Everything goes through a process and eventually reaches its “endpoint.” For instance, when we talk about the human life cycle, it starts with birth and ends with death. However, the in-between processes include childhood, teenage, youth, and then eventually, we get old. This is a complete cycle.
Just like humans, almost everything in this universe has a life cycle. Similarly, when it comes to products we use in our daily life go through the same cycle- product life cycle. You must have seen some worn-out or out-of-trend items in your parent’s garage or drawers. Do you ever wonder why they do not use it anymore?
Well, the answer is, those products have completed their life cycle, and they have finally “retired.” A product’s life cycle starts with its entrance into the market, then it goes to boom or peak (if it is a handy product). Finally, it retires and gets out of the market circulation. However, the process is not that simple as we think.
A product’s life cycle includes various steps but before we move on to that, let’s define what the product life cycle is?
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What Is Product Life Cycle?
The product life cycle can be defined as a process and time-frame that every product goes through, and it includes various stages. The process starts with entering the market and then finally leaving the market. A product’s life cycle has four major/common stages:
Now, things work differently for different products, and the length of middle stages (growth and maturity) may vary. Some products may have a prolonged maturity stage, but it runs out eventually. There are certain factors that cause this decline, such as increasing competition, saturation, a reduction in demand, or dropping sales.
Different organizations develop different strategies to prolong the maturity stage by adapting to market demand or using technological advancements. Let’s have a detailed look at a product’s life cycle.
4 Stages of the Product Life Cycle
Generally speaking, there are more or less four stages of the product life cycle, which starts when a product is developed and ends when it reaches retirement.
Stage 1- Introduction
Practically, this is the toughest, riskiest, and trickiest part of a product’s life cycle. After making a product, the company launches it in the market. The risk factor is always high because you are never 100 percent sure whether this product will succeed or not.
At the start, companies just try to get their word out. They just focus on getting the product to the customers, and companies spend heavy budgets on their marketing campaigns. It is also an evaluation period for the companies as they assess whether people like their products and how much success they will gain.
Promotion costs are generally high at this stage with minimal competition. Companies focus on getting the product “viral” and then cashing on it later.
Stage 2- Growth
If a product succeeds in getting attention from customers, the next stage is the growth stage. At this stage, product sales start increasing because of the increasing popularity of the product.
This stage also draws a lot of attention from the competitors as well. If a product has little or no competition, the revenues will increase rapidly, and it will attract competition. Also, the promotion cost will reduce at this stage.
However, if the product is facing competition, the company will have to spend more on promotion to penetrate the market completely. This also brings market expansion, and the company may have to make modifications to the product’s features.
With the expansion of the market, competition increases, and companies may have to reduce their prices. However, the sales volume is high, which generates revenue.
Stage 3- Maturity
When a product hits the maturity stage, the sales start decreasing, or it may face a full stop. This is an indication of market saturation. At this stage, prices reduce further because of stronger and growing competition or a decrease in the product’s demand.
At this stage, the marketing strategies of companies mainly focus on fending off the competition. Moreover, companies try to add new features to the product to make it more valuable. Many companies also alter the original product to penetrate other market segments.
During the maturity stage, weak competitors often back out of the competition, and this situation is termed a “shake-out point.” Due to saturation, sales decrease, and companies make developments in the product or even change it. The longevity of the maturity stage of a product depends on how effectively a company develops/improves the product.
Stage 4- Decline
The end is inevitable, and a product is no exception. Companies try hard to keep the product at the maturity stage, but the “luck” finally runs out. Product sales start decreasing significantly, and so does the product demand.
A decrease in sales means that the product is losing its market share. Moreover, companies don’t pay much attention to marketing except for loyal customers. The maturity stage may prolong, but the product eventually retires unless companies make significant changes in the product.
Common Examples of the Product Life Cycle
There are so many “classic” examples of the product reaching the boom and then fading away, such as:
Well, the typewriter is a word known to almost everyone, but how often do we use them now? Typewriters are an invention of the 19th century, and it gained massive popularity as it made writing way lot easier.
However, it started fading, especially during the 21st century. The typewriter saw its downfall because of the invention of computers, smartphones, laptops, etc. Microsoft was the major “culprit” that caused the downfall of typewriters.
As of now, typewriters have almost vanished as laptops, computers, and smartphones replaced them. These products are now enjoying their growth or maturity stage.
People born in the 20th century would definitely know what a VCR (videocassette recorder) is. However, teenagers, these days have no or little idea about VCRs.
VCR was a popular way of entertainment, and Blockbuster Inc. really enjoyed its fortune back then. It was a household until the late 1990s.
VCR saw its decline when online streaming got prominence. Companies like Netflix and Amazon wiped out the VCRs during the 21st century.
Although the concept of electric cars is not new, the product is enjoying its growth stage for a long time. The iconic company, Tesla, made considerable advancements in this concept and is enjoying the growth stage for years. Moreover, electric cars are still far away from replacing the traditional ones, but the future seems to belong to these advancements.
Product Life Cycle (PLC) Strategies
As mentioned earlier, the toughest phase in a product’s life cycle is its introduction into the market. Companies have to be very precise and accurate to make it work.
Some companies follow price skimming strategies. That said, they start with high prices and then reduce them once the market expands.
On the other hand, some companies prefer market penetration. They start with lower prices to get themselves in and then increase the prices. Apart from that, companies should pay a lot of attention to packaging and advertising with the right approaches.
Adapting to the changing environment is very important for a product to succeed. For instance, if a product is not getting significant or desired success, the company should change its strategies. They can make alterations or developments or shift to new demographics to get a better reach.
If a company can successfully evaluate which stage its product is going through, it can make improvements by bringing innovation and more value for the customers. Keeping up with the competition is the only way to survive and grow in the market.