is conducted well, then a company may be able to knock down some of the substitute products already in the market. The growth stage determines the life cycle of a certain product (Collins, 2009:3). It is at this stage that one can easily determine whether a product will be able to withstand competition and for how long it will actually remain in the market. There are certain products that die at this stage because the basis was not laid down well.

A product that goes through the growth stage successfully enters into the maturity stage. As seen earlier, this is the stage that profits and sales volume starts to decline due to increased competition. If a company is able to understand what goes through during this stage, then it can prevent its products from fading off through product differentiation or introduction of new products of the same product. To achieve this, a company has to understand its core competencies. An organization has its own core competencies that are different from another organization.

It needs many different competencies in order to operate efficiently and effectively. Core competencies can be defined as the few competencies in an organization that ensure long-term success. There are those competencies that are rare, valuable, non-substitutable and non-imitable. For a competency to qualify as “core”, it has to fulfil the above four criteria. It is quite evident that knowledge is crucial in building core competencies. In the context of the knowledge economy and international markets, firms localized anywhere have access to resources from wherever they need them. Ironically, it is the local factors which are of increasing importance for competitive strength and prosperity, and even as components of core competencies (Grant, 2005:310).

Coca Cola makes a good illustration of a firm that has maintained in the maturity phase for a number of years. To achieve its position, the company uses various marketing strategies to retain and attract customers and ensure that its products do not die. For instance it has been known to use the cost leadership strategy for a long time. Cost leadership is a strategy that is aimed at ensuring that costs remains as low as possible. It is a competitive strategy used by many organizations by giving them a competitive advantage in the market (Hitt, et al, 2009:81).

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Cost leadership strategy is an indication of how a firm’s theory in successful competition is centred on low costs and prices. It ensures that products of the same value are offered at a lower price in order to attract more customers. By using the cost leadership strategy, the Coca Cola Company has been able to position its products to target the average customers in the market with little or no differentiation. This strategy uses the low-margin high-volume kind of approach. Key areas in cost leadership are: materials, management of logistics and manufacturing. Another example of a cost leader is Wal-Mart which is able to withstand the five forces of competition. With low prices, it is able to better its profits as compared to its rivals firms, which charge higher costs (Campbell, et al, 2002:159).

The low cost also gives it a competitive advantage which is a significant entry barrier. By charging low prices, it is able to buy large volumes of goods from suppliers thus enjoys economies of scale. However, this cannot be possible if a company does not understand where it stands in terms of the life cycle. This strategy is very useful in the maturity stage when a company is at the point of collapsing. However, a cost leader is prone to face some drawbacks.

The first drawback is that, in most cases, there is a danger of out competition on the basis of cost. If this happens, the leader will be forced to continuously reduce prices which may not be profitable in the long-term. The other drawback is that, the persistent force to cut costs may engrave corners that displease customers. An example of this was the case in which Toyota attempted to market a car in Japan with unpainted bumpers. They were not successful since customers were quick to notice it forcing the company to withdraw the model.

By understanding where a product stands in the life cycle, a company can manipulate its supply chain to suit the current demand. A supply concept that has been proved to work during the growth rate is the just in time principle (JIT). This principle is used in both manufacturing and non manufacturing process for the delivery of products and services. Businesses that use just in time principles include; banks, hospitals, insurance companies, and hotels. JIT principle was originally associated with Toyota managers as a problem solving mechanism to eliminate waste. It is a supply kind of approach used in a business to perk up its production through a diminution of the inventory procedure and other correlated costs. It assists in the production of goods and services without wastage of time and resources (Graham, 2005:372).

Limitations of Product Life Cycle

The major drawback of the product life cycle is that one can never predict the time that a product will take in each stage of the cycle. Sometimes it becomes difficult to distinguish one stage from another because very few people are keen to pay details of the flow of goods and services in the market. Some products decline even before reaching the maturity stage and thus the life cycle cannot be fully relied upon.

Sometimes it can result in bad decision being made by a company, for instance if a company experiences an increase in its sales followed by a decline, it may conclude that the product is finally dying of which might not be the case. It may make some hastily decision for example cutting on its advertising budget thereby facilitating further decline in its sales (Haes, et al., 2008). This may not have happened if the company had assumed that the product was in the maturity stage.

Marketing managers need to analyze a lot of data in deciding the stage at which a product is. Some data may give the wrong impression because of other external forces for instance, government inference, which may result in wrong strategies being employed. Some managers may use vigorous advertising strategies as they try to extend the growth stage which may not work in they favour (Rey et al., 2004:600). To sum it up, product life cycle has a number of limitations which reduces its effectiveness. It cannot be relied upon since it is not predicable and cannot be used to forecast future sales.


Product life cycle is a model that describes the process a product goes through in the market. This cycle is made up of four main stages; introduction, growth, maturity, and decline. Every organization has to understand the stage at which its products are in order to develop appropriate marketing strategies to market the product. It also helps an organization to understand when to expect an increase in its sales revenue and when to expect intense competition. For instance, during the introduction stage, an organization does not expect to make much profit because a lot of money is used for advertisement. On the other hand, the sales revenue is expected to increase as the product reaches the maturity stage.

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The product life cycle helps industries in developing strategies to use in order to compete in the global marketing. When an industry recognises that a product is in the decline stage, it can launch other products to take the place of the product that is becoming extinct and still maintain its market share. The product life cycle can also be used to ensure that a product never reaches the decline stage. The coca cola company has been able to remain in the maturity stage for along time because it understands the product life cycle and it is always coming up with new strategies that help it to compete in the global market.

Reference List

Anon. 1995. Product life cycle: managing your products to maximize success [Online]. Web.

Campbell, D. et al, 2002. Business strategy: an introduction. Burlington, Butterworth-Heinemann pp60-250.

Collins, D., 2009. Who wants to live forever? The advantages of the product life cycle concept [Online]. Web.

Graham, G. 2005. Exploring supply chain management in the creative industries, Volume 10, Issue 5 of Supply chain management pp349-380. London, Emerald Group Publishing.

Grant, R. M., 2005. Contemporary strategy analysis, Blackwell business. New York, Wiley-Blackwell pp307-312.

Haes, H. A. et al., 2008. Three strategies to overcome the limitations of life-cycle assessment [Online]. 

Hitt, Michael H., et al, 2009. Strategic management: competitiveness and globalization: concepts & cases. Auckland, Cengage Learning pp64-263.

Rey F.J., et al., 2004. Life Cycle Assessment and external environmental cost analysis of heat pumps, Environmental Engineering Science, vol. 21, pp 591–605.

Westkämper, E., 2000. Live Cycle Management and Assessment. Approaches and Visions towards Sustainable Manufacturing, Annals of the CIRP, Vol. 49/2/2000, p. 501-522.

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