Contents
- Product Lifecycle
- Main Stages of the Product Lifecycle
- Varieties of the Product Lifecycle
- How to Extend the Product Lifecycle
- Managing the Product Lifecycle
Product Lifecycle
The product lifecycle (PLC) represents the time period that begins with the creation of a product and ends with its disappearance from the market. Every product or service goes through this cycle, which can vary in duration depending on the product category, usage conditions, competitive environment, fashion trends, technological changes, and consumer preferences. For instance, the legendary drink Coca-Cola has been around for over 130 years, while many mobile phone models are discontinued just 2-3 years after their release.
Analyzing the product lifecycle is an important tool in business planning. By knowing which stage the product is in, companies can develop more effective marketing strategies, choose appropriate promotion and sales stimulation methods. However, it is worth noting that a drawback of this concept is that it is based on empirical experience and does not always allow for mathematically accurate forecasts. In the early stages, it is difficult to predict what kind of lifecycle your product will have and whether it can return to a growth stage after reaching maturity.
Main Stages of the Product Lifecycle
The classic theory of the product lifecycle includes four main stages: market introduction, growth, maturity, and decline. An expanded version includes additional stages—development and market exit. Each stage is characterized by specific sales volumes and profits generated by the product. To determine which stage the product is in, it is enough to plot these indicators. The duration of the stages can vary and depends on the product characteristics and the manufacturer's marketing strategy.
1. Product Development
At the product development stage, companies need to study the needs of the target audience, determine the characteristics and properties of the product, select production technologies, and create and test a prototype. Simultaneously, the manufacturer conducts market analysis and economic calculations to understand whether the product will be profitable at current prices and demand, and whether it can successfully enter the chosen niche.
2. Market Introduction
At this stage, the company launches the new product into the market and starts making its first sales. This can be a finished product, a minimum viable product (MVP), or a prototype. During this period, the product is often little known, and its sales occur in limited volumes. The primary task of the manufacturer is to attract the target audience's attention through advertising campaigns and to use methods such as trial marketing, allowing customers to test the product.
3. Sales Growth
At the growth stage, the product begins to gain market share. Awareness of the product increases, and demand for it rises. This allows the company to increase production volumes and reduce costs, thereby increasing profits. At the same time, competitors begin to respond more actively to the emergence of the new product, which requires the manufacturer to pay attention to distribution, product range, and pricing policy.
4. Product Maturity
At this stage, the product occupies a stable position in the market, and demand for it remains high. The company has a loyal audience and regular customers. It is important to maintain brand recognition and customer loyalty, as competition may increase.
5. Sales Decline
At this stage, interest in the product begins to wane. Newer, more technologically advanced or fashionable products emerge, leading to a decrease in demand for the old product. The company needs to keep only the most profitable items in stock and optimize advertising expenses.
6. Market Exit
When the product becomes unnecessary for the audience, it is taken out of production. Although it may still be in use, the manufacturer stops servicing it and does not provide warranties.
Varieties of the Product Lifecycle
Despite the classic PLC model, products can develop according to various scenarios. Let’s consider some of them:
- Growth-Decline Curve: Sales grow quickly, reach a peak, and then decline just as quickly, but there remain loyal customers.
- Constant Growth Curve: Sales continue to grow or remain stable at a high level due to constant product improvements.
- New Peaks Curve: The product does not decline in demand but enters a new growth phase post-maturity due to improvements and innovations.
- Repeat Cycle Curve: After a decline, the product may experience renewed growth, often due to seasonal demand or current fashion trends.
- Failure Curve: The product fails to find demand and quickly exits the market.
How to Extend the Product Lifecycle
To extend the product lifecycle, companies can use various strategies:
- Improve Characteristics: Add new features or enhance quality.
- Update Design: Create new packaging or improve the interface.
- Attract New Audiences: Find new market segments to stimulate demand.
- Change Positioning: Alter the product's image to attract new customers.
- Expand Distribution: Ensure product availability across different sales channels.
- Adjust Pricing: Regulate prices based on demand.
- Offer Promotions and Discounts: Stimulate demand through special offers.
- Launch a New Advertising Campaign: Remind consumers about the product.
Managing the Product Lifecycle
At each stage of the product lifecycle, companies need to set different goals and objectives related to the product, pricing, promotion, and distribution:
- Market Introduction: Gather feedback, establish pricing strategy, and engage in active advertising.
- Sales Growth: Improve quality, engage in competitive price battles, and promote actively.
- Maturity: Maintain quality and seek new markets.
- Sales Decline: Revise the product or reduce its market presence.