What is the Product Life Cycle?

Product Life Cycle refers to the journey of a product from a product first being successfully developed and introduced in the market. Then, as the demand faded, the product eventually wipes out from the market. Every product has a market or shelf life. How long it stays in the market allows the managers and marketer to develop its promotional strategy, cost-cutting strategy, and price fluctuation, advertising schedules, and redesigning packing to extend its lifespan.

When a product is successfully introduced to the market, it experiences an increase in demand and popularity, displacing older products. Marketing efforts decrease, and marketing and production costs decrease as the new product gains popularity. As a product matures, its demand declines, and it starts being withdrawn from the market, furthermore it could be replaced with new alternatives.

Stages of Product Life cycle

In terms of marketing, there are typically five stages of products: development, introduction, growth, maturity, and decline. The product life cycle stages help make decisions and determine the strategies on advertising, product prices, and packaging.

Development

The development stage is one of the most crucial and time-consuming steps for businesses. A new product idea is generated and is associated with the needs and wants of the customers, determining the demand of the product and analyzing the competitor’s products to make their product stand out. Companies spend tons of money on the development of a successful product. In this stage, products do not bring any revenue because they are in the improvement phase. The organizations have yet to finalize the product; they carry out the test, work on the proposals, and make the necessary changes to increase the effectiveness of a product. This stage can continue for a long time, depends upon the complexity of a product. Product development is a sensitive stage, and in order to avoid any setbacks before offering a product in the market, companies utilize every resource in the development phase.

Introduction

After the successful development of the product, the next stage is to offer the product to potential customers. When the product is released in the market, it takes high-stakes time in the product’s life cycle. It doesn’t determine the success or failure of a product, but it’s common to get a negative result in the beginning. The key to outcome these barriers is to plan how to promote the product in the market, what marketing strategies to follow, how to create the product’s popularity among customers, and how to reach out to potential customers. Awareness and demand of the product in the introduction phase are low and grow slowly by the marketing team’s efforts. This stage also requires lots of investment in the marketing and advertisement of the product to educate the consumers about the benefits of a product. The company’s main focus is to build awareness, not profits. The right marketing strategy will be beneficial for the company’s sales in the long run.

Growth

The hard work is now started to show the result. In this stage, consumers begin to purchase the product. Products demand, awareness, preference start increasing rapidly as well as the market share. Products market begins to expand, and new competition starts to develop. The products are widely available in the market, and the companies observe the increase in sale volumes. Consumers develop a sense of reliability towards a product. As the market grows, more competition pulls down prices, making certain products more competitive. Sales, on the other hand, often increase in volume and generate revenue. The goal of marketing at this stage is to increase the product’s market share. This stage also lasts for a longer time and continues to grow till the product reaches its maturity phase.

Maturity

Maturity is a peak point in a product lifecycle’s graph. This stage is the most profitable, as the sales are steady and the product has a broad market share. The cost of production and frequent advertisement decline, and products sale mostly rely on the brand image and word of mouth. At this stage the product is established and stabilized. However, in this phase, the promotional strategy is more focused on how better and mature your product is better than your competitors. The companies face difficulty with the arrival of new and better products alternatives; therefore, they focus on giving better discounts and sales to attract customers to stick to their brand. Companies also examine any product changes or production process upgrades that could provide them a competitive advantage.

Decline

Generating massive profit and gaining colossal market share in the maturity stage, the product moves toward its final stage. The declining phase is the difficult phase, but somehow, it’s still profitable for the companies. Marketers try to prolong the product’s life duration by offering a discount and promoting the product on different platforms; as there is less demand for the products and sales volumes significantly decrease due to consumers’ behavior changes. As a result, the company’s product continues to lose market share, and revenues start declining due to increased competition. In the end, the product no longer generates profit and is replaced by its substitute product, and the company simply removes the product from the market.