The stages of the product life cycle are:
Product Lifecycle Management Stage 2: Growth
The growth stage is the period during which the product eventually and increasingly gains acceptance among consumers, the industry, and the wider general public. During this stage, the product or the innovation becomes accepted in the market, and as a result sales and revenues start to increase . Profits begin to be generated, though the break even point is likely to remain unbreached for a significant time--even until the next stage, depending on the cost and revenue structures.
Initial distribution is expanded further as demand starts to rise. Promotion is increased beyond the initially high levels, and word-of-mouth advertising leads to more and more potential customers hearing about the product, trying it out, and--if the company is lucky--choosing to use the product regularly. Repeat orders from initial buyers are also obtained.
If a monopoly was initially created, then it still exists in this stage. Because of this, the manufacturing company can look at ways to introduce new features, alterations, or other types of innovation to the product according to feedback from consumers and from the market in general. This would be done in order to maintain growth in sales and ensure that interest in the product continues to grow and not stagnate, thus maintaining the growth stage. In fact, the growth stage is seen as the best time to introduce product innovations, as it creates a positive image of the product and diminishes the presence of competitors who will be attempting to copy or improve the product, and present their own products as a substitute.
Features of the growth stage:
- Costs reduced due to economies of scale: as production and distribution are ramped up, economies of scale kick in and reduce the per unit costs.
- Sales volume increases significantly: as the product increases in popularity, sales volumes increase.
- Profitability begins to rise: revenues begin to exceed costs, creating profit for the company
- Public awareness increases: through increased promotion, visibility and word of mouth, public awareness grows.
- Competition begins to increase with a few new players in establishing market
- Increased competition leads to price decreases: price wars may erupt, technology may get cheaper, or other factors can ultimately lead to falling prices.