From their initial development through to their final decline, all products will go through what’s known as a product life cycle. The product life cycle (PLC) maps the journey each product goes on, outlining each step – or stage – along the way.
First introduced by economist Theodore Levitt in a Harvard Business Review article in the 1960s, the product life cycle model has since become a crucial illustrative tool for businesses, helping to inform and shape strategic product life cycle management, which in turn determines:
- Marketing strategies.
- Advertising budgets and schedules.
- Product price points.
- Packaging and packaging redesigns.
- New market expansion.
- Old product retirement.
Understanding product life cycle stages can also ensure that businesses respond effectively to changing customer needs.
What are the stages of the product life cycle?
Development
Product development is the initial stage of the product life cycle. It requires market research and product research to gauge demand, interest, market segments, target markets, customer need, and customer demographics.
Product development also typically requires investment in order to develop product prototypes, test products with user feedback groups, and refine the product concept as required. This is also the stage to begin strategising the product’s launch into the market.
Introduction
Once a product has been developed and is ready for product launch, it’s introduced into the marketplace. The introduction stage relies heavily on marketing efforts and advertising campaigns to build product awareness and demand, but even so, sales will typically be low at this stage. Influences on product sales at the introduction phase also include:
- Competition within the market.
- Product complexity, and how well consumers understand the product’s benefits.
- Product reviews, particularly for new and innovative products that some consumers may be wary of trying.
It is also worth noting that the more products are tailored to meet customer needs, the more successful products are likely to be.
Growth
Also known as the take-off stage, the growth stage is where demand for a new product begins to accelerate. Consumers have begun to buy into the product – and competition is likely to grow, too. In fact, the size of the total market can expand rapidly.
As demand grows, so too should product production and availability expand. This will help to ensure steady growth particularly if – or when – product demand ramps up significantly and it expands into new markets.
Because competition can increase during the rapid growth phase, strong, effective branding is necessary to maintain marketplace strength, and highlight points of differentiation between products.
Other areas of focus in the growth stage will be product improvements – such as enhancements to functions and new features – as well as product pricing adjustments, both of which can help ensure the product stays competitive as newer alternatives are launched into the market.
Maturity
Maturity is reached as a product becomes established in the market, and demand for the product levels out. The maturity stage usually includes:
- Reducing prices to stay competitive.
- Marketing campaigns that focus on differentiation.
- Concentrated, intense distribution channels.
The maturity stage is typically the most profitable stage in the product life cycle, and businesses aim to maximise their time within this stage. Production costs and operations are at their most efficient, while sales operate at a steady pace.
The maturity phase may also include new product features and new innovations on existing products as a means of capturing a larger chunk of the market.
Saturation
Saturation within the market is almost inevitable for any product, with competitors taking up larger and larger portions of the market share, and product sales stagnating.
At the market saturation stage, many people may be using the product – and many others may be using alternative options. Profit margins will begin to shrink due to lowered demand and lower prices, alongside increased competition.
Decline
A product’s decline is its final stage in the life cycle. It begins when a product starts to lose consumer interest and sales begin to dip.
Often, a product’s decline will be triggered by alternative options, but it may also occur as new innovations and trends emerge. For example:
- The typewriter declined as the computer rose to prominence.
- The vinyl record was replaced by the cassette, which was replaced by the CD, which was replaced by digital music files.
- The Apple iPod made way for the iPhone.
- The VHS was replaced by the DVD, which was replaced by the Blu-Ray, and then streaming services such as Netflix.
At the decline stage of the life cycle, businesses will often discontinue a product that’s in decline. Marketing and advertising campaigns will end during the decline phase, and product support will cease. In some cases, though, products may still be offered in a significantly reduced capacity for niche consumers, such as vinyl record enthusiasts, for example.
What is the difference between the product life cycle and product development?
The product life cycle is focused largely on a product’s performance in the marketplace, and helps to determine marketing activities and advertising campaigns through several key stages.
Product development, on the other hand, is focused solely on the first stage of the product life cycle: development. During product development, inventors, creators, entrepreneurs, and businesses focus only on developing the new product – brainstorming ideas, evaluating customer needs, and conducting extensive research.
The product life cycle marketing model
The product life cycle is an important tool for developing the marketing strategy around a new product. This is because marketing campaigns will need to be tailored specifically for each stage of the product life cycle.
For example, during the initial development stage, it can be useful for marketing campaigns to generate buzz and excitement about the product. During the growth stage, meanwhile, it’s important for marketing to build product and brand awareness, and during the maturity and saturation stages, campaigns that focus on differentiation between the product and its competing alternatives are crucial.
By adapting marketing strategies to all stages of a product life cycle, businesses can lengthen the lifespan of their products, increasing profits and maximising returns.
Maximise product life cycles
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