The product life cycle is a set of various stages through which every product has to go. When a product is first introduced in the market, people will take some time to adopt it. After adoption, demand increase to a lifetime high. After watching that a product is earning premium profits, competitors start producing similar products. As competition increases, profitability decreases. Soon there alternative and better products are introduced in the market.
Let's take an example of iPod.
Stages
Introduction
Apple invested lots of funds to make this product. When iPod was launched, it didn't get market attention. It was widely advertised, so profit volume was low.
Growth
After some time iPod became popular and as there was no alternative to this portable music player, people were ready buy it for a premium price. Demand was huge while Apple was charging premium price.
Maturity
Now many other Chinese producer brought cheap portable music players which were available for fraction of dollars. Now many customers switched to these cheap portable music players. Now Apple decreased the price of iPod. So the demand of iPods stabilized and profitability decreased.
Product extension
Apple brought touch screen iPod, demand and profitability stabilized.
Decline
Now people have smartphones and quality of music in smartphones is really good. People don't need any portable music players. There are few people who still prefer a portable music player because they love "iPod" brand.
Now profit is negligible and demand goes down to all times low.
Death of product
As Apple starting incurring loses on this product and this product leads to working capital and floor space blockage, Apple discontinued this product. Now Apple is concentrating more on iPhone, iPads and Macs.
