When I was 12 years old, I used to look through my older cousin's CD collection, a little confused.
I didn't understand the need to have CDs when I could go on my iTunes and listen to all my favorite songs. Then, when I was in middle school, I got my first hand-me-down iPod shuffle.
This is a great example of the product life cycle (PLC) in action. CDs were in the decline stage while the iPod was in the growth stage – more on the stages below.
Overall, the concept of the product life cycle is to help businesses make decisions on how to mature and grow in the marketplace.
As marketers, it's important to understand how your marketing tactics and strategies will change depending on the stage your company is in.
For example, a brand new product will market differently than a well-established, mature product. On the one hand, the marketing will focus on raising awareness and on the other it'll focus on maintaining awareness.
Below, let's review the product life cycle — from learning about what it is, what the stages are, and looking at real-life examples.
What is a product life cycle?
A product life cycle is the cycle that a product goes through, from development to decline. It's typically broken up into six stages. Business owners and marketers use the product life cycle to make important decisions and strategies on advertising budgets, product prices, and packaging.
Stages of a Product Life Cycle
The development stage of the product life cycle is the research phase before a product is introduced to the marketplace. This is when companies bring in investors, develop prototypes, test product effectiveness, and strategize their launch. Due to the nature of this stage, companies spend a lot of money without bringing in any revenue because the product isn't being sold yet.
This stage can last for a long time, depending on the complexity of the product, how new it is, and the competition. For a completely new product, the development stage is hard because the first pioneer of a product is usually not as successful as later iterations.
The introduction stage is when a product is first launched in the marketplace. This is when marketing teams begin building product awareness and reaching out to potential customers. Typically, when a product is introduced, sales are low and demand builds slowly.
Usually, this phase is focused on advertising and marketing campaigns. Companies build their brand, work on testing distribution channels, and try to educate potential customers about the product. If those tactics are successful, the product goes into the next stage — growth.
During the growth stage, consumers have accepted the product in the market and customers are beginning to truly buy-in. That means demand and profits are growing, hopefully at a steadily rapid pace.
The growth stage is when the market for the product is expanding and competition begins developing. Potential competitors see success and want in. During this phase, marketing campaigns often shift from getting customers to buy-in to the product to establishing a brand presence so consumers choose them over developing competitors.
Additionally, as companies grow, they'll begin to open new distributions channels and add more features and support services.
The maturity stage is when the sales begin to level off from the rapid growth period. At this point, companies begin to reduce their prices so they can stay competitive amongst growing competition.
This is the phase where a company begins to become more efficient and learns from the mistakes made in the introduction and growth stages. Marketing campaigns are typically focused on differentiation rather than awareness. This means that product features might be enhanced, prices might be lowered, and distribution becomes more intensive.
During the maturity stage, products begin to enter the most profitable stage. The cost of production declines while the sales are increasing.
During the product saturation stage, competitors have begun to take a portion of the market and products will experience neither growth nor decline in sales.
Typically, this is the point when most consumers are using a product, but there are many competing companies. At this point, you want your product to become the brand preference so you don't start to enter the decline stage.
Again, marketers need to focus on differentiation in features, brand awareness, price, and customer service. The competition reaches its apex at this stage.
Unfortunately, if your product doesn't become the preferred brand in a marketplace, you'll typically experience a decline. Sales will decrease during the heightened competition and are hard to overcome.
Additionally, consumers might lose interest in your product as time goes on, just like the CD example I mentioned earlier.
If a company is at this stage, they'll either discontinue their product, sell their company, or innovate and iterate on their product in some way.
To extend the product life cycle, successful companies can implement new advertising strategies, reduce their price, add new features to their increase value proposition, explore new markets, or adjust brand packaging.
The best companies will usually have products at several points in the product life cycle at any given time.
International Product Life Cycle
The international product life cycle is the cycle a product goes through in international markets. As products begin to mature and companies want to avoid the decline stage, they'll typically begin to explore new markets globally. When products reach mass production, manufacturing and production shifts to other countries.
Example of a Product Life Cycle
Similar to the CD example above, let's follow the product life cycle of the typewriter:
Development: Before the first commercial typewriter was introduced to the market, the overall idea had been developed for centuries, beginning in 1575.
Introduction: In the late 1800s, the first commercial typewriters were introduced.
Growth: The typewriter became a quickly indispensable tool for all forms of writing, becoming widely used in offices, businesses, and private homes.
Maturity: Typewriters were in the maturity phase for nearly 80 years, because this was the preferred product for typing communications up until the 1980s.
Saturation: During the saturation stage, typewriters began to face fierce competition with computers in the 1990s.
Decline: Overall, the typewriter couldn't withstand the competition of new emerging technologies and eventually the product was discontinued.
However, not all products need to face the decline stage. Companies can extend the product life cycle with new iterations and stay afloat as long as they have several products at various points of the product life cycle.
Whether you're developing a brand new product or working with a mature, well-established brand, you can use the product life cycle stages as a guide for your marketing campaigns.
Originally published Jan 15, 2020 7:00:00 AM, updated January 15 2020