To quote the lyrics of Grubson's iconic song "Na góra" (On the Top), "We are born to live. We live to die." It's not exactly groundbreaking, but when it comes to purely human existential issues, it's exhaustive. But why is a product born to die? What is the product life cycle like? And when can we speak of the immortality of matter? You'll find the answers to these and many other questions in this publication. We invite you to read it!
Are you responsible for introducing a new product to the market? Then you probably know what a product life cycle means. However, the average consumer isn't always aware that products, like people, go through specific phases during their existence. And they die too! In this respect, business closely mirrors the cycles of nature. What does this mean in practice?
Before we provide an example of a product life cycle, let's start with the basics...
What does product life cycle mean?
In simple terms, the product life cycle is the period during which a given good is available to consumers. That is, it is in the buyers' market and comes to their attention. For those wondering how to construct a product life cycle and what to expect from it, we offer a less surprising answer. The same as after a human life cycle!
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At the very beginning, an idea for a product emerges. Then we undertake various activities aimed at bringing "words to life." Although in this case, it would be more appropriate to write down a thought. Or an idea. The design of the product itself, its refinement and testing, and appropriate packaging (both physical and marketing). We have a lot to do before the product bearing our company's logo reaches store shelves and consumers' hands.
While our visions are undergoing the miracle of materialization, we can work on the entire promotional strategy and determine the path to market.
Will we roll out the red carpet and use megaphones to call for closer inspection of our new product? Or perhaps we'd prefer to do it more quietly? Anything goes, depending on the chosen strategy. But before we get there, let's first take a look at the specific phases. The product life cycle is quite formulaic in this regard – there will be no surprises.
Product life cycle – phases
Every product goes through different phases of its life. Applying these to the individual phases of our lives, we can talk about birth, growth, maturation, and… yes – death. However, in the case of products, we can defy "death" and strive to extend their lifespan. To achieve this, we need knowledge of the entire life cycle, focused on specific industries and goods. It will be a lot of work, but… immortality is worth it, right?
When it comes to the classic division of the product life cycle, we can distinguish 4 basic phases:
4 phases of product lifeThe individual phases of the life of a product introduced to the market differ mainly in the amount of revenue and profit achieved.
The first phase of the cycle , introducing the product to the market, is the most difficult for the company. Why? Because the costs are high, and the profit is practically zero. The product is unknown, so its distribution is usually difficult and requires a significant investment in promotion.
This is the moment when patience and careful observation are essential. The introduction of a new product must include a built-in timeframe for customer acquisition, for customers to be convinced that the product is high-quality and good enough to be worth buying. At this stage, we need to "hold the reins" and wait for reactions. This is where collecting customer feedback and being open to feedback comes in handy.
But that's not all. Successfully navigating the first phase of the product life cycle depends on the proper selection of marketing strategies . Quoting the Encyclopedia of Management, we can consider four basic strategies used during the stage of introducing a new product to the market:
- A strategy for quickly "skimming the cream" – characterized by setting a high entry price for a new product and intensive promotion. This approach works especially well when offered product There is no competition, and our company enjoys an impeccable reputation among customers. The goal? Quickly achieving profit.
- The strategy of slow "cream skimming" – In this case, the initial price of the product is also high, but we limit promotional costs. We can afford this if our brand has an established market position and the demand for the product we offer is limited.
- Rapid penetration strategy – Unlike previous strategies, here we apply the principle of maintaining a low product price and high promotional expenditures. This approach works well in a highly competitive and expansive market. Admittedly, however, it's a rather expensive proposition.
- Slow penetration strategy – the price here is also low, and we also limit our expenses advertisementThis approach will work well in the long run, but the benefits of scale will take time to materialize. It's worth considering this strategy if you operate in a large and highly competitive market and want to reach a broad audience.
Product life cycle - chart
source: www.mmstargard.plThe second phase of the product life cycle
After the hardships and high costs incurred in the first phase, it's time to "rebound." This, of course, means increasing sales. Their peak will be reached in the third phase, but already here we can speak of gradually increasing success and systematically increasing profit levels.
Achieving such results is only possible if our consumers accept the product and believe in "our brand philosophy." Importantly, the second phase of the product life cycle cannot lull us into a state of alertness. If things are going well, let's stay on track. Competition is fierce and constantly glares at us. Let's ensure the product maintains its high standard and top quality. Perhaps it's even worth considering improving it to better meet customer expectations?
marketing strategy in the sales growth phase The third phase of the product life cycle
We'd venture to say that things were already good, and now they're about to get even better! The third stage of the product life cycle is called the market maturity phase. It's characterized by the highest levels of sales and profits. After reaching this culmination, market saturation occurs.
Our product is chosen by regular customers who don't need additional incentives or advertising. They accept and appreciate the product, so they decide to add it to their carts again. Various promotions will reinforce their positive purchasing decision. This is simply a price-sensitive approach.
At this stage, our primary goal should be maintaining our market position while simultaneously expanding into new segments. In the literature, this is captured in the definitions of defensive and offensive marketing strategies.
The fourth phase of the product life cycle
We're moving on to the final, fourth phase. Decline doesn't sound particularly optimistic, but it's a natural consequence of product development. And the proverbial "final straw" in its lifespan. We most often reach this point as a result of competitive activity and market saturation. Furthermore, the product we offer may simply not have stood the test of time – due to technological advances or shifting consumer preferences. Who becomes our target group? Those resistant to change and innovation.
At this stage, most companies decide to "kill off" their product . This demise usually occurs after all the raw materials that make up the product have been used up or the last units have been sold (for example, by lowering the price).
However, if a manufacturer knows how to extend a product's lifespan and wants to keep it on the market, this is the last chance! Achieving these goals may translate into changes to our product's appearance, function, or intended use.
However, you should be aware that this may be a costly undertaking without a satisfactory outcome.
important
To rationally manage a product at every stage of its lifecycle, knowledge of the specifics of marketing activities and a narrow focus on individual phases are essential. This will allow us not only to optimize the product's introduction, sales, and withdrawal processes but also to precisely define its lifecycle. This can be as short as a few weeks (the cycle will be very rapid, and demand for a specific product will be short) or as long as many years.
Product life cycle – example
Much theory has already been explored, which we will now present using a selected example. The product life cycle we will examine concerns a mobile phone. A remarkably durable one!
We place a strong emphasis on innovation. In our communications, we highlight how the product differs from the competition. In the case of our dream mobile phone, for example, this might involve a highly durable case that can withstand a 30-story drop and leave the phone intact.
If similar models already exist on the market, let's emphasize that the smartphone is also lightweight and elegant. This is important – we buy with our eyes and we like beautiful things! Add to this prestige and a narrow target group, and we've launched a powerful object of desire! Let's play with its price and tailor the promotional costs accordingly. Any evidence of the absolute freshness and unrivaled nature of the offer is worth its weight in gold!
Our smartphone already has its devoted fans. It's also quite recognizable in the market, and its position is more established. We boast about it in our announcements, highlighting its strengths, which have been verified by the market.
For example, we can mention that for two years now, our phone has held the undisputed lead in 15-meter drop tests. Supporting this with research results and comments from satisfied customers will also prove the strength of our brand.
At this stage of the product lifecycle, everyone (or at least most) knows what features a smartphone offers and what its strengths are. Our company also enjoys trust, and that's precisely what we'll build our message on.
The growth phase is when we need to think about attracting customers with promotions. Our target audience is defined. We rely primarily on reliable customers who have already added our product to their carts and want to do so again. Perhaps it's worth surprising them?
How about refreshing a timeless model and giving it a bit of designer flair? Maybe some new features as a bonus? A promotion with a temporary price drop sounds good too!
This is the final call to "go overboard." Literally, both for the company and in customer communications. Your product will soon be out of business. It will be replaced by the competition, new technology, and more interesting designs. What do we do?
We're offering our iconic smartphone at a great price! Only now, and only until the end of the year, you can get it for 15% less!
What do we gain by playing this game? We're getting rid of the last models and preparing to launch a new phone. The king is dead, long live the king!
We hope our article has thoroughly explored the product life cycle. If you're still looking for valuable content, we encourage you to continue exploring our blog.
Frequently asked questions about the product life cycle
This market concept describes the path a product takes from its introduction to the market until it is completely withdrawn from sale. Analyzing this cycle helps companies understand consumer behavior and adapt marketing, pricing, and production strategies accordingly at each stage.
The classic model includes four basic stages:
- Introduction (Implementation): The product is first introduced to the market. Sales growth is slow, and marketing and customer education costs are very high, so the company rarely generates a profit at this stage.
- Growth: The product is gaining popularity, and sales are growing rapidly. Initial profits are being generated, but so are the first competitors.
- Maturity: Sales peak and the market becomes saturated. Competition is fiercest, often forcing price wars or product modifications.
- Decline: Interest in a product declines (e.g., due to technological advances or changing fashions). Sales and profits drop dramatically, and the company prepares to discontinue the product.
In the implementation phase, marketing focuses on building brand awareness and communicating the product's essence. In the growth phase, when customers are already familiar with the product, marketing activities shift their focus from mere education to building brand loyalty and highlighting competitive advantages to encourage customers to choose our offering.
The maturity phase is the most profitable, so companies strive to prolong it as much as possible. They do this through product modification (adding new features, changing the design), seeking new customer segments or geographic markets, repositioning (finding new uses for the product), and intensive loyalty programs.
No. Some products (e.g., one-season hits or fads) rapidly transition from launch to decline, completely bypassing the stable maturity phase. Others, on the other hand, may fail from the outset and be discontinued during the launch phase, never reaching the growth stage.
It allows for optimal management of the company's budget and resources. Thanks to it, managers know when to invest heavily in promotion (implementation and growth), when to maximize profits and optimize costs (maturity), and when to phase out production and begin investing in the development of a completely new product to replace the one being phased out.
Summary
The above article covers the following topics:
- The product life cycle is the period from idea generation through market introduction to withdrawal. Products go through successive phases of existence and ultimately "die" unless the company takes steps to extend their lifespan.
- There are four phases of the cycle: introduction with high costs and zero profit, growth with gradually increasing sales, maturity with the highest level of profits, and decline leading to product withdrawal or modification.
