In this article, you will learn about product life cycle, its stages and strategies that business needs to employ in each product life cycle stage.
Each product will have a life cycle, although the exact shape and length is not known in advance.
A product’s life cycle is the period of time from when it is initially made available to consumers until it is removed completely from the market.
PLC is the pattern of a product’s lifetime profits and sales. Management wants the new product to live a long and healthy life after it has been introduced.
The company wants to make a respectable profit to recover all the time, money, and danger that went into developing the product, even though it doesn’t expect it to last forever.
Each product will have a life cycle, although the precise shape and length are not yet known to management.
There are the four stages that form a product’s life cycle.
This S-shaped product life cycle is not followed by all products. Some products are released and quickly disappear, while others remain in the mature stage for an extremely long time. Some products reach the decline period, and through strong promotion or repositioning, they switch back into the growth stage.
When a new product is first introduced, the introduction stage begins. Product is launched in the market with full scale production and marketing program. In this stage sales grow at very low rate because the product is not in the demand.
Before they began to experience rapid growth, well-known products like instant coffee, personal computers, and cell phones remained on the market for many years.
Due to the low sales and expensive distribution and promotion costs, this stage’s profits are negative or poor when compared to other stages.
To attract distributors and increase their stocks, a lot of money is required. To get consumers to try a new product and learn about it, comparatively large amounts of money are spent on promotions.
The company and its few competitors offer basic versions of the product because the market is typically not prepared for continuous improvement at this point.
Characteristics of Introduction Stage
- Low and slow sales
- High product price
- Heavy promotional expenses
- Lack of knowledge
- Low Profits
- Narrow product lines
Marketing strategies used in Introduction Stage
One of many marketing approaches may be used by a business to launch a new product. Each marketing variable, such as price, advertising, distribution, and product quality, can be set to a high or low level.
Following are the marketing strategies that can be used in the introduction stage.
Launching the product at a high price and high promotional level.
In the early stages of a new product’s launch, a high price, high promotion strategy aids the company in rapid skimming the price-insensitive end of the market.
Launching the product at a high price and low promotional level.
Companies may offer the new product with a high price and low promotion spending in order to slowly skim the market.
Because of the low promotion spending, marketing expenses are kept to a minimum while the high price helps in recovering as much gross profit per unit as possible.
Such a strategy works sense when the market is small, the majority of customers are knowledgeable about the product and eager to pay a high price (these customers are often referred to as the “innovators”), and there is little immediate or possible competition.
Launching the product at a low price with high promotion
A business may launch a new product with a low pricing and strong promotional expenses.
This strategy offers the fastest market penetration and the highest market share, as the market is large, potential buyers are price sensitive and unfamiliar of the product.
There is strong potential competition, and the company’s unit manufacturing costs fall as production scale and manufacturing experience increases.
Launching the product at a low price and low promotion.
If consumers are price conscious yet the company needs to keep its launch costs low due to resource limitations, it may opt for a cheap price but low promotion spend option instead.
Once market has accepted the product, sales begin to rise.
The new product will enter a growth stage, during which sales will start rapidly increasing, if it fulfils market need or generates previously unmet demands.
Early adopters will keep purchasing, and subsequent consumers will begin to do the same, particularly if they hear positive word of mouth.
New rivals will enter the market drawn by the chances for financial gain. They will expand the product’s market, add new product features.
The number of distribution channels rises as a result of increased competition, and sales increase solely to fill reseller inventories. Prices either stay the same or only slightly decrease.
Companies maintain or slightly increase their spending on promotions.
Profits rise during the growth stage as unit manufacturing costs decline and promotion costs are spread over a large volume.
- Rapid increase in sales
- Product Improvements
- Increase in profits
- Increase in competition
- Reduction in price
- Strengthening the distribution channel
The primary goal of marketing strategies utilized during the growth stage is to boost profits. The following are some strategies to try:
- lowers prices to attract more customers.
- enters new market segments
- adds new product features and models
- improves product quality
- grow sales by selling through new distribution channels
- shifting advertising message from product awareness to product preference and purchase
A product will eventually reach a point of maturity when its sales growth slows.
This stage of maturity typically lasts longer than the other stages and presents significant difficulties for marketing management.
Since most products are in this stage of their life cycles, the majority of marketing management activities center on mature products.
Due to the slowdown in sales growth, there are numerous producers and a large number of products. This excess capacity then increases competition. In order to develop better versions of the product, competitors start to reduce prices, expand their advertising and sale activities, and increase their R & D spending.
These actions result in a decline in earnings. The lesser competitors frequently begin to fall behind and finally leave the market, leaving only the more well-established competitors.
Even while many mature products seem to remain unchanged for extended periods of time, the most successful ones survive by constantly adapting to meet shifting consumer needs.
- Sales increasing at decreasing rate
- Normal promotional expenses
- Uniform and lower prices
- Product modifications
- Profit margin decreases
Following are the marketing strategies that can be used in the maturity stage.
- Market Development
- Product Development
- Market Innovation
Here, the business aims to boost the use of the current product. It searches for new users or market segments that the business isn’t currently serving.
Companies enters new market segments, redefining target consumers, converting non-users.
The companies alter or improve product’s features, quality, pricing, and differentiating it from competing products in the market.
To draw in new customers and encourage increased usage, the product manager may also alter the product’s qualities, features, or style.
The product’s performance and quality might be enhanced, including its speed, flavour, dependability, and durability.
It could also include additional features that increase the product’s use, safety, or convenience.
By altering one or more components of the marketing mix, marketers might also strive to increase sales.
Price reductions draw in new users and clients from other businesses. They can start a more effective advertising campaign or employ forceful sales promotions, such as trade offers, discounts, premiums, and competitions.
If these channels are expanding, the business can also enter broader market segments. Finally, the business can provide customers with even more value by introducing new or upgraded services.
In decline stage, actual sales begin to fall under the new product competition and changing consumer behavior.
Most product types and brands eventually see a decline in sales. The decline could be slow or quick. Sales could decline to zero or to a low level where they stay for several years.
Sales are declining for a variety of factors, including changes in consumer preferences, technology advancements, and heightened competition.
Some businesses leave the die market as sales and revenues fall. Carrying a poor product may cost a company significantly, and not just financially.
- Decrease in price
- No promotional expenses
- Suspension of product work
- Sales decline
- changes in consumer preferences
- Increase in competition
Following are the marketing strategies that can be used by firms in the decline stage.
- Keep the product in production and wait for rivals to leave the market first
- harvest the product
- Cut the costs ( plant and equipment, maintenance, R & D, advertising, sales force )
- drop the product from the line
Product Life-Cycle Characteristics Table
|Sales||Low sales||Sales increases rapidly||Peak sales||Sales decline|
|Costs||High cost||Average cost||Low cost||Low cost|
|Profits||Negative||Rising profits||High profits||profits decline|
|Customers||Innovators||Early adopters||Middle majority||Laggards|
|Competitors||Few||Competitors grow||Stable competition starts to decline||Competitors Decline|
Product Life-Cycle Objectives and Strategies Table
|Marketing Objectives||Create product|
milk the brand
|Product||Offer a basic|
|Diversify brand and|
|Price||Use cost-plus||Price to penetrate|
|price to match or|
|Build more intensive|
and interest in
the mass market
Reduce to level needed to retain hard-core loyals
|Sales Promotion||Use heavy sales promotion to attract customers||Reduce to take|
advantage of heavy
|Increase to encourage|
Example of Product Life Cycle
As consumer needs have changed or new technologies have been launched, many products or brands have seen a decline.
When it comes to television entertainment, flat-screen TVs are at the mature stage, on-demand programming is in the growth stage, DVDs are in decline, and video cassettes are now largely obsolete.
Some industries operate in multiple stages of the product life cycle at once. Many of the most popular items in the world maintain their mature state for as long as possible, receiving just minor alterations and redesigns combined with fresh advertising to keep people thinking of them, like with the Apple iPhone.
Product Life Cycle of Coca Cola
Introduction: The brand appeared to have the right project from the time it was founded in 1886.
Growth: Within ten years of its introduction, Coca-Cola was being drank in every state of the United States.
Maturity: It’s difficult to pinpoint the precise moment at when the brand attained maturity, but it’s safe to say that it has spent the majority of its history up to this point in this stage.
Benefits of Product Life Cycle
- An effective framework for defining how markets and products operate.
- Estimate product performance.
- Assist in creating effective marketing strategies for various phases of the product life cycle.