What is Product Life Cycle?
Product life cycle is the progression of an item through the four stages of its time on the market. The four life cycle stages are: Introduction, Growth, Maturity and Decline. Every product has a life cycle and time spent at each stage differs from product to product.
Life Cycle Through the Stages
At the Introduction stage the product comes to the market and the business looks to get a foothold on the sales ladder by:
- Establishing branding and assuring the market of the quality of the new product.
- An initial low pricing policy to get into the market, though with little competition, price may be high initially to recoup development costs.
- Selection of a distribution model to get the product onto the market.
- Promotion of the product through aiming it at specific target groups such as online forums.
After successful Introduction comes the Growth stage. This will look to take developments at the first stage up to another level by:
- Maintaining the quality of the product and adding any extra services or support that becomes obvious during introduction.
- Keeping the price at a good level to maintain sales growth.
- Increasing distribution and sourcing new, faster ways of getting the product onto the shelves.
- Marketing campaigns aimed at a broader audience and at growing market share for the product.
With growth established, Maturity is the next stage of the life cycle. The business deals with this by:
- Adding features that will make the product differ from the inevitable competitors that enter the market.
- Cutting price to counter competition.
- Revising distribution channels and using incentives to encourage stores to stock the original product in preference to newcomers.
- New promotions that aim to show differences between products.
When the Decline happens the business will consider:
- Keeping the product on the market but adding or removing features or finding new uses for it.
- Reducing costs and production and keeping it just for a niche segment of the market.
- Discontinuing the product or selling the production rights to another company.
By keeping a strong hold on the four stages of a product life cycle, a business can maximise returns and realise when the time is right to divest itself of the product. By not doing so may cost the business money and lead to a limited life cycle for the product.