The product life cycle is a theoretical model used to consider characteristics common to different stages of the development of an industry or product. It is based on the hypothesis that the sales pattern/history of every industry, product, or brand passes through four stages which are defined by an S-shaped curve which is drawn by plotting sales with respect to time.
Assumptions
- All products have limited life
- Product sales pass through distinct stages, each posing different challenges to the seller
- Profits rise and fall at different stages of the product life cycle
- Products require different strategies in each stage of their life cycle
Strengths
- A useful forecasting tool if used in conjunction with sales data of similar industries or products
- A useful model for explaining the progression of an industry
Weaknesses
- Can be highly variable in shape and duration depending on the specific circumstances
- Difficult to determine stages (e.g., what is seen as maturity may really be a temporary plateau in growth)
- Life cycles are very much a consequence of strategy rather than an unchangeable course. Thus low sales growth may be due not to the plateau of “maturity” but simply bad marketing(not recognizing this can lead to a self-fulfilling prophecy of beginning decline rather than continued growth)