Courtesy of Cornell Design League

Product life cycle is one of the most important principles of entrepreneurship. Every product goes through stages during its lifetime. Product life cycles can vary in length - weeks, or months, or years. Cycles also vary in expectation and success at achieving a particular level of sales and profits. It is most easily understood as the curve pictured here.

A product's life cycle begins with its development where there are no sales or profits.

When the product is introduced, sales begin slowly and then, hopefully, the product has a period of high growth in sales and profits.

At the mature stage, profits begin to level off.

Sales continue to increase until the market is saturated with the product and competing products. Because of competition for market share, profits typically decrease earlier than sales.

In its decline stage, profits are very low even with considerable sales. With declining demand for a product and a saturated market, profits, sales volume, and prices are all in decline.

This life cycle pattern can help you to understand the relationship between sales volume and time in the marketplace. No matter how innovative and functional a product idea may be, you must plan for its growth as well as its maturity and decline. Marketing and pricing strategies should be different when a product's sales are growing than when declining.