What is A Product Life Cycle?
When a product enters the market, it must go through several stages in its life cycle. Some of these stages are out of your control, but knowing what to expect will help you plan your marketing strategies accordingly.
The product life cycle covers four main stages: introduction, growth, maturity and decline. Getting familiar with these stages can help you understand your business better and make sound strategic decisions.
What is a Product Life Cycle?
The Product Life Cycle (PLC) is a concept used in marketing and product management to describe the stages a product goes through from its introduction to the market until its eventual decline and discontinuation. It is a helpful framework for understanding a product’s sales and profitability trajectory. The Product Life Cycle consists of four main stages:
Effective product management involves recognising which stage a product is in and implementing appropriate strategies. For example, during the introduction stage, the focus is on creating awareness and building a customer base. In the maturity stage, companies may focus on customer retention and cost efficiency. During the decline stage, they may decide whether to phase out the product or explore niche markets.
This is the phase where a new product is launched into the market. It often involves heavy marketing and promotion to build awareness and attract initial customers.
In this phase, the product experiences a rapid increase in sales as more customers adopt it. Profits tend to rise during this stage as well.
The maturity stage is characterized by a plateau in sales growth. The product has typically gained wide market acceptance, and competition may become more intense. Companies often focus on product differentiation and cost control during this phase.
Sales and profits start to decline during this stage. This can be due to changes in customer preferences, market saturation, or the introduction of newer and more advanced products. Companies may choose to discontinue the product or maintain it for loyal customers.
Product Life Cycle Introduction
Everything has a shelf life, whether a car, smartphone, or exercise equipment. And while a product may enter the market as the next big thing, it’s likely to be eclipsed by new technological advancements. This process is constant, so every business needs to understand how their products move through the product life cycle.
The first step in a product’s life cycle is introduction, beginning with research and design. You can begin marketing your product once you’ve passed these early stages. During this stage, you’ll use targeted paid advertising and mass-market tactics to grow awareness of your product. You’ll also develop a launch event that drives excitement among your audience. Apple’s product launches are known for this, with lines forming overnight and stock being limited.
Once your product moves into the growth phase, it’s gaining popularity as more consumers discover it and demand increases. This is when you can start seeing recurring revenue from your customers. It would help if you experimented with additional features or other ways to drive sales during this phase.
As your product enters the maturity stage, demand will start to decline. At this point, competitors will start to enter the market with their versions of your product — either direct copies or with some improvements. At this point, you should consider implementing a loyalty or rewards program to encourage repeat purchases.
Once your product has passed the initial development and testing stages, it should move quickly into the growth phase. This is where your company’s marketing efforts should be focused on increasing market share, driving sales and establishing brand presence. During this stage, your competitors will likely respond to your success by introducing similar products to the market, which could eventually cause you to slow down or even stop your growth strategy.
When your product reaches the mature stage, it’s essential to have an alternative marketing strategy in place. You will also likely experience increased competition and lower prices in the marketplace. If you adapt your product in response to changing consumer needs or the introduction of innovations, you can expect your product to continue and become obsolete.
Many companies will choose to manage this phase by keeping their product in the spotlight with periodic updates and redesigns to keep consumers interested. Some will also launch complementary products to support the original, an excellent way to extend your market reach and keep sales up. The televisual entertainment industry is an excellent example; VCRs are in the decline phase, flat screen smart TVs are in the growth phase, and on-demand programming is replacing traditional cable and satellite services.
Once a product passes through the market growth phase, it enters the mature stage. This is when demand slows, but the product is established and a favourite with consumers. Marketing at this stage should maintain customer loyalty and encourage repeat purchases. This is also when competitors begin to launch new versions of the product.
This is where good product life cycle management can help. By tweaking the original product to make it feel fresh, companies can keep sales going and stave off entering the decline stage. This is done with video game consoles; for example, each generation is released to the public with incremental changes such as a better screen, more storage or faster processor.
It is also a good idea to tap into adjacent markets with your established products at this stage. By doing this, you can increase your market penetration and reduce the risk of your product reaching its decline stage. For example, by partnering with GoCardless, you can automate payments from your customers, making it easier for them to pay. This can free up your team to focus on other aspects of the business, such as customer service or finding new ways to make your product more attractive. TWI (Industrial Membership based organisation) has used its expertise to support the industry and improve safety, quality and efficiency in materials joining technology.
As your product reaches the maturity stage, sales will begin to decline. This is due to market saturation, as many consumers have already purchased your product, and competition has increased, requiring more investment in branding, price and product differentiation. Retailers may also start deferring marketing support for your product, further reducing demand.
As the product reaches this phase, it becomes increasingly important to identify customer segments and deliver targeted, personalised messaging. This will help you drive a higher return on your marketing spend. Your marketing mix must be reviewed and adjusted for the decline stage, including developing new channels and strategies.
A strong understanding of a product life cycle is critical to successful marketing. It helps organisations and leaders make core decisions around pricing, ideal audience selection, advertising strategy, package design and more. This information allows businesses to maximise sales and profits as products move through each stage.
Understanding the Product Life Cycle helps businesses make informed decisions about product development, marketing, pricing, and resource allocation to maximise a product’s profitability and longevity in the market.
Product Life Cycle – Other useful links from our Knowledge Centre:
How to Manage Business Finances Correctly and Efficiently
Unlocking Business Potential: Strategies for Long-term Success
The Impact of Sustainability on Ecommerce Businesses
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