A company has to be good at developing and managing a new product. Every product seems to go through a live cycle. It is born, goes through several phases and eventually dies . product Life Cycle involves introduction, growth, maturity and decline.
This is the period when product is introduced. Company wants to get breakeven point as soon as possible but this is not always the case. Companies spend huge money on advertising in the introduction stage. At this stage companies have to aim for both reach and frequency. Both strategies involve huge advertising cost.
It is period of market acceptance and increasing of the profit. This is a period where advertising cost is financed by sales revenue. Companies announce giveaways and other sales boosting stuff so that sales growth continue to pick up
At this stage product achieves acceptance by most of the buyer and profit level is surprisingly at its maximum. The reason being is that companies tend to reduce their advertising expenses at this stage because they see stagnant growth in sales. Reduction in advertising expenses results in more profit. Some companies revamp their products at this stage and add new features and increase advertising activity to take their products in to growth stage, but this sort of strategy is not commonly followed.
At this stage profit and sales of the specific product decline. Advertising activity is at its minimum. Whatever comes in the shape of sales is welcome.