The Product Life Cycle model is a must-know for anyone working in sales or marketing. This model outlines the steps a product takes on its journey from creation through to discontinuation.
Why is this important?
It helps you understand why certain products lose popularity after a while. Different stages of the product cycle require different marketing strategies. This applies to both physical and digital products.
Understanding the Product Life Cycle will help you keep your products relevant and fresh for longer. You can prevent decline and ensure that your products are generating as much revenue possible.
This article will help you understand the cycles, their stages, and examples. We'll also show you how to use this concept. This article is worth reading until the very end.
What is the Product Life Cycle?
The Product Life cycle is a management tool that allows you to see how a product performs from its conception to its withdrawal from market. It includes every stage of growth from launch to adoption and sales maturity.
It's like a product-to-customer journey.
This concept was created by Theodore Levitt (a German economist who lived and worked at Harvard Business School).
Levitt proposed a model with five stages that he called the Product Life Cycle.
These stages include development, growth, maturity and decline.
Before I go into detail about each one, it is worth understanding why Levitt believed that defining the model would be beneficial.
He discovered something obvious, but not yet mapped: product characteristics change over time.
Every strategy surrounding a product must consider the unique issues and characteristics of each stage.
This is not only for sales and marketing but also product development and management decision-making.
When is the best time to invest in a product so it explodes on the market?
Is it time to let go of something that has been very successful and replace it with something better?
These are the questions that a Product Life Cycle analysis can help you answer.
Note on Product Lifecycle Stages
It's important that I explain each stage of the Product Life Development Cycle below. However, some definitions may have different stages. Some definitions have only four stages and leave out the development phase. Some have six stages and include a saturation stage. Levitt's original diagram had four stages. I have added an introduction phase to the middle of his growth and development stages.
This is because hundreds of products have been through a development phase, and are now released to the market. But they never grow. Some products, especially innovative ones, require very specific marketing strategies in order to reach the growth stage when they are introduced to the marketplace. This fact can hinder your product marketing efforts.
The 5 Stages in the Product Lifecycle
Now is the time to examine more deeply Product Life Cycle model.
We now know all about the stages. Let's look at the key characteristics and best practices for achieving your marketing goals.
1. The Product Life Cycle begins with the Development Phase
Product development is always an adventure into the unknown. Although companies can spend millions on product research and development to ensure a successful product launch, there is no guarantee that it will succeed.
Companies are now spending money on product development without any revenue. Proposals are made and tested, hypotheses validated, then changes are implemented.
Although this stage is often integrated into the startup company's process, it is not exclusive to them. An automobile manufacturer will not launch a new vehicle without first going through a rigorous project development phase. Only the difference is that companies with established businesses can fund this phase using revenue from other products.
Let's take a look at the 2018 Walkee Paws leggings collection.
We can only imagine the meticulous planning that went into this product's launch.
It is possible that there were some initial promotions. While a product in development doesn't need to be sold heavily, some promotion might be necessary if it is new.
Imagine the potential success of a Walkee Paws marketing campaign announcing this novelty for dog lovers. You could use social media to post teasers and encourage engagement. You might also see billboards and press releases.
This is a fact that the company should consider all of these aspects even at the development stage.
2. The Introduction Phase of Product Development Life Cycle
Once you've created a product that is ready to launch, you can move on to the Introduction phase of the Product Cycle.
Launching a product is an enormous marketing task. To reach a large audience, you will need to identify a target market and make significant investments in marketing campaigns. At this stage, TV ads are a popular option. It takes only a few seconds to watch ads for new flavors of soda, new motorcycle models, and smartphones with superior features.
This stage of the Product Development Life Cycle requires the most marketing investment. Even though sales are increasing, it's not unusual to find yourself in the red. If you're the first company to bring a new product on the market, your costs will be higher. Although first movers might have an advantage, they still need to pay the price. This is why so many companies wait until there is a market before they launch a new product.
You can reduce costs by choosing the right audience and persona for your products.
This allows you to optimize your marketing investment by using the right platforms to communicate the right message to the exact audience.
Inbound marketing can be used to reach early adopters.
3. The Growth Phase of the Product's Life Cycle
The growth stage is the next. Your product will be well-known and should have a high sales rate.
Your success will attract other competitors. The market in which you are entering will determine how fast competitors respond. Competitors will respond quickly in crowded markets. However, if the market is not crowded, you might be able continue to grow your business without too much competition.
To continue your growth, you'll need to invest heavily in marketing.
Despite your company experiencing growth, many companies fail at this stage. Their products' sales continue to decline even though they have never reached maturity.
One beer brand you might recall had a funny TV commercial featuring a short, chubby actor wearing a mustache. It was a leading brand for a long time. The ads generated comments on the oldest social network: word-of mouth. Although the product is still on the market and there are no new changes to the formula, it was eventually swallowed up by strong competition.
The lesson here is that even if a product is at the growth stage, it is crucial to have a strategy in place to maintain its position, regardless of new competition.
4. The Product Life Cycle's Maturity Phase
Maturity marks the top and highest point in a cycle. This is when the product achieves its full potential and sales, and stabilizes. This doesn't mean that your sales will not grow. However, it does mean that you won't see the same rapid growth as before.
Although it may sound disappointing, this stage has many benefits. This stage will undoubtedly make you more efficient and reduce your production costs. Because you already have a market, marketing costs can be reduced.
This stage will be challenging because you need to keep up your results and beat your competitors.
This is not an easy task. However, it is crucial that you do everything in your power to make it happen. You can name all the iconic brands that have been able to get to where they are today due to their investment in this stage.
Coca-Cola, for example, doesn't stop advertising despite the fact that it is dependent on marketing. The company also understands that brands can change over time due to market instability and behavioral changes within its audience.
5. The Product Life Cycle's Decline Phase
Even the most well-known products eventually see their popularity decline and revenue drop. It is interesting to think about the end of Coca-Cola, a company that has been around for over 100 years and enjoyed great financial success.
Coca-Cola may not last forever. Perhaps not the company but its main product. This could take 100, 200 or even 1000 years. It is impossible to predict. However, every product has an end.
The company should recognize that its performance indicators are showing a painful truth and choose one of the options. You have the option to either discontinue the product, create a new product, or sell it.
Be sure to weigh the benefits and costs of each option. It is okay to retire a product, particularly if you are already investing in new products.
It's important to understand the product life cycle
You should have understood the Product Development Life Cycle concept and the characteristics of each stage. This model should be applied to your business.
These are the main benefits and benefits that adhering to the model can bring.
- Better support allows for better decision-making
- Optimize marketing investments
- qualify sales efforts
- Give you more control over the results
- Better long-term strategic planning
- Better organization and process management
- Products with longer life expectancy
- Give more preparation for competition
- It becomes possible to lead the market
What Factors Influence the Product Lifecycle?
There are many things you can do that will influence the way your product progresses through its lifecycle. There are many things that you cannot control that can impact the performance of your product.
It can be difficult to enter competitive markets and your product may struggle to make it to the launch phase. Barriers to entry are important. Although it might be more difficult to enter a market that has high barriers to entry it will likely have a longer life span if your product is established. This may not hold true in markets where there are lower barriers to entry, which makes it easier for your competitors to copy your product.
Sometimes, the world can work against you. A global recession or pandemic could end a cycle. You may also experience rapid changes in consumer behavior, which can have a negative impact on the product's lifespan.
Rapid technological changes can dramatically shorten product life cycles, especially if they are not easily adapted. Blockbuster was destroyed by the internet and video streaming.
If a company or person invents a better way to do something, there isn't much you can do. You can only react as best that you can.
Use the Product Lifecycle to Enhance Your Marketing Strategies and Increase Your Product's Life
Understanding your current stage in the Product Life cycle is the first step in using it to improve your marketing strategy. You can identify the exact position of your product by understanding the stages and comparing them to your product's performance.
During the introduction phase, it is important to establish authority. Whether you are positioning your product as a cheaper, more effective, or more environmentally-friendly alternative, it's key to get this across in your messaging. This will help you get to the growth phase faster and should be done well.
Tailor Your Pricing Strategy
Pricing strategy should be flexible and tailored to each stage of the product's life cycle. You might, for example, want to lower your prices in the beginning stages and increase them during growth and maturity, then lower again as the product ages.
Your product's growth can be helped by tailoring its pricing. Discounts, for example, can be a great way of increasing sales and extending the product's life.
Add New Features
Products that aren't innovative and introduce new features will not continue to grow. They will soon become saturated and will begin to decline. This is why you need to invest in new features throughout the growth and maturity stages of your product's lifecycle. You can enjoy rapid growth again by doing this.
This is evident in the iPhone. The product has grown steadily thanks to continuous investment in screen quality, camera quality, and even the App store. The positioning of the iPhone by Apple has allowed for steady growth. Apple has created a new market by focusing on privacy.
What are the Limitations to the Product Lifecycle?
The main problem with the product lifecycle is that it can't predict how long each stage will last. It is impossible to predict sales using the different stages.
Moreover, certain products are more difficult to lose than others.
The product life cycle stages could become a self-fulfilling prophecy. Product managers might stop paying attention to their products because they fear that their products will soon fall.
Does the Product's Life Cycle Only Apply to Products?
This is a fascinating question about the model.
The idea that the cycle is more effective for physical products is true, given its nature. It's also possible to think of adaptations for the model.
Let's say we have a large corporation with branches in different cities.
Each of these units can be considered a product if you apply the Product Development Life Cycle model. All that is required is to analyze each unit's performance.
Another example is a company that has many brands and each one of its products.
This is why you should visit the Procter & Gamble website. You will find that there are several active brands on the USA market.
Which stage is each brand in the cycle? Are they developing new brands?
Let's conclude by looking at another example.
Can services replace the products of Theodore Levitt's model?
This is possible depending on what company does. Consider a home-remodeling company as an example.
You may be able to find a wide range of services such as painting, plastering and electric and hydraulic work, masonry and other construction tasks.
You can use the Product Life Cycle method to observe each service's life cycle and assess its potential returns.
The Product Life Cycle does not apply to only physical products.
What is the Product Life Cycle in practice?
To find out, we will be taking a look at Havaianas as well as Coca-Cola.
The Product life Cycle of Havaianas
- Development: The traditional flip-flops were inspired from Japanese sandals made out of straw or wood. In Brazil rubber was chosen because it was the most popular material.
- Introduction: Whether it was planned or not, the introduction of this product to the market was a huge success with classes C-D and E.
- Growth: Havaianas flip flops were at the growth stage most of their existence. They eventually dominated over 90% of flip-flops market.
- Maturity: This was the 1990s when maturity arrived. There was new product design that was aimed at a different audience and great marketing investment. The TV ads, which were always funny and starred well-known actors, were a classic example of this.
- Decline: At this point, there is no indication that Havaianas flip-flops will reach this stage.
The Product life cycle of Coca Cola
- Development: Very little information is available about the development of Coca-Cola or how they created this mysterious formula.
- Introduction: By 1886, its year of foundation, the brand seemed to already have the right project.
- Coca-Cola's growth: In the tenth year of its creation, Coca-Cola had been consumed in every state in the United States.
- Maturity: It's difficult to pinpoint when the brand reached maturity. However, it is safe to say that most of its history has been in this stage.
- Decline: Since 2012, Coca-Cola's net operating revenue has been decreasing. While a slight decrease is to be expected at maturity, it's important that investments in marketing and new products continue.
Product Lifecycle Vs. BCG Matrix
A product is born, grows and then dies. This model is the same as the BCG Matrix. You were very shrewd if you thought that.
The Boston Consulting Group created the BCG Matrix, a powerful management tool. It is named after their initials.
Although the BCG Matrix is similar to the Product Live Cycle, there are some differences.
First, instead of five stages, there are now four: Question Mark (Star), Cash Cow (Cash Cow), and Dog.
Second, these names are specific to the stage of product development and not necessarily the whole life cycle.
Are you confused? I'll explain.
Have a look at this table:
Question marks refer to new products that have great potential for growth, but don't yet have a market.
Stars, as their name suggests, are at the top of the heap: they generate high revenue.
Cash cows are the future stars: Their performance has peaked but their decline is to be expected.
Dogs are also a problem. They are products that are at the end, and don't sell well.
Generally, stars and question marks require marketing investment. Cash cows don't need investment any more and dogs won't recover from investment.
What's the Product Life Cycle?
From the initial ideation to the time it is taken off the shelves, the Product Life Cycle describes how a product progresses.
What Stages are there in the Product Life Cycle?
The Product Life Cycle has five main stages: development, implementation, growth, maturation, and decline. Some explanations may only leave the development stage, leaving four others. Some explanations will also include a saturation stage for a total number of six. Although Theodore Levitt initially showed four stages in his diagram, we believe it is important to include a developmental phase due to the unique challenges encountered and the fact that not all products are released to market.
Why is understanding the product life cycle important?
Different strategies and expectations are required at each stage. It is important to know where your product is at each stage of its life cycle so that you can market it effectively.
You should now be familiar with the Product Life cycle and each stage. The Product Life Cycle was also explained to you. You can use it to guide your decisions, even if you don't sell physical products.
Our agency can assist you with digital marketing support at any stage of the Product Life Cycle model.
It's now time to work hard to reach maturity and extend it as much as you can.
Which stage are you at with your main product? Comment and share this article!
By: Neil Patel
Title: Product Life Cycle: What It Is, the 5 Stages, & Examples
Sourced From: neilpatel.com/blog/product-life-cycle/
Published Date: Fri, 19 Aug 2022 19:00:00 +0000