The product life cycle is a marketing and business management term that describes a product's stages from its introduction to its withdrawal.
The product life cycle is vital because it helps product managers understand their customers' needs and develop strategies for meeting those needs.
The different stages of the product life cycle also help them determine when to introduce new products and services, what pricing strategies to employ, how much inventory to carry, how aggressively they should promote the product, and when to withdraw it from the market.
In the same vein, product lifecycle management is the practice of planning ways to support and sustain a product constantly.
What Is The Product Life Cycle?
The product life cycle is an essential concept in product development. It is the phase that a product goes through from its introduction to its eventual withdrawal. The product life cycle is vital because it helps marketers understand how the demand for their products changes over time.
Product managers and marketers can use this knowledge to decide when to create new products and stop producing old ones. The product life cycle also aids marketers in determining how to adjust their marketing approach when demand for their items shifts over time.
Understanding The Relevance of The Product Life Cycle
How a product is marketed to consumers is determined by the various stages of its life cycle. When a product is successfully introduced to the market, it should experience an increase in demand and popularity, displacing older items. As the new product gets more well-known, marketing efforts decrease, and marketing and production costs fall.
As a product matures, demand declines, and the product may be phased out of the market, maybe to be replaced with a fresher option. Failure to manage the four life cycle stages might result in a product failing to fulfill its potential and having its shelf life reduced.
What Are The Four Stages of the Product Life Cycle?
The Product Life Cycle is a model of how products may progress from introduction to maturity to decline. The stages are not necessarily linear, and they can overlap.
The product life cycle has four stages: introduction, growth, maturity, and decline. Knowing how products move through these stages will help you understand the demands on your business at different points in time and the opportunities that present themselves.
Knowing the product life cycle will make you aware of when your product or service is declining and when your market might be saturated. You can also see where your product stands in comparison with competitors.
We've broken down some strategies for each stage so you can take advantage of opportunities at each point in the product life cycle:
#1 Market Introduction Stage
The market introduction stage is the first stage of a product life cycle. It is the introductory stage in which a company introduces its product to the market. A company can do this through advertising or by introducing it to retailers.
The market introduction stage has two goals: to get consumers aware of the product and convince them that they need it. Marketers use a variety of strategies for this stage, including advertising campaigns and social media posts.
When marketers decide to introduce a new product, they need to be prepared for all eventualities. They have plans for responding if their campaign is unsuccessful or if their competitors are more successful than anticipated.
#2 Growth Stage
The growth phase is when a product begins to grow in popularity and sales. This is one of the most critical stages in a product's life cycle because it can determine whether or not the product will be successful.
The growth phase begins with a slight increase in sales, which gradually increases over time. At some point, the company will reach a point where they are selling enough products to cover production costs and then start making money from their sales.
As the product takes off, the steady growth of the market introduction and development stage gives way to a sudden upturn. At this stage, competitors may enter the market with their versions of your product - either exact copies or improved ones. As the consumer has more options, branding becomes more crucial to preserve your position in the marketplace.
#3 Maturity Stage
In the maturity phase, the product has become a dominant market force. It is now in competition with other products in the same category. The company may introduce a new product or service to maintain growth and profits.
The maturity phase of a product life cycle can be seen as the most competitive stage of all stages, as it is likely that many companies are now competing for market share. The company will need to innovate and differentiate its products from others to maintain growth and profitability.
#4 Market Decline Stage
The decline phase is the final stage of a product’s life cycle. It is also the most challenging period for a company to endure because they will have to decide whether to continue producing a product that is not selling well or discontinue it.
Companies can use various strategies to prolong the life cycle of their products. For example, they could develop new features and improvements, offer discounts on items, and change their marketing messages to attract more customers.
Developing A Product Life Cycle Strategy
A well-managed product life cycle strategy can help you extend the life of your product on the market. The price strategy starts right from the beginning of the market debut stage. 'Price skimming,' for example, is a strategy in which a high initial price is set and then dropped to skim consumer groups as the market grows. Alternatively, you can go for price penetration, which involves setting a low price to capture as much of the market as possible immediately before increasing the price once it has been established.
Understanding Our Fundamental Takeaways
- A product's life cycle is the period between its introduction to the market and its removal from the shelves.
- A product's life cycle has four stages: introduction, growth, maturity, and decline.
- From pricing and promotion through expansion and cost-cutting, the product life cycle concept aids business decision-making.
- Older, less profitable items are pushed out of the market by newer, more successful ones.
A product life cycle is the period of time that a product spends in the market, from when it was first created to when it is removed from the market.
The importance of a product life cycle can be seen in the end. As soon as a company releases a new product, they want to see how well it does and how much money it can make off of it. However, if their products are not selling well or there are no more customers for them, then the company has to stop making that product and focus on something else.
While all products have a life cycle, many of the most successful ones can stay in the mature stage for many years before succumbing to the inevitable decline.