Growth Stage - Definition & Importance

Published in Marketing and Strategy Terms by MBA Skool Team

What is Growth Stage?

Growth Stage is the second stage in product life cycle (PLC). In the growth stage, the products growth, sales, revenue and profits are on the rise. In the growth stage, the company’s emphasis is not only on recovering the costs incurred in the introduction phase but also on generating profits.


The growth stage comes after the introduction stage of the product life cycle (PLC) where the emphasis is on developing the product and the company incurs cost on it. Growth stage is followed by the maturity stage and then the decline stage.


Importance of Growth Stage

The company wants to attain maximum share in the market in the growth stage and wants to attain the targets it has forecasted. After the high investments and slow sales in the first stage, the growth stage is where the company focuses on driving sales aggressively. Since the customers are aware of the new product, the company wants to increase its market share as compared to competition. The growth stage is when a company has to fight for business with an existing competitor, and ensure they have significant revenue share.

The below diagram shows the product life cycle of a product:

Growth Stage

Growth Stage Strategy

The company in this stage grows to a point and then the sales, revenue and the profits generated are saturated. The stage which comes after this stage is that of maturity stage. The company is faced with many challenges in this stage. The company is faced with competition from a lot of existing firms to restrict the entry of product in the market.

Another challenge posed by the company is that the competitors may reduce their price so that in the growth stage of the company the product may become unfeasible. Because of this the product may not generate profits for the company making it discontinue the product. A company needs to see to it that all these challenges are eliminated by selecting the appropriate strategy and proactively approaching towards the problems. The company has an early bird advantage since it knows when and where the problems would arise.

Hence, this concludes the definition of Growth Stage along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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