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A decline stage is a component in what is known as the life cycle of a product. Considered the final stage in the product life cycle, this period refers to a time in which the appeal of the good or service is waning, resulting in decreased sales revenue. As a product enters this particular phase, companies have to make decisions regarding whether to attempt to retool the product, change marketing tactics in an effort to tap into new consumer markets, or abandon the product in favor of a new good or service.
There are a number of reasons why a product may enter a decline stage. One of the more common has to do with the fact that newer products attract the attention of consumers and provide benefits that the older product cannot offer. This is often due to innovations in technology that render the older product obsolete and no longer desirable in the eyes of consumers.
Another common reason for the onset of the decline stage involves changes in the tastes of consumers. For example, a particular style of clothing may be extremely popular for a period of time, but over time the design that was once considered attractive and cutting-edge begins to be perceived as somewhat commonplace. As this happens, consumers turn their attention to new fashion designs and the demand for the once popular product begins to subside.
Increased competition in the marketplace can also lead to a decline stage for a given product. In this scenario, as more companies offer similar products, often at lower prices, consumers shift attention to competitors to fill their needs. When this happens, the company either has to combat the downturn in sales by lowering prices to compete or discontinue the product in order to produce something new that is not already offered by the competition.
There are also instances in which the decline stage is hastened by the advent of new governmental regulations that have to do with the manufacture of certain products. When and as those regulations trigger factors that make it less profitable for the products to be manufactured, or in some way limit the range of outlets consumers can use to buy the products, there is a good chance that sales and revenue will decrease. Unless the product can be modified to comply with those newer regulations and be allowed to re-enter those former retail outlets, it may be in the best interests of the company to lower or discontinue production of the good or service in favor of other products that can be sold in a wider range of outlets to consumers.