What is the Product Life Cycle?
The product life cycle is quite simple. It has to be considered when a company is deciding on its marketing strategy. It is basically the many changes a product or service goes through starting with the initial idea and ending with the product being taken off sale and getting replaced.
The first stage of the product life cycle is research and development. It involves the idea being created, researched and tested. This stage can take anywhere from a few months to several years depending on the complexity of the product. Research and development is an expensive stage of the product life cycle. The company is not making any revenue from the product, which may be costing a lot to develop. It is also a crucial stage of the product life cycle as getting it wrong can affect the future sales performance and even affect the companies stability or reputation.
The second stage is known as introduction. This is the launch of the new product. It can again be an expensive time, as the product is not yet selling well, so the costs of the launch are not covered by the sales. Some products never make it to this stage as get abandoned after the prototype is made and tested.
The third stage in a products life is growth. This is when the product becomes more well known and starts selling well. The company may break even as costs become stable and sales boost revenue.
The fourth stage is maturity or saturation and can last for years. Sales are likely to be stable here and often in decline. Competitors may be taking some business away or the product may have fallen in popularity. The product has often been on sale for a long time at this point.
The final stage in the life cycle of a product is decline. The product is falling in sales. Prices may need to be lowered in order to keep the product selling.
Several things can be done to prevent the decline of a product.
- Increasing product usage. If a firm can market reasons why consumers must use a product more often, it can help increase sales. Drinking extra milk, cleaning your teeth more, doing extra exercise are some examples.
- Price reduction. This is very common. Lowering the price can result in extra sales and exposure.
- Product adaptation. Companies often change a product slightly. New colours, extra flavours etc. Releasing a chocolate bar with mint or other different varieties are common.
- Changing the products image. This is often done to please another audience, or perhaps upgrading a product to keep up with current trends.
- Promotional offers. Buy one get one free, half price and coupons. These can all be done to draw attention to a declining product and boost sales. Everyone loves a special offer!