In business, the stages known as "recession" and "decline" actually refer to two very different cycles. The business life cycle, which measures the ebb and flow of the overall state of the economy, involves stages known as prosperity, recession, depression and recovery. The product life cycle, which measures a product's popularity in society, is made up of development, introduction, growth, maturity and decline stages.
Recession
The recession stage refers to a portion of the business life cycle where prosperity ends. The recession stage of the business life cycle is defined as an economic contraction, where buying patterns become more conservative. The recession stage is evidenced by consumers who concentrate on purchasing basic, functional products, as well as businesses who slow production and reduce inventories.
Recession Indications
The recession phase precedes the depression phase, and is marked by curtailed investment, employment decline and decline in product and service demand. Another sign of the recession stage is credit contraction and increased competition. During a recessive phase, taxation may also increase, as governments search for ways to boost the economy.
Decline
The decline stage refers to a section of the product life cycle, where after a product's initial introduction, the market becomes saturated and interest in and sales of the product decline. A decline in the product life cycle can be triggered by technological evolution, or changing cultural tastes and fashions.
Decline Indications
The decline stage follows the maturity stage of a product, and signals the end to major profitability with the products. During this phase, companies can maintain the product and reduce its price, market the product as-is until the market dries up or discontinue the product as profits decrease. Many times, companies will attempt to modify the decline stage by rejuvenating existing brands, lowering prices and extending promotions to increase brand image and loyalty.
Tags: life cycle, recession stage, business life cycle, decline stage, product life, product life cycle