- The different stages of the Product Life Cycle
- Benefits of the Product Life Cycle for businesses
- What is understanding your product’s journey in the market important?
- Examples of the product life cycle
What is the Product Life Cycle?The Product Life Cycle refers to analysing the journey that a product takes after it is first introduced into the market until it is withdrawn from shelves. The product life cycle must be considered by all businesses: from new online businesses to the global tech giants. Firms use PLC analysis to determine the behaviour of their product at all stages of the product journey to assess what actions need to be taken to meet market demand. No company wants its product to become “obsolete” and reach the end of its life cycle. Hence, it’s essential to understand the journey your product undertakes to make more effective marketing decisions. The concept was conceived by German-American Economist Theodore Levitt, a monumental figure in the marketing field. Mr Levitt proposed a five-stage model about the characteristics of product change during its life cycle, which he termed the Product Life Cycle. The five stages he developed all explore specific issues and features of a product’s journey in the market to help marketers and administrators answer questions such as: When is the right time to place my product on the market? When should I discontinue a product? What needs to be improved? What’s interesting about the product? These are the types of questions that the Product Life Cycle analysis can help you answer.
What are the five stages of the Product Life Cycle?If you’re ready to grow and mature in the marketplace, continue reading to learn more about the different stages of the product life cycle and how you can exploit them to achieve your marketing goals.
Stage One: Introduction of the Product Life CycleBefore we get into stage one, we should note that the PLC can be categorised into six stages; the one not being heavily discussed in this article is the “development stage”, which crosses over into the “introduction stage”. The introduction stage refers to the point at which the product is first introduced into the market. Before releasing your product into the market, undertake extensive research to boost your chances of success – develop prototypes, test the effectiveness of the finished product and develop a strategy for launch. While this stage tends to be naturally integrated, the success of a potential product will rely on any planning that preceded its introduction. As sales tend to be low when a product is first introduced into the market, businesses should prioritise advertising at this stage of the PLC. Create some hype around your product, educate your audience on how it could be helpful to them and employ marketing strategies that encourage interaction. Big brands tend to use TV marketing for advertising their products. However, the steps to conversion have become more complex due to increasing sources of information available to users. While TV ads are successful due to the sheer number of people you can reach, marketers could have just as much, if not more, success by marketing across multiple channels, such as social media sites, email marketing services, websites and direct mail. It’s not uncommon to suffer a loss in profit at this stage as it demands the most financial investment from the company. That’s why it’s essential to thoroughly research your target audience and gain insight into your brand’s customer persona to limit any potential headwinds. At this stage on the PLC, businesses can get a first sense of how customers interact with their product and indicate how successful or unsuccessful it may be moving forward. The principal goal of the introduction stage is to generate interest around your product to build demand.
Stage Two: Growth in the Product Life CycleBy the growth stage, consumers should have accepted your product, and its popularity should be driving sales. The main characteristics of the growth stage are:
- Scalable sales
- Maintenance of costs invested in marketing
Stage Three: Maturity phase of the Product Life CycleThe maturity stage refers to when sales have hit their peak and begin to stabilise or even stop – indicating a highly saturated market. At this stage, companies can begin to lower their prices to remain competitive and maintain their market share. However, firms should also find the time to learn from the mistakes they made during the introduction and growth stages to become more efficient. The challenge during this stage is to maintain solid results while fending off the competition and managing lower demand. Companies often think of ways to innovate or enhance their products to maintain or increase market share. However, it’s important to understand that your brand will be subject to market instabilities and behavioural changes, so you should be concerned with boosting visibility at this stage.
Stage Four: Saturation in the Product Life CycleAs competitors are now occupying a significant portion of the market, you’ll need to focus on differentiating your product from the competition. How can you improve your product’s features, boost brand awareness and customer service so that you become the brand of preference? A highly saturated market could result in a decline in sales. Innovate your product or make customer service a significant part of your marketing efforts to counteract this possibility.
Stage Five: Decline in the Product Life CycleThe decline stage is inevitable for every company. No matter how much you invest into the maturity and saturation stages of the PLC, changes in consumer behaviour cause sales to drop. That is true even for well-known brands such as Coca Cola and Apple, which have to produce new products or harvest them by reducing the product’s price and the associated marketing costs. For example, Apple’s iPod has entered the decline stage, with former iPod users no longer using the product now that they can stream and listen to music on their phones. It’s important to recognise when your product has entered the decline stage, as investing heavily in the market to try and restore its performance could be financially damaging.
Why is understanding the Product Life Cycle important?Now that we’ve delved into each stage of the PLC, you should understand why it’s important to apply this model to your business. The main advantages and benefits of adhering to PLC principles are:
- Aids in planning appropriate marketing strategies
- Optimise marketing investments
- Implement strategies to prolong a product’s profitability
- Easily track and evaluate decisions made for each stage
- Greater control over results
- More appropriate preparation to face competition
- Assign staff to specific stages based on their areas of competency