Product life cycle is the journey of a product from the development stage to the decline stage. A product introduced in the market undergoes 6 different stages until it is phased out of the market.
The concept of PLC is to help businesses to make decisions on how to grow and mature in the market place. PLC also represents the sales and profits generated by a product throughout its life. The life cycle of a product is affected by the two factors majorly :
- Changing needs of the customer
- Launch of new products with better efficiency
The journey of a product is defined in 6 stages:
This is the primary stage of PLC, in which the company does the research before introducing the product to the real market-place. In this phase, companies bring in investors, develop prototypes, test product efficiency, and strategize their launch. Because of the nature of this stage, companies invest a huge amount of money without bringing in any revenue. For a brand new product, this stage is hard because the first pioneer of a product is usually not so successful as later iterations. This development stage can last longer, depending on the product type, market size, and competition.
The second stage is when the product is introduced for the first time in the market-place. The marketing team focuses on advertising and promoting the product to spread awareness about the product through various campaigns reaching potential customers. In this stage, the sales are typically low and the demand builds slowly.
Usually, the introduction phase is focused on advertising and promotional campaigns. Companies work on branding, building distribution channels, and try to spread the word in the market about the product and educate potential customers. If these tactics are successful, the product moves to the next stage – growth.
During the growth phase, the consumers have accepted the product in the market and customers are beginning to truly buy-in, which means that the demand and profits are growing, hopefully at a progressive rapid pace. In this stage, the product’s market share is expanding and competition begins developing.
The potential competitors catch sight of success and want to move in. During this time, companies slightly shift their marketing campaigns’ focus from getting customers to buy the product to building a brand presence so consumers choose them over competitors.
This is the phase where companies begin to be more efficient and learn from the feedback and mistakes happened in earlier stages. At this point, the companies begin to reduce their prices to stay competitive in the market with the growing competition.
Marketing campaigns now shift their focus on differentiating rather than awareness. This means that the product might be innovated with enhanced features, prices might be brought down and the distribution method becomes more intensive.
After gaining enough recognition in the market, the product reaches the saturation stage. In this stage, the competitors have begun to take over the position, and the sales of the product standstill, showing neither a decline nor an increase. The product has already reached its target audience but there is a major threat of new entrants.
Marketers here focus on making their customers brand loyal to avoid entering the decline stage. They need to focus on differentiation factors, raising brand awareness and pricing strategies as well as customer service.
Unfortunately, If the product doesn’t continue to satisfy the demand of the customers and match up to the changes in the market, it enters the decline stage. Sales will start declining and are hard to overcome because of existing competition taking over the market.
Consumers tend to lose interest in the product, for example, in the case of Nokia, the company started off very well with their phones as they were the leading brand in the market. But it failed to adapt to the new innovations the technology introduced by its competitors and did not focus on the changing demands of the customer and thus entered the decline stage and eventually became extinct. If a company happens to be at this stage, they’ll either discontinue the product and sell the company or innovate their product in some way.
To extend the life cycle of a product, companies need to become customer-centric and change with the era by implementing new strategies, reducing prices, add some new features, or explore new markets.