The product life cycle describes the steps a product goes through from beginning to end until it eventually disappears from the shelves. There are four stages of the product life cycle involving a product’s initial launch, growth, maturity, and eventual decline. Each phase has its own characteristics and requires unique strategies to ensure success. We will take a closer look at each of the four stages of the product life cycle.
Stages of the Product Life Cycle
Product Launch (Introduction)
The product life cycle begins after a product has been designed and developed (New Product Development). It then gets introduced to the market.
The introduction stage is characterized by high risk. The product cost is at its highest and often involves little to no competitors trying to steal the light. The main objective of a product’s introduction is to increase the products desire among consumers. This will in turn hopefully lead to popularity paving the way for the next stage: Growth.
When a product enters the growth stage, it has begun to get more recognition on the market and is bought by more and more consumers. It is no longer only seen by early adopters, but starts to hit on the mass market. The idea behind the product is well accepted and the product is known by many, which is making sales climb.
With the growth of the product continuing, expansion will typically occur within the market: both the company selling the product will likely think about expanding capacity, as well as first competitors. The increase in the amount of competitors makes prices drop.
In addition, the product may also be adjusted to respond to customer feedback.
As maturity is reached, the product sales growth starts to decrease and possibly cease. When this occurs it usually means that the market has become oversupplied with the product. Being oversupplied can create competitive price war between manufacturers, which makes margins shrink as prices drop.
In order to grow market share, companies tend to make changes so that the product can be utilized in a different way than originally made for. Thereby, new markets can be accessed to prolong the life of the product.
Many times a company will try to do everything to maintain product relevancy even though it has matured. However, product decline is going to happen eventually. This may be due to changes in demand structure and demographics. In many cases, however, this is driven by technological innovation making previous technology obsolete.
As a product declines, the sales also begin to decline due to the lower amount of demand for a product. This often causes an increased war among competitors fighting for pieces of a pie which decreases in size.
At some point (which may vary drastically depending on the type of product), the declining product will be removed from the market completely if it is not able to revive itself in order to be competitive again.
Product Life Cycle Examples
The stages of the product life cycle may differ a bit depending on the product. Let’s consider two examples that show how the stages work.
The Video Cassette Recorder (VCR)
If you grew up in the 80s, then you pretty much know what a VCR is and likely watched many movies on them. But today, you will likely not find one anywhere anymore.
This is due to the rapid change in technology that tends to replace previous technology. What has been considered high-tech a long time ago is now a relict of the past. After DVDs and Blue-Ray, streaming services have made the VCR obsolete, leading to a decline of the product.
Another example is the typewriter. When it was introduced in the 19th century, it quickly grew in popularity as it offered a complete innovation of the way we write. But that all changed as soon as the technology advanced and computers were introduced. With the introduction of this new technology, the overall revenue of the typewriter quickly diminished.
These stages of the product life cycle are the same for any type of product that is sold on the market. What may differ drastically, however, is how long a product stays within a certain stage. This again strongly depends on the characteristics of the product and its market.