Price, product, promotion and place (4Ps): The product life cycle:

The idea

The product life cycle is a model showing how demand for a product or service changes over time. It has four main stages: introduction, growth, maturity and decline. In introduction, sales are low and costs high, so profit may be negative. In growth, sales rise quickly as customers adopt the product. In maturity, sales peak and competition increases, so businesses may use extension strategies such as product updates or new markets. In decline, sales fall as tastes change or substitutes appear. The model helps businesses decide on pricing, promotion and product changes at each stage.

For example: A new smartphone may be priced high initially, then lowered as it matures.

What earns the marks

• Identifies the four stages of the product life cycle: introduction, growth, maturity and decline.
• Explains how sales and demand change at each stage, from low initial sales to peak maturity and eventual fall.
• Describes how costs and profit may vary across the cycle, such as high development costs at introduction and higher profits at growth or maturity.
• Applies the model to a given product or service, showing how demand might change over time and how the business could respond.
• Evaluates the usefulness of the product life cycle for marketing decisions, including limitations such as not all products follow the same pattern.

Common mistakes and how to put them right

• Confusing the growth stage with the maturity stage.

  Put it right: Growth is when sales are rising quickly, while maturity is when sales peak and then level off.

• Assuming all products pass through every stage in the same way.

  Put it right: Some products may fail at introduction or stay in maturity for a long time due to extension strategies.

• Thinking that decline means the product is immediately withdrawn.

  Put it right: Businesses may continue to sell a declining product to loyal customers or in niche markets.

• Forgetting that the product life cycle shows demand over time, not just sales revenue.

  Put it right: Demand can change due to fashion, technology or competitor actions.

Exam tips

• When asked to explain the product life cycle, always name and describe each stage in order, using a specific product example to show how demand changes.
• Use connectives such as 'therefore' or 'this leads to' to link each stage to a change in demand or marketing mix decision.
• If a question asks how demand might change over time, refer to the shape of the curve and give reasons for the changes, such as increased competition or changing tastes.
• For higher marks, consider limitations of the model, such as products that are relaunched or that have very short life cycles.