Thus, there is great emphasis on reducing the cost of a mature product. At some point the product enters the decline stage. Sales decrease because a new and better product has entered the market to fulfill the same societal need.
During the product introduction phase, where the volume of production is modest, expensive to operate but flexible manufacturing processes are used and product cost is high. As we move into the period of product market growth, more automated, higher-volume manufacturing processes can be justified to reduce the unit cost. In the product maturity stage, emphasis is on prolonging the life of the product by modest product improvement and significant reduction in unit cost. This might result in outsourcing to a lower-labor-cost location.
If we look more closely at the product life cycle, we will see that the cycle is made up of many individual processes. In this case the cycle has been divided into the premarket and market phases. The former extends back to the product concept and includes the research and development and marketing studies needed to bring the product to the market phase. This is essentially the product development phase. The investment (negative profits) needed to create the product is shown along with the profit. The numbers along the profit versus time curve correspond to the processes in the product life cycle. Note that if the product development process is terminated prior to entering the market, the company must absorb the PDP costs.
Product life Cycle of Engineering Design and Manufacturing