A product manufactured for any particular market, such as an electronic device or tool, cannot remain there forever. From the moment it enters the market, its time there is limited as it goes through what is known as the product life cycle. Eventually, consumers will move on and the company will see the need for new product development. But before we get into discussing the stages of the product life cycle, let us look into it a little more by defining what it is.
What is the Product Life Cycle?
The product life cycle is the lifespan of a product, from the time it was developed, launched in the market and eventually taken out of it. Knowing this cycle gives a company valuable information, allowing them to time certain activities such as advertisements, price drops and special offers. Also, it tells them when it is time to move on, giving them reasons for new product development.
Product Life Cycle Stages
The product life cycle can be broken down into four stages: introduction, growth, maturity and decline.
During this stage, the company will channel a lot of resources into the product launch to make sure that it is successful. When the product is introduced, sales will undoubtedly be low, meaning the company will need to build brand awareness for the revenue to increase over time and become profitable. The more competitive the market is, the more expensive it will be for the company to achieve its long-term goal and ensure continued existence.
At this point, the company has started seeing its sales and profits increase. The importance of product quality cannot be stressed enough at this stage; the company must ensure it always delivers a quality product while maintaining prices. It is also at this stage that most firms seek more distribution channels as demand increases, while simultaneously advertising to a broader audience.
The maturity stage is when the product reaches its peak and the sales that were on a steady rise start to diminish. Competitors might use this opportunity to penetrate the market with similar offerings, prompting the company to look at new ways to maintain its market share. They might improve the product, decrease its price, put it on promotion and do other activities that will give them a competitive edge over the rest.
This is the last stage where market share begins to take a decline, translating to a drop in sales as well. The market will have declined because they would have been too many players by now. The company can either maintain the product (make further improvements or add new features), reduce the price even further or see the need for new product development.
When you bring an idea to life in the form of a tangible product, it can only remain on the market for a limited time only. The product life cycle affects every product that has ever been created. And it is up to companies to look at the stages and come up with a strategy to make sure the product ensures the continued existence of the company well beyond the decline stage.