What is the Product Life Cycle and Why marketers should use it
Throughout a product's life cycle, from development and launch to peak performance and eventually decline, its life cycle determines the strategy needed to ensure the long-term profitability and competitiveness of the product.
Each stage's duration is determined by the product and the market, although it is not an exact science. A technology product, for example, has a shorter life cycle than others. With such short life cycles, it is imperative to maximize returns as quickly as possible and to develop the next product constantly. Despite the fact that long-lasting branded products undergo many life cycles, their brand name remains constant. Such brands, however, still require management of their life cycles - planning future improvements as well as managing replacements.
There are five stages in the product life cycle:
Product development - includes new products and changes or improvements to existing products
Introduction - costs are high compared to revenues at this stage
Growth - Revenue growth along with cost reductions
Maturity - growth slows down and competition increases
Decline - reduction in sales due to increased competition or changing preferences of customers
The following describes tactics appropriate to each stage of PLC:
Stage 1: Development
The development process can be expensive, and delays can occur unexpectedly, so cash flow is crucial. In order to develop the best products with fewer glitches, research what customers are looking for and test prototypes with potential customers. This will help you build a ready-made pool of customers. As a result, product development is a continuous process, meant to ensure that existing products are replaced with new ones as soon as possible.
Stage 2: Introduction
It is crucial to get the launch right. It may be useful at this stage to target early adopters based on the nature of the product in order to raise product awareness quickly. Fast market penetration can be achieved via aggressive pricing - although this will depend on the characteristics of the brand. By limiting the product's availability, you could also minimize distribution costs.
Stage 3: Growth
In the face of increased rivalry, but with significant potential revenue and reducing unit costs, the strategy must focus on outcompeting competitors, providing added value to consumers, and expanding market share. Additional special offers, marketing, and advertising campaigns, appealing prices, and brand promotion will reinforce your position.
Stage 4: Maturity
Given the surge of competitors, a company's strategic alternatives for increasing market share include product differentiation, entering new markets, luring competitors' clientele, waging a price war, and cutting costs to retain competitive pricing and profitability. At this point, it is critical to keep an eye on the financial condition and the practicality of the various possibilities.
Stage 5: Decline
With dropping revenues and margins, any plans or further expenditures should be carefully reviewed. Reducing the number of product variants and markets in which the product is accessible will cut expenses. Catering to your key consumers in order to maintain their loyalty might help increase revenues at this point. Product extensions and penetrating previously unexplored markets are two more ways to extend the life of a product.