Table of contents
As the song “Live Like You Were Dying” by Tim McGraw reminds us, that life is short, and we should make the most of every moment. Although it may not be groundbreaking, it exhausts the topic of purely human existential problems. But why do products come to life just to die? How does the product life cycle proceed? And when can we speak of the immortality of matter? Answers to these and many other questions can be found in this publication. We invite you to read on!
Are you responsible for introducing a new product to the market? Then you probably know what the product life cycle means. However, the average consumer may not be aware that products – like people – go through specific phases. And they also die! In this regard, business closely mirrors the cycles that exist in nature. What does this mean in practice?
Before we serve up an example of a product life cycle, let’s start with the basics…
What does the product life cycle mean?
In simplest terms, the product life cycle is the period during which a given product is available to consumers. It is on the market for buyers and catches their attention. For those wondering how to create a product life cycle and what to expect from it, we answer in a not-so-surprising way. The same things you can expect from the life cycle of a human!
At the very beginning, there is an idea for a given product. Then we undertake various activities that are meant to make the “word become flesh” – or rather, the thought or image. The design of the product itself, its refinement and testing, the appropriate packaging (both physical and marketing). We have a lot to do before the product with our company’s logo reaches the store shelves and the hands of consumers.
While our visions are embodied, we can work on the entire promotion strategy and determine the path for introducing the product to the market.
Will we roll out the red carpet and call for a closer acquaintance with our novelty through megaphones? Or do we prefer to do it more “quietly”? All methods are allowed, depending on the chosen strategy. However, before we get to it, let’s first look at the specific phases. The product life cycle is quite schematic in this regard – there will be no surprises.
Product Life Cycle – Phases
Every product goes through various stages of its existence. Referring to them as phases of our lives, we can talk about birth, adolescence, maturity, and… yes, death. Although, in the case of products, we can oppose “death” and fight to extend their lifespan. To achieve this, we need knowledge about the entire cycle, with a focus on specific industries and goods. There will be a lot of work, but immortality is worth it, isn’t it?
As for the classic division of the product life cycle, we can distinguish four basic phases.
The individual phases of a product’s life on the market differ mainly in the level of revenue and profit achieved.
The first phase of the cycle, introducing the product to the market, is the most difficult for a company. Why? Because we incur high costs, and the profit is practically zero. The product has yet to be discovered, so its distribution is usually tricky and requires much effort in promotion.
This is the moment when patience and careful observation are necessary. Introducing a new product must have an extended time frame built into its customer acquisition plan. It takes time to convince them that the product is good quality and worth buying. At this stage, we need to “hold our horses” and wait for reactions. This is where collecting feedback from customers and being open to feedback will come in handy.
However, that’s not all. The successful passage through the first phase of the product life cycle depends on choosing the right marketing strategies. Quoting the Management Encyclopedia, we can consider four basic methods used at the stage of introducing a new product to the market:
- The quick “cream-skimming” strategy – is characterized by setting a high initial price for the new product and intensive promotion. This approach works particularly well when the product has no competition, and our company enjoys an impeccable reputation among customers. The goal? Quick profit.
- The slow “cream-skimming” strategy – in this case, the product’s initial price is also high, but we limit the costs associated with a promotion. We can afford this if our brand has a well-established position on the market and demand for our product is limited.
- The rapid penetration strategy – in contrast to the previous strategies, here we apply the principle of maintaining a low price for the product and high advertising expenditures. This approach works well with solid competition and an extensive market. However, let’s not kid ourselves – it’s a rather costly game.
- The slow penetration strategy – here, the price is also low, and we additionally limit expenses on advertising. Such an approach will pay off in the long run, but we’ll have to wait for profits based on scale. It’s worth considering adopting this strategy if we operate in a large and highly competitive market and want to reach a broad group of customers.
The second phase of the product life cycle
After the difficulties and high costs incurred in the first phase, it’s time for a “rebound.” Of course, we’re talking about increasing sales figures. The peaks will be reached in the third phase, but even here, we can speak of gradually growing success and a steadily rising profit level.
Achieving such results is only possible when our consumers accept the product and believe in “our brand philosophy”. Notably, the second phase of the product life cycle should not make us complacent. Let’s keep our finger on the pulse if things are going well. Competition is fierce and constantly keeping an eye on us. Let’s maintain the level and highest quality of the product. May it even be worth considering improving it even more precisely to meet our customers’ expectations?
The third phase of the product life cycle
It was already good, and now it will be even better! The third level of the product life cycle is called the stage of market maturity. It is characterized by the highest level of sales and profit. After reaching the culmination point, the market becomes saturated.
Our product is chosen by loyal customers who do not need additional incentives or promotional offers. They accepted and appreciated the product and put it back in their basket. Different types of promotions will strengthen the guarantee of making a favorable purchase decision. In other words, playing with the price.
At this stage, our primary goal should be to maintain our position in the market while at the same time gaining new segments. In marketing literature, this is expressed in the definition of defensive and offensive marketing strategies.
The fourth phase of the product life cycle
Let’s move on to the last, fourth phase. The decline could sound more optimistic, but it is a natural consequence of product development. And it is the proverbial “dot on the i” in its life. We usually reach this point as a result of competition and market saturation. Additionally, our offered product may simply not survive the test of time – due to technological progress or changes in consumer preferences. Who becomes our target group? Those resistant to change and innovation.
Most companies decide to “kill” the offered product at this stage. The destruction usually takes place after using up all the resources that make up the product or selling its last pieces (due to, for example, a price reduction).
However, if the producer knows how to extend the product life cycle and wants to keep it on the market, this is the last moment! Implementing the assumptions can result in a change in the appearance, function, or use of our product.
However, it should be noted that this can be a costly endeavor without a satisfying finale.
Knowledge of marketing strategies and a focused approach in each phase is necessary to manage a product at every stage of its existence effectively. This will not only optimize the process of product introduction, sales, and withdrawal but also define the length of its life cycle. It may last only a few weeks (with a very rapid cycle and short demand for a specific product) or several years.
Product Life Cycle – Example
There has been a lot of theory already, which we will present using a selected example. The product life cycle we are examining will refer to a mobile phone. An exceptionally durable one!
- Introduction Phase
We place a great emphasis on innovation. In our communications with the customer, we highlight what differentiates the product from the competition. In the case of our fictional mobile phone, it could be, for example, a very durable case that can withstand a fall from the 30th floor and leave the phone undamaged.
If there are already similar models on the market, we emphasize that the smartphone is also lightweight and elegant. This is not insignificant – we buy with our eyes and like beautiful things! If we add prestige and a narrow target group to this – we will introduce a substantial object of desire to the market! Let’s play with its price and adjust the promotion costs accordingly. All evidence of the absolute freshness and unbeatability of the offer is worth its weight in gold!
- Growth Phase
Our smartphone already has loyal fans. It is also quite recognizable on the market, and its position is more solidified. We brag about this in our communications, highlighting the strengths that the market has verified.
For example, for the past two years, our phone has had an undisputed leadership position in durability tests during a fall from 15 meters. We can support this with research results and comments from satisfied customers. Information about the strength of our brand will also prove itself.
- Maturity Phase
At this stage of the product life cycle, everyone (or at least most people) knows what features the smartphone offers and what its strengths are. Our company can also enjoy trust, which we will build our communication on.
The growth phase is the moment when we need to think about attracting customers with promotions. Our target group is specific. We are mostly based on reliable customers who have already put our product in their basket once. And they want to do it again. It may be worth surprising them with something.
What about refreshing the immortal model and adding a bit of a designer touch? Maybe some new features as a bonus? A promotion with a temporary price drop also sounds good!
- Decline Phase
This is the last chance to “go all out.” And that is literal – both for the company and in communication directed at the customer. Your product will soon drop out of the game. It will be replaced by competition, new technology, and a more exciting design. What do we do?
We offer our iconic smartphone model at a super price! Only now, until the end of the year, it can be purchased for 15% cheaper!
What do we gain by playing this game? We are removing the last models and preparing to introduce a new phone to the market. The king is dead, long live the king!
We hope that our article has thoroughly dealt with the product life cycle. For those who still need more valuable content, we invite you to continue exploring our blog.