3. The maturity stage.

• This is usually the longest stage in the life cycle and can last for many decades.
• Typically, in this stage, approximately 80% of the market has been saturated.
• The growth rate slows and stabilizes at a level that is sustainable over a long period of time, due to competition and shrinking profit margins.
• Firms tend to expand into additional market niches by developing add-ons for the original product, which helps to sustain a higher growth rate.
• As growth slows, the need to expand production facilities declines, which reduces the need for capital expenditures, improving the firm's overall financial flexibility.
• Excess cash that previously has been reinvested into expansion is now available to reduce corporate debt or to be paid as dividends to investors.

4. The declining or harvesting stage.

• The real growth rate tends to decline to a level that is less than that of the overall economy.
• Substitute products and technologies tend to make the industry's product obsolete.
• Firms tend to focus on keeping costs down, in order to maintain, or slow the decline in profit margins and profits.
• Firms may actually sell production assets that are no longer required.
• Dividends paid to investors tend to be large.
• The firms in this stage are often referred to as cash cows.
• However, it is possible for firms and industries to perpetuate themselves by becoming more dynamic and by adding new products or new product lines.