We explain what happens at each stage of the product life cycle and how this concept is applied in marketing.
What is a product life cycle
Life Cycle Stages
Using the concept in marketing
How to extend the life cycle of a product
Disadvantages of the Life Cycle Concept
Expert advice
What is a product life cycle
Table of Contents
The product life cycle (PLC) is the process of describing the stages a product goes through from its creation to its withdrawal from the market.
Any product, regardless of the type of goods and brand, faces competition, technological development, changes in demand and consumer preferences. For example, now everyone uses smartphones, but 20 years ago push-button phones were popular, and even earlier – landline phones.
The LCP concept is applicable to all types of products and services, but the life cycle may be different in each case. The life cycle of a product may last several years or months. For example, Maggi bouillon cubes have been around since 1884 and are still in demand, but fashion products become obsolete every year, with one clothing model being replaced by another.
The LCP helps companies plan and manage cycles, optimize marketing, thereby extending the life of the product. Let’s talk about this in more detail.
You can learn how to use the product life cycle concept in the course “Product Marketer” . During lectures, students analyze the entire promotion cycle: from forming a USP to scaling a product, B2B marketing and the specifics of promotion in different areas of business. Upon completion of the course, students will add six projects to their portfolio and receive a diploma of professional retraining.
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Life Cycle Stages
Every product has four stages in its life cycle:
1. Launch
The company introduces the product to the audience through advertising, exhibitions and television. Profit at this stage can be zero or negative. The business spends money on launching the product, advertising, production, but does not yet make a profit or does not cover expenses.
2. Growth
The product begins to gain popularity, sales grow. The company reaches the break-even point, covers expenses and increases profits.
3. Maturity
Sales peak, the product is popular and in high demand.
4. Decline
The product becomes obsolete, more modern alternatives appear, because of this demand falls, sales become less and less. At this stage, the business decides whether to continue supporting the product or discontinue it. For example, smartphones quickly lose popularity due to the emergence of new models that offer better features at lower prices.
If a company cannot find a solution to modernize a product, it is taken off the market. For example, outdated smartphone models are removed from sale and replaced with newer, more popular models.
Using the concept in marketing
At each stage, the marketing strategy will be different. Here’s what it looks like.
● Market entry
informing consumers. Advertising at this stage is aimed at informing about the release of a new product. Companies post information in the media, social networks, talk about the advantages of the product, its useful properties, quality. At the start, the cost of the product is lower than that of direct competitors.
● Growth
maximizing market share. The company tries to increase the distribution of the product, for example, by starting cooperation with chain stores, trading platforms and marketplaces, launching advertising on all distribution channels: social networks, television, radio, etc.
At the growth stage, a product family may appear. For example, if a company produces smartphones, cases and headsets for these phone models may be produced in parallel. The price of the product is still below the market price.
Advertising budgets are still large. Marketing works for the brand’s reputation – PR of social projects, attracting the audience to closed channels where you can consult with experts, training materials on how to use the product are released, and tools for attracting a new audience are also used: SEO, SMM and others.
● Maturity
protection of market share. The company has competitors who can copy the key advantages of the product. At this stage, a loyalty program for regular customers, discounts for repeat purchases and other bonuses are introduced to retain customers.
Usually at the maturity stage the key role is played by the brand reputation, advertising is mainly of a reminder nature: mailings, calls to regular customers. The cost of the product corresponds to market prices.
The company is already preparing for a downturn, so it is paying attention to the transformation of the product line. To do this , market research and user surveys are conducted: it is necessary to find out what is missing in the product and understand how to fix it.
● Decline
reducing expenses and maintaining sales levels. Businesses begin to get rid of unpopular products or related products. The price becomes lower than the market price, advertising campaigns can only be conducted to sell off leftovers, and unprofitable points of sale are closed.
When the product is withdrawn from the market, after-sales and warranty service for customers will remain, so individual points are still operating.
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How to extend the life cycle of a product
It is easier to extend the life cycle of a product at the maturity stage, when it is still in demand, the customer base is large enough, and revenues allow spending money on transformation.
At the maturity stage, you can transform the product to meet market requirements. For example, if we are talking about software, you can expand the functionality of the software. For example, Microsoft constantly introduces new features into its products, so the demand for them remains for a very long time.
If demand has already started to fall, you can try to slow down the death of the product. As a rule, companies reduce prices, remove the least popular products from the product line in order to save on production.
Disadvantages of the Life Cycle Concept
There is one common flaw in the product life cycle concept: imprecision.
When a business is just planning to launch, it analyzes the audience, the market, and draws conclusions about the current situation. But before the product reaches the demand stage, the situation may change. For example, a strong competitor may enter the market, the product may be unclaimed, or a new law may appear that will affect sales.
When developing a promotion strategy, possible changes in laws, demand, competitive, economic and political environments are usually taken into account. But it is impossible to develop an action plan for every event. Therefore, business and marketing strategies must be flexible so that they can be rebuilt depending on the situation.
