9.3 The Product Life Cycle
3 min read•june 25, 2024
The model guides marketers through a product's journey from launch to decline. It helps companies adapt strategies, predict sales, and make crucial decisions about improvements or discontinuation. Understanding this cycle is key to maximizing a product's success and longevity in the market.
Each stage of the cycle—introduction, growth, maturity, and decline—requires unique marketing approaches. From creating awareness and educating consumers to maintaining and managing costs, marketers must adjust their tactics to match the product's current stage and market conditions.
Product Life Cycle
Concept of product life cycle
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- Model that describes the stages a product goes through from introduction to withdrawal or decline
- Helps companies understand how sales and profits of a product change over time enables marketers to adjust strategies at each stage to maximize success
- Assists in developing effective marketing strategies for each stage
- Helps predict sales and profit potential facilitates better resource allocation and budgeting
- Enables decision-making regarding product improvements, , or discontinuation
Stages of product life cycle
- involves low and slow growth, high marketing costs to create awareness and educate consumers (advertising), little or no competition, and negative or low profits due to high investment and low sales
- characterized by rapid sales growth and , increased competition as new entrants are attracted by success (smartphones), marketing focus shifts from awareness to , and profits increase as sales grow and costs decrease due to economies of scale
- reached when sales peak and is reached, intense competition leads to price wars and reduced (soft drinks), marketing emphasizes differentiation, brand loyalty, and , and cost control becomes crucial to maintain profitability
- occurs when sales and profits decline as the product becomes obsolete or loses relevance (VCRs), competition decreases as firms exit the market, marketing focuses on loyal customers and reducing costs, and decisions about or strategies are made
Marketing strategies across lifecycle
- Introduction stage strategies:
- Emphasize and education through intensive promotion (social media campaigns)
- Set prices based on target audience and objectives like or (iPhone)
- Distribute selectively to key markets and channels (specialty stores)
- Focus on and (tech enthusiasts)
- Implement to identify and target specific customer groups
- Growth stage strategies:
- Expand distribution to new markets and channels (mass retailers)
- Enhance product features and quality to differentiate from competitors (added camera features)
- Adjust pricing to maintain competitiveness and market share (price reductions)
- Shift promotion focus to brand preference and loyalty (emotional advertising)
- Invest in to stay ahead of competitors and meet evolving customer needs
- Maturity stage strategies:
- Modify product to maintain differentiation and relevance through new features, packaging, or positioning (Coca-Cola flavors)
- Implement price adjustments to defend market share and profitability (discounts)
- Optimize distribution efficiency and effectiveness (streamlined logistics)
- Emphasize brand loyalty and customer retention through targeted promotions and relationship marketing (loyalty programs)
- Refine the to address changing market conditions and consumer preferences
- Decline stage strategies:
- Streamline product offerings by eliminating underperforming variations (limited editions)
- Reduce prices to liquidate inventory and maximize remaining profit (clearance sales)
- Selectively distribute to most profitable channels and markets (e-commerce)
- Minimize promotional expenditures and focus on loyal customers (email marketing)
Product Management and Planning
- Develop a diverse to balance risks and opportunities across different lifecycle stages
- Utilize techniques to anticipate market trends and adjust production accordingly
- Monitor and manage to maintain relevance and competitiveness in the market
Key Terms to Review (27)
Brand Loyalty: Brand loyalty refers to the deep commitment and preference a consumer has towards a particular brand, leading to consistent repurchasing of the brand's products or services over time. This strong attachment to a brand goes beyond just liking or preferring the brand, and is a critical factor in consumer markets and buying behavior, product positioning, branding strategies, and promotion mix elements.
Brand Preference: Brand preference refers to a consumer's tendency to choose one brand over others within a product category, based on their perceptions, experiences, and emotional connections with the brand. It is a crucial factor in driving consumer behavior and brand loyalty.
Customer Retention: Customer retention refers to a company's ability to keep its existing customers over time. It is a critical aspect of business success, as retaining customers is generally more cost-effective than constantly acquiring new ones. Customer retention strategies focus on building long-term relationships and ensuring customers remain loyal to the brand or service.
Decline Stage: The decline stage is the final phase in the product life cycle, where a product experiences a gradual decrease in sales and profitability over time. This stage is characterized by diminishing demand, increased competition, and the need for strategic adjustments to maintain the product's viability in the market.
Demand Forecasting: Demand forecasting is the process of predicting future customer demand for a product or service. It is a crucial aspect of both product life cycle management and supply chain functions, as it allows businesses to make informed decisions about production, inventory, and distribution planning.
Early Adopters: Early adopters are the first segment of the population to embrace and adopt a new product or technology. They are typically more risk-tolerant, tech-savvy, and eager to try innovative offerings before the mainstream market. Early adopters play a crucial role in the product life cycle, consumer adoption process, and how customers perceive new products.
Growth Stage: The growth stage is a phase within the product life cycle where a product experiences increased sales and market acceptance after the initial introduction. During this stage, the product gains traction and popularity among consumers, leading to accelerated growth in demand and revenue.
Harvesting: Harvesting refers to the process of collecting or gathering a product or crop at the end of its life cycle. It is a crucial stage in the product life cycle, where the focus shifts from production to maximizing the value and profitability of the product before it is eventually retired from the market.
Innovators: Innovators are the first individuals to adopt a new product or technology. They are the pioneers who are willing to take risks and try something novel, often driven by a desire to be on the cutting edge of innovation.
Introduction Stage: The introduction stage is the first phase of the product life cycle, where a new product is launched and made available to the market. This stage is characterized by low sales, high costs, and the need to build awareness and interest among potential customers.
Market Acceptance: Market acceptance refers to the degree to which a product or service is adopted and embraced by the target market. It is a critical measure of a product's success and its ability to meet the needs and preferences of consumers within a specific market.
Market Saturation: Market saturation refers to a situation where a product or service has reached its maximum potential for sales or market share within a given market. It occurs when the majority of the target audience has already purchased the product, leaving little room for further growth or expansion.
Market Segmentation: Market segmentation is the process of dividing a broad consumer or business market into subsets of consumers or businesses that have, or are perceived to have, common needs, interests, and priorities. Marketers can then design and implement strategies to target these specific segments with offerings that match their unique needs and characteristics.
Marketing Mix: The marketing mix is a fundamental concept in marketing that refers to the combination of four key elements - product, price, place, and promotion - that a business uses to achieve its marketing objectives and satisfy the needs of its target market. These four elements, often referred to as the 4Ps, work together to create a cohesive and effective marketing strategy that helps a business differentiate itself, reach its customers, and ultimately drive sales and profitability.
Maturity Stage: The maturity stage is a critical phase in the product life cycle, where a product has reached its peak sales and market share. During this stage, the focus shifts from rapid growth to maintaining a stable market position and maximizing profitability.
Penetration Pricing: Penetration pricing is a pricing strategy where a company sets a low initial price for a product or service in order to attract a large customer base and gain market share. The goal is to establish the product or service in the market and create brand awareness, with the expectation that prices can be raised later once a dominant market position has been achieved.
Product Awareness: Product awareness refers to the level of knowledge and understanding that consumers have about a particular product or service. It encompasses the extent to which potential customers are familiar with a product's features, benefits, and availability in the market.
Product Differentiation: Product differentiation is the process of distinguishing a product or service from others in the market to make it more attractive to a particular target audience. It involves identifying and highlighting unique features, qualities, or benefits that set a product apart from its competitors, allowing it to command a premium price or gain a competitive advantage.
Product Discontinuation: Product discontinuation refers to the process of permanently removing a product from the market or a company's product lineup. It involves the decision to cease production, distribution, and sale of a particular product, often due to various factors such as declining sales, changing market demands, or the introduction of newer, more competitive products.
Product Innovation: Product innovation refers to the process of developing and introducing new or significantly improved products or services to the market. It involves creating unique offerings that address unmet customer needs or enhance existing solutions, often through the application of new technologies, designs, or features.
Product Life Cycle: The product life cycle is a model that describes the stages a product goes through from its introduction to the market until its eventual decline. This concept is central to understanding how products evolve and how marketers should adapt their strategies to effectively manage a product throughout its life cycle.
Product Obsolescence: Product obsolescence refers to the process by which a product becomes outdated or no longer useful due to the introduction of newer, more advanced, or more efficient products in the market. It is a natural phenomenon driven by technological advancements, changing consumer preferences, and the life cycle of a product.
Product Portfolio: A product portfolio refers to the collection of all the products and services offered by a company. It encompasses the various product items, product lines, and product mixes that make up a business's overall product offering to its customers. The management and strategic planning of a company's product portfolio is a crucial aspect of marketing and product management.
Profit Margins: Profit margin is a financial metric that measures the percentage of revenue that a business retains as profit after accounting for all expenses. It represents the efficiency and profitability of a company's operations and is a crucial factor in evaluating its financial health and performance.
Repositioning: Repositioning refers to the process of modifying a product's positioning or image in the minds of consumers. It involves altering the product's features, benefits, or target market to better align with changing customer needs and preferences, often in response to evolving market conditions or competitive pressures.
Sales Volume: Sales volume refers to the total number of units or the total monetary value of a product or service sold over a specific period of time. It is a crucial metric used to measure the success and performance of a business or a particular product within the business. Sales volume is closely tied to the product life cycle, marketing strategies, and distribution channel management, as it reflects the demand and acceptance of a product in the market.
Skimming: Skimming is the act of quickly reading through a text to get a general overview of the main ideas and key points, without delving into the details. It is a strategic reading technique used to efficiently gather information and identify the most important content.