Product Life Cycle: Its Stages and How to Manage It
The product life cycle is the duration a product remains in the market. Ultimately, products give way to more advanced or accessible alternatives. The length of this cycle is greatly influenced by trends and technological advancements.
There is also the concept of a market's product life cycle, which encompasses not just individual products but entire categories. For example, household appliances often have a long market life, while the product life cycle for smartphones is relatively short due to constant technological competition.
Understanding a product's life cycle helps determine the most effective way to present the product at a given time and recognize the initial signs of transitioning to a new phase.
In this article, we will explore the stages of the product life cycle, how to extend it, and effective management strategies.
Stages of the product life cycle
There are 6 stages in the life of a product: product development, market introduction, sales growth, product maturity, decline, and product phase-out. To understand at which stage your product is, you need to create a graph that reflects sales volume and profitability.
Graph of product life cycle stages
The process of creating a product begins with understanding the needs of the target audience. This is where the properties of the future product are determined, production technologies are chosen, and a prototype is created. At the same time, the manufacturer conducts market analysis and economic calculations. It's essential to understand whether the product will be profitable at the current production cost, price, and demand level. Additionally, a competitive analysis should be carried out, and a marketing strategy needs to be developed.
The company starts getting its initial sales during this stage. It could involve the sale of a fully developed product or even a prototype. At this point, the product is not well-known to the target audience and is typically produced in limited quantities.
The primary goal for the manufacturer at this stage is to inform the target audience about the product through extensive marketing campaigns. To introduce the product, a method often used is "tryvertising," which offers the opportunity to try the product for free in real-life conditions.
When launching a product, one of two popular pricing strategies is typically employed. The first strategy involves starting with a high price for the product, which is then gradually reduced over time. The second strategy begins with a low price to attract consumer attention and provide them with the opportunity to try the product. After achieving a stable demand, the price can be increased.
The company actively penetrates the market, and its product becomes well-known among consumers, leading to rapid sales growth. Costs decrease, and the company's profit increases. However, with the emergence of competitors, the company must focus on its marketing strategy. Emphasis is placed on stimulating repeat sales and building a loyal customer base.
The product solidifies its stable position in the market, with consistent and high demand, and customers keep coming back to it. The company's profit becomes substantial and steady. The organization successfully sets itself apart from competitors by attracting customers with unique product offerings and characteristics. At this stage, it's important to maintain customer interest and loyalty.
Interest in the product begins to wane due to the emergence of more technologically advanced or trendy alternatives. Customers have already made their purchases and do not plan on additional ones. The market becomes saturated, and profits decline. The organization may choose to keep the most popular products on the market, reduce advertising activities, and optimize costs. Sales decline can be abrupt if the audience shifts to more trendy products or protracted, occurring over a year or several years. An example of such a situation is the transition from button phones to touchscreens.
The product is no longer in demand among the audience and is discontinued. The product may still be in use by consumers, but warranties no longer apply. Sometimes, such products can be found on the secondary market, for example, as collectibles or vintage cars.
The main curves in the product life cycle
The product life cycle consists of five main curves, each indicating specific stages of product development and providing signals for when action is needed to extend the product's life cycle. Let's take a closer look at each of these curves.
The "BOOM" curve represents a prolonged growth stage that persists without reaching maturity and decline. This type of curve is typical for products that are popular in the market and maintain a stable production process. It's often associated with market leaders in their niche.
The BOOM curvei s typical for leaders of the market
The "Plateau" curve represents rapid growth followed by a rapid decline to a level of stability. This type of curve is typical for products subject to short-term trends. It includes trendy products like Tamagotchis, fidget spinners, and so on, which can quickly become popular but then lose consumer interest.
The Plateau curve is typical for short-term trends
The "Seasonality" curve is characterized by cycles of growth and decline that alternate. This curve is typical for seasonal products like ice skates, skis, swimwear, flowers, and others. They are popular only during specific times of the year, leading to distinct stages of growth and decline at the end of each season.
The Seasonality curve is typical for seasonal products that are popular during specific times of the year
The "Scallop" curve represents a product's life cycle in marketing, demonstrating another growth in sales during the maturity stage. This type is typical for products that are continuously evolving, capable of attracting new customers or increasing product usage frequency.
The Scallop curve is typical for products that are successfully developing
The plunge curve
The plunge curve represents a product that immediately enters the decline stage after market introduction. The initial sales growth during the introduction phase is only due to trial purchases, indicating that the product failed to become unique and capture a loyal audience.
The plunge curve indicates that the product couldn't establish a loyal customer base
How to extend the product life cycle
These strategies can help extend the life cycle of a product on the market:
- Advertising. Use advertising to introduce a product to the market and attract an audience. For products already on the market, consider refreshing advertising campaigns to remind consumers of the product's presence.
- Rebranding. A failed launch might be attributed to unappealing packaging, slogans, or product names. For example, the company Old Spice only gained popularity after rebranding. Initially, it was associated with the older generation and considered somewhat dull. After rebranding, the brand turned to basketball player Isaiah Mustafa and created memorable advertising. The company emphasized provocation, successfully attracting a younger audience.
- Product line expansion. When a product reaches maturity, it often has a loyal customer base and a well-established reputation. At this stage, it's a good idea to expand the product line by adding new variations, flavors, colors, shapes, and more.
- Product modification. Make minor improvements to the product to modernize it and prevent a sales decline.
- Entering new markets. Expanding to new markets is an effective way to overcome seasonality and declining demand.
- Audience segmentation. Segmenting your audience helps identify the core segment of your product's target audience, allowing you to adjust your positioning and sales strategy accordingly.
- Price regulation. Adjust prices to either attract more customers during the growth stage (lower prices) or capitalize on the product's reputation (higher prices) to target a different audience.
To manage the Product Life Cycle (PLC), different measures can be taken depending on the specific stage of the product's life cycle.
At this stage, a business needs to conduct a thorough market analysis to identify potential customers and competitors. During this phase, it's essential to focus on:
- estimating the market share for the future product;
- analyzing the competitive landscape, including identifying competitors, assessing their scale and unique features;
- segmenting potential consumers to provide personalized marketing strategies and activities at the introduction stage;
- researching the impact of consumer habits, economic factors, and political events on the market, product manufacturing, and demand;
- conducting interviews with potential consumers to assess the product's attractiveness.
During the introduction stage, the goal of the business is to understand what customers like about the product, what advertising catches their attention, and which aspects need improvement. Collecting feedback and reviews allows for making adjustments and improvements before moving on to the growth stage.
Additionally, conducting various tests and experiments can be valuable at this stage. For example, running promotions with two different banners and analyzing which promotion attracted more customers.
During the growth stage, it is important to monitor the product's reputation and brand, as well as track its recognition and competitiveness.
During the maturity stage, you can:
- monitor brand performance metrics to understand how the product is perceived in the market and among consumers;
- keep an eye on competitors and trends to anticipate potential changes that could impact the product;
- consider rebranding and expanding the product range;
- assess the product's future prospects and perform consumer segmentation to identify new target groups.
During the decline stage, a business should analyze the reasons for the decline, review strategies, improve customer service quality, update production processes, and take other measures aimed at restoring growth.
The Product Life Cycle (PLC) is the interval from product creation to its market entry.
Analyzing the product life cycle is crucial to maintaining sales and profitability levels and staying competitive in the market. Every company goes through six stages: development, introduction, growth, maturity, decline, and market exit.
It's important to remember that the product life cycle is influenced by external changes in the economy, politics, and technological progress. To keep a product in the market longer, consider the risks at each stage.