What Is Product Life Cycle ?
The product life cycle is the process that a product must go through from the time it first enters the market until it goes down or is taken off. The life cycle has four stages–introduction, growth, maturity, and decline.
Although some products might be in a longer maturing state for a while, all products eventually fade out from the market due to various factors, including increased competition, lower sales, and decreased demand.
Businesses use PLC analysis (the procedure of analyzing the lifecycle of their products) to devise strategies to ensure their product’s lifespan or alter to meet market demands or change to meet the demands of evolving technology.
When to Use the Product Life Cycle
For instance, a new product is promoted differently than an established and well-established product. In the case of the first, marketing campaigns will concentrate on increasing awareness, while those for the latter will concentrate on maintaining awareness.
Businesses can also make use of the lifecycle of a product to accomplish the following goals:
Establish authority in the market. For example, if your product was recently launched and is new on the marketplace, you may market it as a fresh and improved version of any existing item. On the other hand, if your product is already established and has been in use for a long time, you can be sure of its long history of usage for branding.
Choose a pricing strategy. Based on the lifecycle stage that your product is in, the decision will be made on how to price your product. For example, the new product might be priced lower to draw customers, while products in the growth phase can have a higher price.
Develop a marketing strategy. Your product’s life cycle stage will determine the method to follow. In addition, your audience’s maturity and knowledge influence the content you post on your website and social media accounts.
Respond before the product demand decrease. There’s no worse experience than watching your product become outdated or displaced by a rival product. However, if you keep the lifecycle stages in mind, you can devise an approach to keep your product ahead of the pack until you’ve reached the stages of saturation and decline.
What are the stages of the product life cycle
1. Product development
In the stage of product development, it could be a concept or a prototype. In this stage, profit and competition are nearly impossible, and investments and development expenses could be substantial. Therefore, settling on a minimally viable solution (MVP) early and as early as possible is recommended.
2. Introduction Stage
When a new product is launched, the sales are typically slow and will only increase gradually. The company’s profits are minimal (if there are any) because the product is still new and has not been tested. The introduction phase requires substantial marketing efforts since consumers may not be willing or unable to test the product. There aren’t any benefits to the economics of scale because the production capacity is not maximized.
The primary goal of the beginning stage is to get acceptance of the product and to encourage testing of the product by customers. Marketing efforts should concentrate on the base of customers of the innovators – those who are most likely to purchase the latest product. There are two pricing strategies during the initial stage of introduction:
- Skimming price charges an initial high cost and then gradually reduces (“skimming”) price as the market expands.
- Price permeation establishes the lowest price that allows you to get into the market and gain market share before raising prices to match the market’s growth.
3. Growth Phase of the Product Life Cycle
The next stage is called the expansion stage. At this point, your product sales should be increasing, and your product should become an established product in the marketplace.
Your success will draw competition. The rate at that competitor’s will be based on the market you’ve entered. If the market is overcrowded, competition will be quick to react. If your market is not crowded, However, you might be able to grow with no competition.
In the end, you’ll need to continue investing in marketing to ensure that you continue to grow.
Although you see an increase in sales, many businesses fall short at this point, and their sales fall, even though they’ve never had the luxury of maturing.
If you have a product in the expansion phase, it’s crucial to devise a plan to ensure it stays there as competitors emerge to gain its attention.
4. Maturity stage of the product life cycle
The maturation stage usually lasts longer, and most products are in this phase of their lives. It is a phase of market saturation. Hence, the slowing of sales growth while profits increase or decline.
Managing a mature product and selecting the appropriate strategies for marketing is among the most difficult.
If the growth rate in sales starts to slow, It is a sign that the product is at the phase of maturation.
The competition is growing due to the excessive supply of the product. Therefore, new markets are being sought after.
Businesses are forced to cut prices and raise costs for promotion. The result is that profits decrease.
The prices are reduced, and the objective is to build brand loyalty and enter market opportunities for the business in which the product is brand new. Promotional activities increase.
5. Decline Phase of the Product Life Cycle
At some point, even the most well-known products lose money, and their popularity decreases. It’s fascinating to imagine the demise of a business such as the iPhone, a product that has been a leader over the years and has had a lot of financial growth.
Even iPhone may cease to exist one day. Perhaps not the business maybe, but the principal product. It could take 10-20 years and even forty years. It’s difficult to know. However, every product comes to the point where it has reached the end of its cycle.
If this happens, the company has to acknowledge the painful reality revealed by the results indicators and decide on one of the choices. You may decide to stop selling the product, discover an alternative purpose for it, sell the product or the business or even tap into an entirely new market by launching an entirely new product.
Be sure to weigh the benefits and costs of each choice. There’s no reason to be ashamed of getting rid of a product, especially in companies already investing in new, exciting products that are due to be launched.
Product life cycle examples in current market
Once you understand the four phases of a life cycle for a product, Let us help you clarify your concept with some examples.
Product at Introduction Stage
Autonomous/ Driverless Vehicles AI-powered vehicles that do not require a driver are at the beginning of their introduction. They’re not yet alongside other vehicles. However, the consumers are talking about the product. Marketers are creating the market for this particular product via ads.
Smart Homes – AI-powered homes that are completely automated aren’t something that is commonplace. We are, however, being taught that such a home will become a real thing within the next few years. People are getting prepared mentally to be a part of this revolutionary product. Therefore, smart homes are currently in the beginning stages of introduction.
Product at Growth Stage
Internet The internet as a service, could be described as being at a growth stage. It’s been launched well and is widely known by everyone who has heard of it. Internet Service Providers strive to get into the market and increase their customer base as far as possible. There is a huge demand, and the number of customers is growing quickly.
Product at Maturity Stage
Today, the majority of people have smartphones in their possession. The smartphone has surpassed the beginning and growing stages. The companies that sell smartphones are looking to offer affordable prices, develop distinct products, and preserve their brand’s identity. The decline phase could be far away, but this product has been a considerable distance from the maturity phase.
Product at Decline Stage
Typewriters were introduced during the late 19th century; the typewriter was an original product. They passed through the initial and growth stages and gained popularity on the market after the advent of technology such as electronic word processors and computers. Typewriters needed to endure a phase of decline. They are now obsolete.
Big Screen Computers – The computers that ended the use of typewriters were not the same as the flat-screen laptops and desktops we have nowadays. The older big-screen computers went through the four phases of a product’s lifecycle, but the production and sales of these computers have slowed. There isn’t a market for large-screen computers.
How do you determine the level your products are at
Each product goes through stages at a distinct rate. There’s no set-and-forget guideline to determine how long a product will stay at any stage. Every stage can be measured in years or days. Understanding each stage’s traits can help make it simpler to go back and figure out what stage you were into to determine the next step.
Knowing what’s to come will help you adjust your strategy to increase the potential value of your products or to prevent it from entering decline or maturity.
Use tools for market research to evaluate growth rate or sales trends, price, and competition to determine your current level.
How can you extend your product’s lifespan?
There are three strategies to control the life of a product cycle.
Modification of the product
Strategies are employed to make modifications that alter the product’s characteristics like quality, appearance, etc. Modifications could be stylish, structural, and functional. The product’s design is influenced by consumers’ evolving preferences and therefore extends their lifespan.
Modifications of the market
It is more popular by introducing new applications or identifying new users. Finding new ways to utilize the product extends the product’s life span.
Repositioning
Making a difference within the consumer’s consciousness by using the components in the market mix. Repositioning is a way of responding to competitors’ positions and establishing the market of a new type, recognizing the emergence of a new trend, or altering the value offered to the customer.
E.g., Danone 1984 launched Jop liquid yogurt; however, the product was not a success because there was no interest in a product like this. It was in 1988 that Danone revamped the positioning of Jop as a healthy drink to aid in eating, and it saw an increase in sales.
Analyzing shifts in consumer preferences could lead to the repositioning of products. For instance, tanning during the summer months was a tradition that led to a surge in sales of oil for the beach. The increasing fear of skin cancer during summer has resulted in the shifting of oil from the beach as a way to guard against skin cancer.
In the event of repositioning the brand, the firm might decide to alter what the item is worth by either increasing or reducing the value. To increase the value, it is necessary to add new value by making further improvements or by using better quality materials.
Conclusion
Every single thing on the planet has a beginning, middle, and end. There is no product that lasts forever. However, product management plays an essential part in the speed at which each product progresses through its life phases.
A well-managed business can make the distinction between a faded trend or a long period’s worth of profit. Knowing the product’s current phase and preparing accordingly will ensure that every chance is maximized.
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