Product Life Cycle

What exactly do we mean when we refer to the life cycle of a product? Why is it important to learn about product life cycles? What steps are to be taken at the different levels of the product life cycle? Read on for answers to these questions and more.

Product life cycle definition

Very much like our life cycle, products, too, have a life cycle. We refer to this as the product life cycle (PLC). (This is not the same as sell-by dates used for perishable food items.)

A product, once introduced, cannot stay in the market forever. It will have to be withdrawn once market trends change. Thus, the change in market trends and market life cycle are essentially one and the same.

Once consumer interest switches from one product to another, the former product is withdrawn from the market, as it can no longer be sold.

Stages of a product life cycle

A product goes through various stages in the life cycle process. There are four steps: introduction, growth, maturity, and decline.

Product Life Cycle: Introduction

This is the very first stage of a product's life cycle. It is mainly focused on capturing the target market’s attention with the product. It involves investing in product marketing and other marketing campaigns that help make people aware of the new product.

The sale of a new product tends to be slow, as people need time to learn about and understand the product. The brand needs to create a demand for the product, and the market needs to be convinced that it needs this product. The product should further have added value to attract customers. If the product fails to do this, it will fail on the market, and it may never enter the second stage of the life cycle - the growth phase.

Product Life Cycle: Growth

When a product has been successful in the product introduction stage, it moves on to the growth phase. This phase is characterized by an increase in demand for the product.

As there is a market for the product, competitors seize the opportunity and introduce their versions of it. This can be challenging, as customers are given more options for the same product to choose from.

Therefore, the customer’s purchase decision will depend on various factors such as value for money, quality, price, and other aspects depending on the product. As a result, the different brands will have to differentiate their product from the original product to make them stand out from the competition.

Product Life Cycle: Maturity

This stage is the beginning of market saturation. At this stage, the cost of production, as well as that of advertising, declines. This is therefore a very profitable stage, and the product, along with its variations from competitors, is now established in the market.

Product Life Cycle: Decline

This is the last phase, in which production is ultimately stopped and the product is removed from the market. As the competition in the market rises, competitors bring about more product differentiation. The product’s marketability will decline if and when new and better products are introduced into the market.

The market will then experience a higher demand for the newer product, and the former product’s demand will decline. Some brands that may have survived the market decline will continue production, but at a smaller scale, and with lower profit margins.

A graph depicting how the sales of a product change with time at various stages of a product life cycle is shown below in Figure 1:

Figure 1. Product life cycle graph, StudySmarter

Examples of products at various stages of the product life cycle

The products you have seen or see now in the market are in different phases of their life cycle. Given below, are the different stages of the product life cycle with examples.

Product Life Cycle: Introduction phase

The use of Virtual Reality or VR in many industries is still in the introductory phase. VR has been introduced in some areas in the healthcare industry where it is still working its way up in the market. Not many markets are familiar with this technology, but when the success and popularity of VR techniques increase, more businesses will be prompted to invest in and manufacture such products. An example of the use of VR is shown in the image below.

VR technologies in the introduction phase of the product lifecycle, Wikimedia Commons

Product Life Cycle: Growth phase

Self-driving cars are in the growth phase of their life cycle. These cars have been introduced in the market and their popularity is increasingly growing. Many car companies have been introducing their versions of self-driving cars, but not all are popular. A man using a self-driving car can be seen in the image below.

A self-driving car in the growth phase of the lifecycle process, Wikimedia Commons

Product Life Cycle: Maturity phase

Coca-Cola is a good example of a firm with products in the maturity stage. The company is a market leader for soft drinks, which are very popular among consumers. At this stage, they also have established competitors such as Pepsi, which also has a strong foothold in the market.

Product Life Cycle: Decline

Typewriters are a good example of a product facing a decline in the market. The introduction of devices such as computers and laptops have made life easier, thereby decreasing the demand for typewriters. The market for typewriters is basically non-existent and continuously declining.

A typewriter in the decline phase of the lifecycle process, Wikimedia Commons

Product life cycle strategies

It is unfortunate when businesses have to withdraw their products very soon from the market - in other words, when products go through their product life cycle very quickly. Therefore, to ensure a prolonged life cycle for products, businesses adopt certain strategies at every stage of the PLC.

Product Life Cycle: Strategies in the introduction stage

As products in the introduction phase need to capture the target group’s attention, it is important to focus on strategies that will help the brand achieve this goal. The following strategies are focused on the price and promotional levels.

• Rapid skimming - this involves launching products at a high price and high promotional level.

• Slow skimming - the strategy of introducing products at a high price and low promotional level.

• Rapid penetration - the process of launching products at a low price with significant promotion.

• Slow penetration - this involves launching the product at a low price with minimum promotion.

A matrix depicting the different strategies is shown in Figure 2.

Figure 2. PLC introduction strategy matrix, StudySmarter

The aim of the growth stage is to increase profits. Some strategies that help to achieve this are as follows:

• Enhancing product quality

• Introducing product variations

• Expanding market presence

• Lower prices if profits are low

Product Life Cycle: Strategies in the maturity stage

Market modification and product modification are two strategies that are used when products enter the maturity phase.

• Market modification - this involves entering new markets, targeting new customers, and inviting non-users to use the product.

• Product modification - this is the process of enhancing the existing product so as to attract more customers.

Product Life Cycle: Strategies in the decline stage

In this stage, companies try to reduce their expenditures as the product is bringing in very little to no revenue. Some strategies adopted by businesses at this stage include:

• Reducing the number of distribution channels

• Reduction in activities that create expenses, such as promotion

• Lower prices to attract customers

The aforementioned are the different strategies used by businesses at different levels to prolong the life cycle of a product.

Product life cycle management

Product life cycle management focuses on improving product quality and profitability. It involves taking steps to make the product the best in the market in order to be able to sell the products in the market longer.

This process helps the brand reduce production costs and production waste. Steps are taken to optimize the product and maximize sales. Businesses use software that helps them manage their product through the life cycle. This software helps them with processes such as tracking changes in product information, product integration, and maximizing collaboration opportunities.

Life cycle management plays an important role in helping the product remain on the market through innovation and product differentiation. This helps to maintain people's interest in the product. Analysing and understanding the phases of a product is important to keep the product relevant in the market.