If you wish to work with product management, it is mandatory to know the Product Life Cycle model. The model explains the different stages a product has to go through right from its creation to discontinuation. You should have a deep understanding of this product life cycle tool as products or services demand different strategies at different stages. Read this article to get to know the product life cycle stages, examples and more!
What is a Product Life Cycle?
A product life cycle is used as a management tool that helps businesses to analyse the product behaviour from its developmental stage to its withdrawal from the market, also based on its launch, growth and sales maturity.
Theodore Levitt, a German economist and the mind behind this concept proposed a five-stage model and named it the “Product Life Cycle”. These five stages are development, introduction, growth, maturity, and decline. Before we move on to explain these stages, you need to know why he thought this model would be useful.
During Levitt’s research, he discovered that the characteristics of a product change many times during its life cycle. All the strategies around the product need to consider its characteristics and specific issues in each of these stages. In addition to sales and marketing, this also applies to product development and making sound judgements in the management sphere.
Stages of Product Life Cycle
According to the product life cycle theory, all products go through four main stages of market progression- introduction, growth, maturity and decline. However, some marketing professionals also consider a beginning fifth stage called “development”. That being said, most professionals focus on the products and services that make it to the market, passing these early trials. The following are the five different product life cycle stages:
The development stage refers to the research phase of the product before it is launched into the market. This is when the investors are brought into the organization, prototypes are developed and tested to check for their effectiveness, and the strategies for the launch are laid out. Companies spend a lot of money in this stage without bringing in any revenue as the product is not being sold yet. Depending on how new the product is, its complexities and the competition, this phase can last for a long time.
As the product gets fully developed, it’s ready to be introduced to the market. This is the phase where businesses should establish branding and grab the audience’s attention. The market can be wary about the uses and qualities of the product. A solid product-market strategy has to be implemented to highlight the product’s strengths and build users’ trust. Distribution models should also be determined to get the product out in the market during this stage. Typically, as the demand for the new product builds slowly, the sales at this stage will be low. As far as the marketing budget is concerned, businesses seek the help of investors.
Once the product enters the market, it simultaneously enters the growth stage of the product life cycle as well. This phase concentrates on different ways to increase the sales and distribution channels. Unlike the introduction stage where the marketing is focused on a select core, the business should reach out to a wider audience at this stage in order to increase the market share. Although the sales revenue will begin to rise, the business might still need funding from investors.
The product will be well-established as it reaches this stage. Here, both the production and marketing costs are reduced to increase the profit. The only challenge here is that the audience will be already looking for new and better products and so, the business needs to hold their attention by adding new features and offering discounts. The marketing strategy in this stage should focus on how this established and mature product is still better than the new products by competitors.
Finally, the product naturally meets its end. In this stage, the business needs to find different ways to breathe life into the product. This could mean introducing new features or uses and reducing production to increase the demand for the product as it becomes rarer. Often, selling the production rights or discontinuing the product altogether makes the most financial sense.
Product Life Cycle Examples
Typewriters which were introduced in the late 19th century rose in demand thanks to their improved technology. However, eventually, the computers took over, marking their withdrawal from the market.
With the establishment of online streaming services, DVDs, which were once considered a ground-breaking technology, slowly faded out from the market.
- AI Products
AI has been in its development stage for some time now. Today, new products and strategies are built to extend its life cycle.
A strong product lifecycle management can help businesses in faster product marketing, maintenance of product popularity, improved product safety and increased sales opportunities. Many product management training courses these days offer the required tools and knowledge for you to build effective marketing and sales strategies to extend the product life cycle.