Life Cycle

Life Cycle
The course of events that brings a new product into existence and follows its growth into a mature product and into eventual critical mass and decline. The most common steps in the life cycle of a product include the following phases:

• Product Development Phase - Includes market analysis, product design, conception, and testing.

• Market Introduction Phase - Initial release of the product, usually marked with high levels of advertising.

• Growth Phase - Sales growth begins to accelerate, characterized with increasing sales year-over-year. As production levels increase, gross margins should steadily decline, making the product less profitable on a per-unit basis. An increase in competition is probable.

• Maturity Phase - The product will reach the upper bounds of its demand cycle and further spending on advertising will have little to no effect on increasing demand.

• Decline/Stability Phase - This is where a product has reached or passed its point of highest demand. At this point, demand will either remain steady or slowly decline as a newer product makes it obsolete.

It is important for investors to understand a company's product life cycle. Firms that are predominately in the development phase will likely be characterized with small levels of sales and are more speculative in nature than firms in the growth or maturity phase.

When a firm reaches the maturity stage, it does not mean that a product is no longer a growing income source for the company, as there may still be further margin improvements and innovations. Furthermore, a more mature firm with mature products may be more likely to issue dividends than firms in the other phases.


Investment dictionary. . 2012.

Игры ⚽ Нужен реферат?

Look at other dictionaries:

  • Life cycle — refers to: * Biological life cycle ** Honey bee life cycle * Life cycle of a nation * New product development * Product life cycle management * LIFECYCLE Fundraising * Software life cycle * Adobe LifeCycle …   Wikipedia

  • life cycle — life cycles 1) N COUNT: usu with poss The life cycle of an animal or plant is the series of changes and developments that it passes through from the beginning of its life until its death. The dormant period is another stage in the life cycle of… …   English dictionary

  • life cycle — The term is first recorded in 1873 in its biological meaning ‘the series of changes in the life of an organism’, and this is the only meaning given in the current edition (2006) of the Concise Oxford Dictionary. During the course of the 20c,… …   Modern English usage

  • life cycle — n 1) the series of stages in form and functional activity through which an organism passes between successive recurrences of a specified primary stage 2) LIFE HISTORY (1a) * * * the successive events in the life history of an organism, such as… …   Medical dictionary

  • life cycle — life .cycle n all the different levels of development that an animal or plant goes through during its life …   Dictionary of contemporary English

  • life cycle — life ,cycle noun count 1. ) the series of changes that happen to an animal or plant during its life 2. ) the length of time that something lasts or remains useful …   Usage of the words and phrases in modern English

  • life cycle — ► NOUN ▪ the series of changes in the life of an organism including reproduction …   English terms dictionary

  • life cycle — life cycle. См. жизненный цикл. (Источник: «Англо русский толковый словарь генетических терминов». Арефьев В.А., Лисовенко Л.А., Москва: Изд во ВНИРО, 1995 г.) …   Молекулярная биология и генетика. Толковый словарь.

  • life cycle — n. 1. the series of developmental changes in form undergone by a particular type of organism from its earliest stage to the recurrence of the same stage in the next generation 2. any series of changes like this …   English World dictionary

  • life cycle — 1. Biol. the continuous sequence of changes undergone by an organism from one primary form, as a gamete, to the development of the same form again. 2. a series of stages, as childhood and middle age, that characterize the course of existence of… …   Universalium

  • life cycle — The lifetime of a product or business, from its creation to its demise or transformation. Bloomberg Financial Dictionary * * * life cycle UK US (also lifecycle) noun [C, usually singular] MARKETING, PRODUCTION ► the series of changes that a… …   Financial and business terms

Share the article and excerpts

Direct link
… Do a right-click on the link above
and select “Copy Link”