Product development is a complicated field with new academic and industry research challenging conventional wisdoms constantly. However, one concept which has remained unchanged for many years is the product life cycle. Consisting of four distinct stages, the theory accurately charts, well, the life cycle of a product!
It may seem confusing at first glance, but it can be explained fairly easily as we prove below. If you want to learn even more about the product life cycle, your best bet it to check out the bountiful resources available at Marketbusinessnews.
Stage one of the life cycle is introduction. Once a product has been fully developed, it is ready to be released in the market. This is a massively important stage in determining success, however if a product tanks at this stage, it does not mean guaranteed, long term failure.
The introduction stage of the product life cycle is characterised by high amounts of marketing, promotion and advertising. A fine example of this in the recent launch of the PS5. In the build up to its full release, the new games console’s fresh features were exhibited at various conventions, while Sony also pursued an aggressive advertising campaign.
Generally speaking, the introduction stage of the product life cycle is the least profitable as there are many outgoing while a company tries to grow their market share.
After consumers are already purchasing goods in significant numbers, the product moves onto the Growth stage of its life cycle.
This period is characterised by increasing sales and market share. Because of this, competitors are likely to become aware of the product and attempt to introduce a competitor. This increased competition has the potential to drive prices down.
To counteract this, many companies may continue to invest heavily in marketing and advertising during the growth stage. It all depends on the individual situation.
Stage three of the product life cycle is known as maturity. At this point, sales have plateaued and competitors will have almost certainly introduced rival products that capitalise on the originals success.
During this stage, companies focus less on increasing brand awareness through marketing and instead centre their efforts on keeping sales at a steady pace. One method they may use is decreasing the price of the product. Others may opt to offer promotions, such as ‘buy one get one three’ or coupon codes.
Making their product stand out from its many competitors is also important. This is known as product differentiation.
Of course, a product cannot last forever and eventually they must enter the final stage of their life cycle. This climax is known as decline.
It is characterised by declining profits and the manufacturing process ceasing to be viable economically.
The market itself is also likely to be massively saturated. In other words, everyone who is willing to buy the product already has it. This leaves zero room for additional growth, which sets in a period of marked decline.
Eventually, after a prolonged period of decline, the product finally dies.