Each product has its own life cycle.  A product will be ‘born’, it will ‘grow’, it will ‘mature’, provide a period of ‘saturation’ and, eventually, it will ‘decline/die’.  Some products, like Tip Top, have retained their market position for a long time.  Others may have their success undermined by falling market share or by competitors.

The product life cycle shows how sales of a product change over time.  There are typically 4-5 stages of the life cycle of a product.  Not all products follow these stages precisely and time periods for each stage will vary widely.  Growth, for example, may take place over a few months or, as in the case of Tip-Top, over decades.

However, perhaps the most important stage of a product life cycle happens before the birth, namely the research and development (R&D) stage.  Here the company designs a product to meet a need in the market.  The costs of market research – to identify a gap in the market and of product development to ensure that the product meets the needs of that gap – are called ‘sunk’ or start-up costs.