Product Life Cycle
What is the Product Life Cycle?
The ‘Product Life Cycle’ is an essential concept in marketing. It describes the stages a product goes through from its conceptualisation through to its final removal from the market.
As consumers, we purchase millions of products each year. And just like us, these products have a life cycle. Products that have been around for a while eventually lose their popularity, while the demand for new, fresh products tends to increase almost immediately after they are launched.
From a business point of view, it is important to understand the different stages of the product life cycle and to participate in product life cycle management.
Remember that all products have a limited lifespan; time and resources need to be invested continually into new product development to ensure continued growth.
The product life cycle has four clearly defined stages, as follows:
Stages of the Cycle:
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Introduction – It’s important to recognise that launching a new product often requires significant investment. However, it doesn’t always follow that the more that is spent at this stage, the greater success the product will enjoy. Any financial outlay in research and product development must be weighed up against the likely return on investment. Coordinating an effective marketing plan will help to give the product the best chance of achieving this return.
Growth – This is the stage in which a product’s position in the market is established, product sales increase and profit margins improve. The marketing of the product is one of the main contributors to this because it drives consumer demand. And through economies of scale, you will usually see a reduction in manufacturing costs per item produced.
Maturity – It is challenging for manufacturers to achieve a lengthy phase of maturity in a product. During the introduction and growth stages, businesses will try to achieve as large a share of the market as possible. The primary focus of the maturity stage, however, is for businesses to maintain their market share in the face of a number of challenges. The market might become saturated, for example, as a result of there being fewer new customers, or there might be a large volume of manufacturers competing in the same market.
Decline – This stage is clearly demonstrated by the fall in both sales of the product and in profits. Despite the obvious challenges of this decline, there may still be opportunities for manufacturers to continue making a profit from their product.
Extending the Product Life Cycle
Businesses can try to extend their product’s life cycle using a range of different strategies, including:
- Price Reduction
- Exploring New Markets
Not all products follow the structure of the Product Life Cycle. For example, some products enjoy a rapid growth stage but quickly move into decline. Pokémon Go, for example, was introduced to a global craze, which quickly declined. On the other hand, other products, such as Netflix, have particularly long-life cycles and experience a maturity phase that lasts for many years.
Experience and knowledge help you understand a growing business – find partners who can support your growing business and who can contribute their own (proven) experience – their appointment should provide a massive return on investment.
Straight talking advice from Yorkshire Powerhouse
Now you’ve read our article on the product life cycle – have you any more questions?
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