In business school I learned about the product life cycle, but then pushed it to the back of my head once I graduated and started working in banking. I had something remind me of the product life cycle today and it even applies to banking products. Here is a graph of the product life cycle.

You can see there are four phases, 1) Introduction, 2) Growth, 3) Maturity, 4) Decline. A product can be in the growth stage for one bank, but in the maturity stage for another bank. Lets look at them a little closer.

Introduction – A new product enters the market. The sales are slow and the bank actually usually loses money from set-up cost and marketing the product to “catch on” with it’s customers.

Growth -Sales of the product start growing as customers become more aware of the product. As a product catches on and sales grow more competitors join to take a bite of the action.

Maturity – Sales growth slows as new competitors join the game and most purchasers already have the product that need it. Heavy advertising & sales expenses are needed to maintain sales and profit starts dropping off.

Decline - Sales start to slowdown. Fewer banks offer the product. A newer and better product is offered that the customers needs in the place of the current product. Promotion of the product falls off and the product dies.

Here are a few examples I can think of by looking that the products offered by my bank.

Introduction – Ready Reserve Protection. We’ve had this product a few years now, but it hasn’t been promoted until the past 6 months.

Growth – Home Equity Line of Credit. Even though this product has been around a while it is really starting to be applied for more often and creating more buzz in town.

Maturity – Auto loans have hit maturity because of indirect lenders being able to offer lower rates.

Decline – Variable rate loans on the consumer side are in decline. We haven’t done adjustable rate mortgages in years, but we still have customers that still have them.