Like everything in life, there is an ending. In the Decline Stage of the product life cycle, eventually sales begin to decline as the market becomes saturated, the product becomes technologically obsolete, or customer tastes change. If the product has developed brand loyalty, the profitability may be maintained longer.
You may also discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product. Unit costs may increase with the declining production volumes and eventually no more profit can be made. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.
Every firm in the cosmetics industry has the similar product as yours. It has obtained some loyal customers thats why you have continued to produce the lipstick even though there is increase in production cost. Smoothe, another cosmetic company, is about to introduce an eye shadow-lipstick that changes color with a higher SPF and a moisturizer with Vitamin E.
There are three things you can do: 1) Continue to produce the lipstick for your loyal customers; 2) Add new features to the lipstick to rejuvenate it or 3) Sell the lipstick to another firm that will continue to produce it. What would you do?
Innovate or Die,
p.s. The product doesn’t have to die, just be aware of what is going on and move faster than your competition. Or you may sell off that product line and go into something else just as the decline starts.