What happens to profit margins during the maturity stage of the product life cycle?

During the maturity stage of the product life cycle, profit margins typically erode. This phase is characterized by increased competition as more competitors enter the market in response to the product's established success. As the market becomes saturated, companies often resort to price reductions, promotional strategies, or increased marketing expenditures to maintain market share. These actions can lead to reduced profit margins as the overall pricing power diminishes.

Additionally, customers may become more price-sensitive, which places further pressure on companies to lower prices in order to remain competitive. While operational efficiencies may improve as companies streamline processes, these gains are often not enough to offset the downward pressure on margins from competitive dynamics and pricing strategies. Thus, the erosion of profit margins is a defining characteristic of the maturity stage, reflecting the challenges businesses face as they strive to sustain their profitability in a crowded marketplace.