What happens to cash flow during the maturity stage of the product life cycle?

During the maturity stage of the product life cycle, cash flow typically improves significantly due to several key factors. At this stage, a product has established itself in the market, resulting in a stable customer base and consistent sales. Since the initial costs of developing and marketing the product are already incurred, companies can enjoy healthier profit margins from ongoing sales.

Furthermore, as competition reaches its peak, businesses will often focus on optimizing operations, reducing costs, and enhancing efficiencies in production and distribution, which can lead to increased profitability. Marketing efforts may shift from acquisition to retention strategies, which can also contribute positively to cash flow as they tend to cost less than acquiring new customers.

In essence, the combination of stable sales, improved operational efficiencies, and controlled marketing expenses typically results in significant cash flow improvement during the maturity stage.