What is Product Life Cycle: Stages, Importance, & Benefits

Keeping up with time is necessary. Constantly upgrading to keep up with competition is necessary. Product lifecycle is a process that indicates the various stages that a product goes through and how it ultimately reaches its end. Ever wondered why understanding the life cycle of a product is important? 

Understanding the lifecycle of a specific product helps you analyse why specific products are popular and why others are not. It helps you understand why sales of a specific product go down. They act as a roadmap for understanding how you can tweak your strategies to enhance your products to increase their lifespan. 

It is all about staying relevant. In this article, everything about the product life cycle is detailed to help you understand its stages, its importance, its constraints and benefits, and more. 

Let us dig a little deeper.

What is Product Life Cycle

Product lifecycle is the timeline of a specific product. The product life cycle is analysed from the time a product is introduced to the consumer market until it is removed from the shelves. It is a concept designed by management and marketing experts to factor in checking when it is the right time to enhance marketing strategies, minimise product prices, tap into different markets, and redesign the packaging. The process of strategising methods to constantly support and maintain a product is called product life cycle management. 

A business tends to incur higher marketing prices while introducing a product in any market and also experiences greater sales when product adoption grows. Upon maturity of a product, the sales stabilise and peak based on the competition. The life cycle of that product helps a business make informed decisions that impact the overall profit margins of the business. 

How Does Product Life Cycle Operate?

The life cycle of a product can be segregated into four distinct stages, namely:

• Introduction
• Growth
• Maturity
• Decline

Every product begins with a simple idea through creativity, imagination, and innovation. However, an idea is confined until it undergoes research and development in modern businesses. Unless found feasible and profitable, the ideas are not turned into actions. Feasible and profitable ideas are then produced, marketed, and rolled out for sale. Some product lifecycle models are inclusive of a product development stage that helps enhance the idea before selling it to the buyers. 

Product Life Cycle: Stages

Let us understand the four different stages of the product life cycle in detail:

• The Introduction Stage: 

This is the initial phase of any product. It is the very first time when a product is launched into the market for consumers to purchase. A company must include a sizable investment in marketing the product well. The strategy used should be consumer-centric to create a demand for the product. In this stage, there often tends to be almost zero competition for a product as the competitors now get a glimpse at the new offering. Businesses, however, still might experience negative financials during this stage. This is because the sales tend to be lower and the promotional prices might also drive low consumer engagement. This is when the sales strategy must be evaluated and optimised.

• The Growth Stage: 

When a product gains good traction in the market, it proceeds to the next phase called the growth phase. It is characterised by increasing demand, enhanced production quantities, and expansion in its availability. The time spent in the introduction phase before a business witnesses substantial growth will depend on the type of product and the acceptance it gains from the market.

The growth phase makes a product gain popularity and gives it the right recognition. Any business can choose to invest largely in marketing if the product is subjected to intense competition. The business can also choose to refine its offerings by enhancing functionality and features based on the feedback gained. 

The growth phase results in enhanced sales and greater revenue. With greater competition, the chance of needing to minimise the pricing will be inevitable.

• The Maturity Stage: 

The third stage in the product life cycle is the maturity stage. This stage yields profits and the production and marketing costs decline. When the market reaches its saturation, the competition will be higher and profits begin to shrink. Based on the type of product, a company can choose to innovate or even enhance the same one to capture the attention of its customers. 

The maturity stage has the highest competition for a product. The level of sales must stabilise and the business must aim to have their products exist in this stage for as much time as possible. 

• The Declination Stage: 

When a product faces elevated competition as other businesses emulate its success, the product might lose its market share and begin the decline. The availability of alternatives in the market causes drops in sales and market saturation, and the business can choose to not make any additional efforts to market the product.

When a product is about to be retired, the business will stop generating support and will completely phase out of the market. The company can choose to revamp the product and replace the older model. It can change the course of the product’s life cycle. 

Factors Determining a Product’s Life Cycle

Numerous factors can impact the performance of a product and also its position within its life cycle. In general, market adoption, ease of competitive entry, the innovation rate of the industry, and changes in consumer trends can affect the life cycle of a product largely. In case it is easier for competitors to enter your domain easily, the chances of market saturation are high. Thus, products have a shorter lifespan in these cases. Other factors influencing a product’s life cycle include technological change, economic conditions, market adoption, competitor accessibility, and risk management capacity. 

How Does Product Life Cycle Benefit a Business?

The product life cycle enables marketers and business developers to understand how every product’s portfolio and the brand sit with a company’s portfolio. It allows the business to internally transition resources to specific products of those product positioning within the life cycle of the product. 

For instance, a business can choose to reallocate market staff time to other products entering the introduction and growth stages. Moreover, they must also invest in labour and consumer service resources when a product matures. The life cycle of the product organically tends to make a positive impact on economic growth because it enhances innovation and demotes supporting outdated products. 

Constraints in Applying the Product Life Cycle

Although the life cycle helps in analysing and enhancing the business decision process, the product life cycle is not relevant to every industry. It also does not work consistently amongst the entire portfolio of products. 

The product life cycle might be artificial in industries with trademark or legal restrictions. Another rather unfortunate adverse effect of the life cycle of a product is prospectively planned decline. A company might get tempted to replace a product when it reaches the maturity phase. 

The Perfect Product Life Cycle Strategy

Based on the stage at which a product is in, a company can adopt different strategies along its life cycle. For instance, a company is more likely to suffer heavy marketing research and development costs during the initial stages. As the product gains more traction and grows, companies reallocate the funds to the quality improvement of the product. They also focus on creating demand for the product in other markets. Businesses also strategically approach divesting from product lines inclusive of the sale of divisions and discontinuation of goods. 

Here are some common marketing strategies for the growth stage:

• Improve product quality
• Add new features or services
• Adapt the product for new market segments
• Maintain a pricing model that keeps the demand and profits high
• Adopt new distribution channels
• Switch up marketing messages
• Skim product pricing

Marketing Strategies to Implement at Different Stages of Product Life Cycle

Here are different marketing strategies that can be used during different stages of the product life cycle:

• Marketing strategy during the development phase: Creating a demand for your product in the market is crucial during the introduction phase. You can create a demand for your product by securing an endorsement for your product through established voices in your domain. You can even consider a limited release of the product to a selective group of consumers to create exclusivity and urgency. 
• Marketing strategy for the introduction phase: After launching the product, inbound and content marketing strategies can be used. You can also choose to collaborate with influencers and experts to promote your products. Promoting your products on different platforms can help you gain credibility and reach a larger target. Understanding your market is crucial at this stage. Thorough research will help you succeed.
• Marketing strategy for the growth phase: Here’s where the marketing strategy shifts. Now the focus will be transferred to establishing the brand rather than getting consumers to buy the products. By allocating resources toward digital marketing and using SEO and other content marketing strategies, you can enhance your brand reputation. Moreover, you can also leverage data analytics to reach your target.
• Marketing strategy for the maturity phase: When your market is saturated, brand awareness becomes the supreme focus. You must pick out specific segments within your market and customise marketing efforts to appeal to this section based on their needs. By refining your messaging and positioning to vibe with these segments, you will gain an effective entrance into the market again. As the competition is high during this stage, it is critical to optimise all strategies to showcase the superiority of your services and products. 
• Marketing strategy for the decline phase: Sometimes the decline phase is inevitable. Here it becomes vital for you to emphasise your solution to successfully come out of this stage. You can extend the life cycle through promotions, new marketing gimmicks, reduced prices, and more. This way of pivoting might not be successful all the time and the decline will become inevitable.

What is the International Product Life Cycle?

The international product life cycle (IPL) is a process where a product goes through international markets. When products begin to mature, businesses will want to avoid the decline stage. Hence, they will typically begin to explore other markets worldwide. The life cycle in IPL is very similar to the normal product life cycle. The only difference will be in the development stage as local customs and regulations might affect the time taken for the product to reach a global marketplace. 

Brands That Effectively Managed Product Life Cycle

Here are some brands that have effectively managed product life cycle:

• Woolworth Co.: Frank Winfield Woolworth incorporated FW Woolworth Co. back in 1905. It was a general merchandise store and by early 1929 he had expanded his business with over 2250 outlets across the world. Several years later, due to enhanced competition and competitive pricing, Woolworths closed down its last store in 1997 to concentrate its energies on sporting products. To last such a long time shows effective product lifecycle management. 
• Coca-Cola: Early on in 1985, Coca-Cola deployed its new recipe for its beverage. Coca-Cola has a market share lead that was on the decline over the past 15 years and the company decided to launch a new variety into the market in hopes of reinvigorating product interest. The masses demanded that the old recipe come back. After 79 days of launching the new drink, the full lifecycle of the product was through. Despite the inability of the product to go through the growth and maturity phases, it created a demand for their previously declining product. It can be thought of as an effective strategy to prolong the life of their old declining products. 

Products That are Going Through or Have Completed the Product Life Cycle

Here are a couple of real product examples that have gone through the entire product life cycle:

The floppy disk:

• Development stage: It was created by IBM engineers and was a simple and flexible eight-inch disk with a storage capacity of 2MB.
• Introduction: It was launched in 1971 and was the only method to store and transfer data at the time.
• Growth: It rose to its peak until the early 1990s.
• Maturity: Over time, enhancements were made to store up to 200MB.
• Decline: Storage alternatives become more efficient with the CD and pen drives, thus leading to the decline of floppy disks. 

The typewriter:

• Development: The idea was launched way back in 1575 to make the art of writing easier.
• Introduction: It was introduced into the markets in the late 1800s.
• Growth: It soon became an indispensable tool due to its convenience and efficiency and was commonly used in all fields and industries.
• Maturity: They matured over 80 years and were used up to the 1980s.
• Decline: Emerging technologies and the affordability of devices like laptops and computers caused the decline of typewriters.

Conclusion

Irrespective of developing a new product or a brand, the product life cycle is an important concept that you must understand. Product life cycle plays a crucial role even when dealing with products that have reached their saturation; the life cycle plays a vital role in determining how it will progress. It is the roadmap for you to optimise and enhance your business and marketing strategies. Every stage dictates the information transfer from your company to your audience about the product. It positions your brand in the market and also determines how your product will fare in the market. With the life cycle in mind, you can shift your business toward gaining a higher ROI.