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Unlock This CourseEvery product goes through different stages during its time in the market, just like how people go through different life stages. After the exciting growth phase, products eventually reach maturity - where sales level off - and potentially decline. Understanding these stages helps businesses make smart decisions about their products and marketing strategies.
Think about products you know well. The iPhone is currently in its maturity stage, whilst products like DVDs are clearly in decline. Businesses need different strategies for each stage to stay profitable and competitive.
Key Definitions:
During maturity, sales growth slows down significantly. Most people who want the product already have it, so companies mainly sell replacements or compete for customers from rivals. Profits may start to fall due to increased competition and marketing costs.
The maturity stage is often the longest phase in a product's life cycle. Sales have reached their peak but aren't growing much anymore. This creates both challenges and opportunities for businesses.
Several important things happen when products reach maturity. Understanding these helps explain why businesses need to adapt their strategies.
Many competitors fight for market share. Price wars become common as businesses try to attract customers from rivals.
Despite high sales, profits often decrease due to increased marketing costs and price competition.
Most potential customers already own the product, so growth comes mainly from replacements or stealing customers.
Coca-Cola is a perfect example of a mature product. Sales growth is minimal in developed countries because almost everyone knows the brand. To maintain position, Coca-Cola constantly introduces new flavours (Cherry Coke, Zero Sugar), updates packaging and focuses on emerging markets where growth potential still exists.
Smart businesses don't just accept declining profits during maturity. They use various extension strategies to maintain their market position and squeeze more profit from their products.
Extension strategies are like giving products a second wind. They help delay the decline stage and can even create new growth opportunities.
Updating features, improving quality, or adding new variants. Apple does this with annual iPhone updates, keeping the product fresh.
Finding new markets or customer segments. McDonald's expanded globally and added breakfast menus to reach new customers.
Promoting different ways to use the product. Lucozade changed from a medicine for sick people to a sports drink for athletes.
During maturity, businesses often use competitive pricing to maintain market share. Some focus on premium pricing for loyal customers, whilst others use penetration pricing to steal competitors' customers. The key is finding the right balance between volume and profit margins.
Eventually, many products enter decline where sales fall consistently. This isn't always permanent - some products can be revived - but it requires careful management and tough decisions.
Understanding why products decline helps businesses prepare and potentially prevent it. Several factors can push products into decline.
Better alternatives emerge. Smartphones killed digital cameras and streaming services are killing DVDs.
Consumer preferences evolve. Fast food chains now offer healthier options as people become more health-conscious.
Economic conditions or social changes affect demand. The rise of remote working reduced demand for business suits.
Kodak dominated photography for over a century but failed to adapt to digital cameras. Despite inventing digital camera technology, they focused on protecting their profitable film business. By the time they tried to change, competitors like Canon and Sony had taken over. Kodak filed for bankruptcy in 2012, showing how dangerous it is to ignore decline signals.
When products enter decline, businesses have several options. The choice depends on how fast sales are falling, whether decline can be reversed and what resources the company has available.
Businesses can't always prevent decline, but they can manage it effectively to minimise losses and maximise remaining opportunities.
Reduce investment and marketing whilst maintaining sales to existing customers. Focus on profit rather than growth.
Find new target markets or uses for the product. Target different age groups or geographic markets.
Stop production and remove the product from the market. This frees up resources for more promising products.
Knowing when to stop selling a product is crucial. Signs include consistently falling sales, negative profits, better alternatives available and high costs to maintain production. Smart businesses cut their losses early and focus resources on more promising opportunities.
Looking at actual products in maturity and decline helps understand these concepts better. Different industries and products face unique challenges during these stages.
Nintendo expertly manages product life cycles. When the Wii reached maturity, they didn't just wait for decline. They developed the Wii U (which failed) but learned from mistakes to create the hugely successful Nintendo Switch. They also use extension strategies like new game releases and limited editions to extend console life cycles. Their retro gaming products show how old products can be revived for new audiences.
Different industries handle maturity and decline in various ways, depending on their specific challenges and opportunities.
Mature market with intense competition. Companies use annual updates, new features and emerging markets to maintain growth.
Many high street shops are declining due to online shopping. Some adapt with click-and-collect services or experiential retail.
Mature industry adapting to health trends. McDonald's added salads and coffee, whilst new brands focus on healthy alternatives.
Understanding maturity and decline stages helps businesses make better strategic decisions about resource allocation, investment priorities and future planning.
Smart businesses have products at different life cycle stages. Whilst mature products generate cash, growing products need investment. Declining products should be managed carefully to avoid draining resources from promising opportunities. This balanced approach ensures long-term business survival.
Successfully managing maturity and decline requires understanding market signals, customer needs and competitive dynamics. The most successful businesses anticipate these stages and prepare accordingly.