When a product, usually unrevealed to the consumers, enters the market, it gets accustomed to a life cycle that carries the product from being new and valuable to being useless and out of circulation in the market eventually.
With time, all the products shift from their development and introduction stages to a maturity phase and ultimately to their decline and retirement stages. Product Life Cycle is basically an analysis of a product’s various stages during its journey from creation to discontinuation.
No brand wants their product to become “obsolete”. Therefore, it’s crucial to know your product’s stage to make better marketing and business strategies.
What is a Product Life Cycle?
The product life cycle is the brainchild of Theodore Levitt, a German economist who lived in the US and worked as a professor in the Harvard Business School.
It is the duration of time from a product first being introduced to consumers until it is removed from the market where the product’s launch, growth and sales maturity is taken into consideration.
Product Life Cycle Stages
Stages of product life cycle is usually divided into four stages, i.e., the Introduction, Growth, Maturity and Decline. Here is a detailed study of the product life cycle stages.
1. Introduction and Development
It is the stage when the product is launched into the market and requires heavy marketing activities and product promotion. The product is made available in limited outlets, and the sales take off slowly as the demand is created in due course. This stage can be time-consuming, depending on the complexity of the product. Here the primary need is to create awareness and not profits.
2. Market Growth
When a product successfully passes through the market introduction phase, it is all set to enter the growth stage of the life cycle. Growing demand for the product promotes a hike in production, making the product widely available. In this stage, sales take off as the market is well accustomed to the product. Other companies get attracted too, and as a result, profits begin to come in, stabilising the market shares.
3. Market Maturity and Saturation
The third stage is maturity, where sales growth occurs at slow rates. As the product life cycle steps into the maturity stage, the market saturation or stabilisation begins. In this stage, a number of consumers buy the product, competitors get established in the market, and products get differentiated.
4. Market Decline
In the fourth or the last stage, sales drop significantly, as consumers might change and the product might become no longer relevant or useful. The decline can also cause innovations that have superseded your existing products. In this stage, price wars continue, and several products are withdrawn from the market. Many companies move onto different ventures, while some companies survive the decline.
Benefits of Product Life Cycle
Understanding the benefits of product life cycle works is crucial to developing your business strategies. Let’s learn about it in detail.
- The product cycle allows better decision making.
- It helps in optimising marketing investments.
- The product life cycle qualifies sales efforts.
- The phenomena offer much more control over results.
- It provides better long-term strategic planning and offers better organisation and process management.
- The product life cycle provides more longevity for market products.
- It gives more suitable preparation to accept competition.
Product Life Cycle Examples
Many brands may have reached the natural end of the product life cycle, but in many cases, some products could have lasted longer with better management. Here are some examples of popular products that naturally reached the decline stage.
Following the introduction of the typewriter in the late 19th century, it became trendy as it made typing easier. But sooner, the typewriter began to go into the decline stage with the introduction of the electronic word processor followed by computers, laptops and smartphones. Though there is evidence of the availability of typewriters, the product is now at the end of its decline phase with few sales and meagre demand.
2. Video Cassette Recorders (VCRs)
VCRs at the initial stage experienced large-scale product growth. However, with the advent of DVDs and most recently with the popularity of online streaming services, VCRs have now effectively become outdated and, at present, is in a deep declining stage from which it seems complicated to recover.
3. Electric Vehicles
Electric vehicles are still in a growth stage in their product life cycle, and companies are relentlessly pushing EVs into the marketplace by continuously improving their designs and structures. Although electric vehicles are not exactly new in the market, they are still growing and have yet to reach maturity.
A product life cycle strategy means that you can rejuvenate an existing product by developing a new replacement product or alter the direction by keeping a close watch of the changing marketplace. Almost all the products have a life cycle, but the most successful ones are those who are able to maintain the maturity stage of the life cycle for a considerable period before an eventual decline.