Mention the various stages of 'Product Life Cycle'. How is product life cycle advantageous?

Stages of Product Life Cycle:

A product moves through five different stages of its life cycle:

1. Introduction Stage — The product is launched in the market. Costs are high, sales are low, competition is virtually absent and prices are high.
2. Growth Stage — Demand and sales grow rapidly, distribution widens, competition increases and prices fall. Profits rise.
3. Maturity Stage — Sales continue to grow but at a decreasing rate. Markets get stabilised and saturation occurs. Profits start declining.
4. Decline Stage — Sales fall sharply due to displacement by new products or change in consumer behaviour. Promotional expenses are reduced.
5. Abandonment Stage — The product is dropped from the market and firms shift attention to other products.

Advantages of Product Life Cycle:

1. Effective product planning — When the product life cycle is known, the firm can prepare an effective product plan and forecast sales and profits at each stage.
2. Advance steps before decline — Management can take advance steps before the decline of the product, such as introducing new variants or finding new uses.
3. Extending maturity stage — The maturity stage can be extended by finding new uses of the product, differentiating it, or developing new markets.
4. Technological innovation — Technological innovations can be adopted to improve the quality, features and design of the product.
5. Marketing decisions — It serves as a framework for taking sound marketing decisions at each stage of the life cycle, with appropriate emphasis on different elements of the marketing mix.