The product life cycle

In one paragraph

Products tend to follow a pattern: slow start, rapid growth, a long flat middle, then a fall. Where a product sits should change how you market and fund it.

Introduction — low sales, high costs, heavy promotion, usually a loss. Growth — sales climb, unit costs fall, competitors arrive. Maturity — sales flatten at their peak, competition is fiercest, margins get squeezed and this is where most cash is generated. Decline — sales fall as tastes or technology move.

Extension strategies

When a product hits maturity you can extend the plateau rather than let it fall: new markets or countries, new uses, a redesign or new packaging, a price change, new features, or targeting a different segment.

Maturity is not a problem to be solved, it is where the money is made. The mistake is treating a mature product like a growing one and spending accordingly.

Why it matters financially

Different stages consume and produce cash in opposite directions. Introduction and growth eat cash; maturity generates it. A business needs products at different stages at once, which is precisely the point the Boston Matrix makes.

How to actually use it

• Plot your products or services on it. If everything is mature, you have a comfortable present and no future; if everything is in introduction, you have no cash.
• Decide extensions before the decline, not during it. Extending a product that is already falling costs far more and works far less often.

Where it breaks down

• It is descriptive, not predictive. Nothing tells you how long a stage lasts, and plenty of products never grow at all or stay mature for decades.
• It can become self-fulfilling: decide a product is declining, cut its budget, and it declines.

If you are being examined on it

Identify the stage from evidence in the case, then recommend an action that suits that stage. Drawing the curve alone earns almost nothing.

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