In this article, you will learn about What is Product Life Cycle.
‘Product Life Cycle’ refers to the progression of a product through all of its stages until it is finally retired from the market.
Table of contents
It is important to note that a product’s life span is finite, and it progresses through a series of stages ranging from introduction to growth, maturity, and decline, all of which are linked to changes in the marketing environment.
Product Life Cycle
Stage 1: Introduction
Product awareness and a market for the product are the primary goals of this stage of the product’s lifecycle. At this point, more money is needed to establish the product’s name, quality standards, and other intellectual property rights.
In order to gain a foothold in the market, the company can either lower the price of its product or raise the price to recoup the cost of development.
When a new product is introduced, advertising and personal selling are likely to be more effective because customers will only buy if they have enough information. It distributes its products through a selective distribution channel until customers show an interest in the product’s features.
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Stage 2: Growth
Increased sales and profits are seen in this phase. The firm’s overall profits increase as production increases, due to the benefits of economies of scale.
As a result of this strategy, the company aims to build brand recognition and expand its market share. At this point, other products of a similar nature are entering the market, and the company is attempting to maintain its quality while introducing new features and support services to compete.
The firm is able to maintain a reasonable price for its product because the competition isn’t as fierce here. As the number of potential customers grows, so does the network of distribution channels. As a result, the advertising is more likely to be effective due to the larger customer base and the need for a broader promotional tool.
Stage 3: Maturity
Slow growth and intense competition characterise this phase. Many companies produce similar products, so the new product model or its variants are introduced to set it apart from the competition.
Often, channel partners are given incentives to boost sales of their products over those of their competitors. At this point, sales promotion and one-on-one selling are critical. Sales are boosted by short-term incentives, such as gifts, vouchers, discounts and rebates, given to the public.
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Stage 4: Decline
At some point, the product will reach a point where profits are at their lowest, competition is fierce, and customers will begin to turn to better alternatives. A crucial decision has to be made by management here:
New features or new ways to use the product should be added to keep it fresh.
Reduce the production cost of the product and resell it to a specific market segment to reap the rewards.
In other words, stop selling the product and transfer your inventory to a new company that is ready to carry on with the project.
Every product goes through these stages, and a company should plan its marketing strategy based on the product’s current life cycle stage, as well.