What is a product life cycle?
A product life cycle is the period of time from when a product is introduced to market up until it is no longer in circulation in the market. As the name suggests, this is a cycle, meaning that this process happens continually as the product moves through the various stages in the product life cycle. The product life cycle is made up of four stages: introduction, growth, maturity, and decline.
- A product life cycle refers to the process from introducing a product to market through to when it exits a market
- The product life cycle has four stages: the introduction stage, the growth stage, the maturity stage, and the decline stage
- At each of these stages, a product’s marketing, strategy, sales, and costs look different
- It’s important to understand the product life cycle for a more successful business
Why is the product life cycle important to know?
The product life cycle is important for everyone involved in the process to understand, from marketers to product developers. For a product’s success, it’s important to do a deeper dive into its product life cycle. Each of the product life cycle stages requires various strategies for success, and these stages help guide decision-making processes when it comes to the product. Additionally, the product life cycle for every single product is also different and must be considered when looking at the various stages. By understanding these concepts, it makes you well-informed to have overall success in the marketplace.
What are the five product life cycle stages?
Now let’s do a deeper dive into each individual stage.
1. Introduction Stage
The introduction stage occurs once a product has been developed. During this stage, the product is introduced to the market for the very first time. Companies are able to gauge initial response to the product from consumers, giving them a good idea of where the product is headed in terms of success. The overall goals of this stage are to generate demand from consumers for the product and bring the product to market.
Costs during this stage are very high compared to others for a few reasons. First, a lot of consumer and market research goes into this stage, to figure out the best method to launch and the best markets to launch in. Second, marketing and promotion are critical during this stage, and companies tend to spend the most on these areas to generate demand and pique consumer interest. Money spent in both market research and marketing aims to pivot the product towards success.
2. Growth Stage
After the introduction stage, a successful product enters the growth stage of the product life cycle. This stage is characterized by the product gaining increased demand and acceptance among consumers, the market, and the public.
During this stage, companies will see sales and profitability increase at a growing rate. Marketing and promotion are still key at this stage, though they may look different. It is likely that word-of-mouth marketing is impactful during this stage – as more consumers try out the company’s product, they will recommend it to their peers. At this stage, competition may increase as other companies see the success of a product and want to emulate the product for their own gains. Because of this, companies want to keep their products top of mind for consumers, and branding is extremely important.
3. Maturity Stage
Next, the product will move into the maturity stage. At this stage, the product is well-established within the marketplace. Sales will slow down or drop as the product tends to reach its peak at this stage and go into a steady decline. As well, this stage is characterized by market saturation as competitors from the Growth stage start to ramp up. This competition combined with lower demand will make it hard for a product to maintain the success it saw in the Introduction or Growth stages. If companies want to go back to growth, they will need to be innovative. Usually, they do this by either changing or making adjustments to the product to make it plausible to reach different market segments not yet captured by competitors. This is referred to as product extension. Marketing at this stage focuses on differentiating the product from competitors.
4. Decline Stage
The decline stage signals the end of the product life cycle. During this stage, product sales, and subsequently, profits, are significantly lower than in previous stages. This could be due to a variety of reasons including being in a market that is way too saturated, and new innovations or trends that drive the market elsewhere. At this stage, marketing efforts are low and aimed at retaining customers who are loyal to the product. For all these reasons, unless the company is able to innovate and re-generate demand, the product will eventually exit the market.
Example of each of the product life cycle stages?
To put all of this information into context, let’s look at the example of Apple’s iPod and its product life cycle.
The iPod was first introduced on October 23, 2001, by Apple. During the introduction stage, the iPod was seen as most innovative relative to other ways of listening to music, with better technology and a ‘cooler’ feel. This generated a lot of demand as people wanted a new way to listen to their favourite music.
At the Growth stage, there was increased competition as MP3 players became all the rage. Because of this competition, Apple introduced variations of the iPod, with the iPod Mini, iPod Nano, iPod Shuffle, and iPod Touch. By doing this they continued their growth and gained popularity amongst their market.
A few years later, the iPod seemed to reach the maturity stage as sales peaked then started to decline.
Their decline stage quickly followed, especially as Apple launched their first iPhone in 2007, the iPod became less popular and seen as not necessary to purchase. Eventually, the iPod models (aside from the iPod touch) exited the market altogether.