VIDEO: Product life cycle explained clearly using an example

The product life cycle is modeled on a life cycle. The product life cycle, shown here using the example of an automobile, describes the individual phases of a product based on its sales development.

The prognosis model of the product life cycle

• The product life cycle is based on the assumption that every product is timed.
• Furthermore, the production life cycle assumes that the profit of a product both increases and decreases in different phases of the product life cycle.
• The sales of a product go through different phases.
• A marketing department tries to influence the phases of the product in a favorable way through the use of marketing instruments.


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• The phases within the product life cycle are divided into five phases as follows: introduction, growth, maturity, saturation and degeneration.

Example of the product life cycle

The five phases of the product life cycle mentioned above - they become clear using the example of an automobile model:

• In the introductory phase of a car model, the automobile manufacturer still generates losses due to the high production costs and low sales.
• In the second phase, the growth phase, the new car is accepted by the customers. Sales are increasing and the company is making a profit.
• In the third phase, the maturity phase, sales decrease again. The car model is no longer in great demand. The potential buyers have already bought the new car.
• In the fourth phase, the saturation phase, sales and profits shrink. One reason for this can also be that another car manufacturer has brought a similar car model onto the market. But at a lower price.
• In the last phase, the degeneration phase, profits and sales decrease. In the worst case scenario, the car models become slow-moving.

The product lifecycle model is a simple forecasting model that aims to provide a marketing department with incentives on how to respond to sales problems. Problems with this model are, for example, that it is difficult for a marketing department to determine which phase a product is currently in. There is also the problem of precisely delimiting the phases from one another.