The product life cycle shows you how a product which has been developed will pass through the different stages of its life and will also give you an idea in to the number of people who will buy this product at different stages of its life cycle. Let us take an example of a mobile phone, below you will see the different stages of the product life cycle which will indicate the stages that a mobile phone will go through until it reaches its end life.
Example – New mobile phone being launched in to the market:
Introduction Stage – The introduction stage is where the new mobile phone will cost the highest amount for example £700, this is when only 2% of innovators will purchase the mobile phone. The reason for the 2% buying the phone at this stage is that many people will look at affordability and the price to go down before they purchase.
Growth Stage – The growth stage shows the mobile phone passing through the second stage of its life cycle with only 18% of customers making the purchase of the mobile phone. At this stage, the mobile phone cost will drop to around £600
Early Maturity Stage – The early maturity stage is where 32% of customers will buy the product, at this stage the price of the Mobile phone starts dropping further perhaps the phone is reduced in price or special offers are given to customers. The price of the mobile phone at this stage will be around £500.
Late Maturity Stage – During the late maturity stage this is where again 32% of customers will purchase the mobile phone, however the difference between this stage and the early maturity stage is that during this stage more discount will be given to customers perhaps there is a new version of the mobile phone coming soon in to the market and the manufacturer will like to offer reduced sale price on the mobile phone in order to shift sales, the price of the phone at this stage will be around £350
Decline Stage – The decline stage of the mobile phone is where the phone has come to the end of its life, perhaps at this stage the manufacturer will launch a new mobile phone in to the market so therefore all the old models will be put at the lowest prices in the stores to get rid of stock. At this stage only 16% of customers will buy the product, we call these buyers the ‘laggard ‘meaning end users of the phone. These are customers who have waited for the price to be reduced to the lowest for the mobile phones then they make the purchase. At this stage the mobile phone will cost around £250. We can see from the product life cycle example above that the mobile phone will go through
different stages in its life cycle from when it is launched in to the market until a new model is developed and the price starts at the highest point again. We can consider that the above product life cycle has a time frame for around a year as new mobile phone models are launched in to the market every year. So therefore, different products will have a different life cycle time frame depending upon the continuity of the product and the manufacturer plans on how many products they plan to launch.