The concept of the product cycle has been developed from studies of life cycles of individual products. These studies suggest that any product ahs a life cycle and will pass through a number of distinct stages which are as follows:
• Product Introduction: Production costs are high, partly as a result of development costs; price is also high; competitors are few, if any, but sales and profits are low at this stage.
• Growth: Sales rise rapidly; prices ease; unit costs decline and profits are at their peak.
• Maturity: Sales continue to rise, but less rapidly; competition is fierce and prices ease further; profits begin to level off.
• Saturation: Sales stagnate; prices become very competitive and profits begin to shrink; mass market begins to evaporate.
• Decline: Sales take a permanent down turn; profits low or non-existent; product is eventually withdrawn.