Product Life Cycle: Importance for Business

What is the Product Life Cycle?

The product life cycle (PLC) shows how a product moves through four stages: introduction, growth, maturity, and decline. Knowing this concept helps businesses plan how they market, sell, and manage their products over time.

Benefits of Using the Product Life Cycle

PLC offers numerous advantages to boost business marketing strategies and financial performance. Here’s how it supports better business decisions:

• Get products to market faster by removing bottlenecks and providing clear roadmaps for product development stages

• Enhance product quality and keep customers happy with continuous checks and updates at all stages

• Better allocate resources where it’s need most based on the product’s life cycle stage

• Forecast costs more accurately, especially regarding materials and prototyping

• Encourage innovation and ensure products stay relevant to market needs

While the product life cycle is a useful tool, it has limitations to consider. External factors such as market disruptions, regulatory changes, and fluctuations in data can affect outcomes. Apply it in combination with other strategic tools for a well-rounded view of your operations and product management.

The Stages of the Product Life Cycle

Stage 1: Development

The product life cycle starts with development. Before launching a product, teams research the market, test prototypes, and create a launch strategy. Moreover, concept testing with real users is crucial in the development stage. Their feedback helps refine the idea before investing in full production.

Launching a new product comes with upfront costs before generating income. Funding may come from personal savings or investors. To attract investors and customers, create a quick prototype to showcase the product’s potential. Validate demand early to build confidence the launch.

Step 2: Introduction

When a product is launched, it enters the introduction stage of its life cycle. During this stage, the marketing team’s primary focus is to create product awareness and reach your audience. How long this will take depends on product, competition, innovation level, and other factors. Success in this stage can set the stage for growth.

Step 3: Growth

Consumers are now purchasing the product in response to marketing campaigns. Demand and profits are rising, and competitors seek to challenge your success.

In this stage, marketing shifts from getting attention to establishing a brand presence. Demonstrate to customers why your brand is different. Keep improving the product, strengthen customer support, and expand your reach to sustain growth.

Step 4: Maturity

Growth slowdown marks the start of the maturity stage. Even with strong demand, the market may reach a saturation point as competition increases. You may need to lower your prices to remain competitive. Additionally, during this stage, sales remain steady while costs decrease.

Marketing efforts at this stage now shift to highlighting your distinct product features, strengths, and customer service. Keep customers loyal to delay the decline stage.

Step 5: Decline

If your brand loses popularity among consumers, it may enter the final stage. As the market expands, competition will increase, and market share will be divided among various players. And an increase in competition often leads to a decrease in sales.

Factors Affecting the Product Life Cycle

You can manage your product’s concept, positioning, and marketing, but external factors still matter. Listed below are some key factors that can change how long a product stays in the market:

Ease of Entry

Costs, market size, and barriers to entry all shape your product’s lifecycle. With little competition and low barriers, your product’s life cycle may be shorter. On the other hand, harder entry often means less competition—and a longer product lifespan.

Technological Advancements

Industries with fast tech advancement, such as cell phones, tablets, or computers, tend to have short product lifecycles. Stay competitive by tracking tech trends, knowing your customers’ needs, and improving your product at the right time.

Market Acceptance Rate

How quickly your consumers accept your product can determine its success. Analyze the life cycles of similar products to gauge adoption speed, and use market research to forecast how fast people will get on board.

Economic Forces

Economic trends also affect product life cycles. For example, during lockdowns, people spent less or were more selective in buying habits, which slowed new product launches. When spending rises, growth tends to accelerate. The impact are dependent on your product, target market, and industry.

Real Life Examples of Product Life Cycle

What are examples of products at different stages of the product life cycle? Here are a few standouts from prominent global brands:

Coca-Cola

• Development – there is little information available about the formulation and development of Coca-Cola.

• Introduction – in 1886, the year of the brand’s founding, the brand appeared to have the right idea.

• Growth – Coca-Cola surpassed consumption in all states in the US within ten years of its launch.

• Maturity – while it’s impossible to pinpoint precisely when the brand reached maturity, it’s safe to say that most of its history has been spent in this stage.

• Decline – Coca-Cola’s net operating revenue has experienced a decline since 2012, which is typical for a mature stage. However, it is essential to continue investing in marketing and new products.

Havaianas

• Development – Japanese sandals made of straw or wood are believed to be the origin of traditional flip-flops. In Brazil, however, rubber was chosen as the material due to its perceived popularity among the audience.

• Introduction – the product’s introduction to the market proved successful among the C, D, and E classes, whether intentionally or not.

• Growth – Havaianas flip-flops experienced significant growth throughout their existence and eventually achieved a dominant market share of over 90 percent for flip-flops.

• Maturity – during the 1990s, there was a shift in product design and marketing aimed at a new demographic. Well-known actors starred in TV commercials, contributing to the industry’s growth and development.

• Decline – there is no indication that Havaianas flip-flops will undergo this phase soon.

How to Use the Product Life Cycle

In addition to understanding the concept, here are some best practices to consider applying to product life cycle strategies:

Establish Authority Over Competitors

During the introduction stage, the priority is to position your product in the market as the most desirable option based on the chosen benefit, whether it be affordability, luxury, or any other factor. The goal is to distinguish your product from competitors and position your brand as a credible expert in the industry. It is also important to develop effective product launch strategies and document the entire process properly for future reference.

Develop Pricing Strategies

Pricing strategies vary as products go through their life cycle. Introductory pricing is a marketing strategy that involves positioning oneself against competitors. Product pricing may vary during growth due to feature additions, availability, and other considerations. Competitive pricing can result in price reductions as a business becomes more mature. A decline typically results in a decrease in price or a return to the beginning.

Develop a Successful Marketing Strategy

Each stage of the product life cycle presents opportunities to refine your marketing strategy. Here are a few strategies to try for every phase:

• Introduction: Focus on creating product awareness through heavy promotion and advertising. Pricing can be set high for early adopters or low to gain quick market share.

• Growth: Emphasize brand building, product improvement, and expanding distribution. In the growth stage, marketing aims to differentiate from competitors and increase market presence.

• Maturity: Concentrate on customer retention, loyalty programs, and competitive pricing. Highlight product features and benefits to maintain market share amid competition.

• Decline: Reduce marketing expenditure, consider discontinuation or product updates. Focus on niche markets or liquidation strategies to maximize remaining value.