Product life cycle strategy is designed to assist businesses in making strategic decisions on how to evolve and grow in the marketplace. Marketing professionals must recognize that tactics and strategies will change as your company moves from stage to stage.
In a nutshell, a new product will market differently than an existing, mature product. A brand new product’s marketing focus is on raising awareness and a well-established product’s focus is on maintaining awareness.
Below, let’s review the product life cycle — from learning about what it is, what the stages are.
What is the product life cycle?
A product’s life cycle refers to the process by which a product goes from conception to completion. It’s usually broken down into six stages. Marketing professionals and business owners use it to decide when, where, and how much to advertise, set prices, package products, and market products.
Stages of a product life cycle
In the development stage of a product’s life cycle, research will take place before the product is introduced to consumers. In this phase, companies raise funds, develop prototypes, test product effectiveness, and strategize the launch of their products. During this stage of development, companies spend a great deal of money without realizing any revenue because the product has not been sold yet.
The length of this stage depends on the complexity of the product, its newness, and its market competition. The development stage of a completely new product is usually not as successful as later iterations because the first pioneer is usually not as successful.
The introduction stage is when a product is first launched in the marketplace. This is when marketing teams begin building product awareness and reaching out to potential customers. Typically, when a product is introduced, sales are low and demand builds slowly.
Advertising and marketing campaigns are usually the focus of this phase. In an attempt to educate potential customers, companies build brands, test distribution channels, and enlist the help of consultants. A successful launch will advance the product into a new stage — growth.
In the growth stage, customers have been accepting the product on the market, and sales are increasing as a result. This means profits are growing and demand is rising, hopefully at a steady clip.
Market expansion and competition take place when the product reaches the growth stage. Potential competitors see success and want in. At this point, during the growth stage, marketing campaigns shift from obtaining buy-ins from consumers to building their brand to ensure consumers choose them instead of their competitor.
Furthermore, as the company grows, it will add more distribution channels and features and add support services.
As sales begin to slow from the rapid growth period, the maturity stage is believed to be a time when the market has reached its peak. In order to stay competitive amongst the growing competition, companies begin to reduce their prices at this point.
During this phase, a business becomes more efficient and learns from the mistakes made during the introduction and growth phases. Differentiation over awareness is typically the focus of marketing campaigns. This means increased product features, lower prices, and more intensive distribution.
As products mature, they begin to reach their most profitable stage. While sales are increasing, the cost of production declines.
In the product saturation stage, competitors have taken a substantial share of the market, and products will neither continue to grow nor decline in sales.
There are usually many competing companies at this point, when most consumers are using the product. By the time you reach this point, your product should be the brand-preferred choice, avoiding the decline stage.
Again, companies have to emphasize features, brand awareness, price, and customer service in order to differentiate. At this stage, the competition reaches its peak.
In most cases, if your product doesn’t become the favorite brand in a marketplace, you should experience a decline in sales that is tough to reverse. It is almost impossible to overcome the increased competition due to the heightened competition.
Additionally, consumers might lose interest in your product as time goes on.
At this stage, a company will either discontinue its product, sell its company, or innovate and modify its product.
Successful companies can boost the product life cycle by lowering product prices, adding new features to increase value propositions, exploring new markets, and adjusting their brand packaging.
The best companies tend to have more than one product during the product’s lifetime.
You can use the product life cycle stages as a guide for your marketing campaign no matter if you’re developing a brand new product or working with an established brand. Learn more about 6thSolution products.