A product life cycle is a sequence that a product follows, from development to decline. It is typically split up into six stages. It gives direction for developing strategies to make the best use of those stages and strengthen the overall progress of the product in the marketplace.
What is Product-Life Cycle?
Linda Gorchels in her book “The Product Manager’s Handbook” describes the product-life cycle and gives some key assumptions upon which it is based. These assumptions are:
- Products, in usual, have a restricted life span. All products will therefore end up going through a product life cycle.
- Each stage of that life cycle offers the business with a set of possibilities and tests to take benefit of and to overcome.
- Products will need different efforts from design, development, marketing, purchasing, etc. during each stage of their life cycle.
What Do the Product-Life Cycle Stages Mean?
The five stages are discussed below tells that although decline can be avoided by reinventing elements of the product. It is also identified that some products never go beyond the introduction stage whereas some progress through the life cycle much quicker than others.
Stage of Product Life Cycle:
Below are the six primary stages of product life cycle:
The product development stage is often regarded as “the valley of death.” At this stage, expenses are growing with no equal revenue. Some products need years and large capital investment to grow and then test their effectiveness. Since uncertainty is high, outside funding sources are restricted. While existing companies often fund research and development from revenue made by current products, in startup businesses, this phase is typically funded by the entrepreneur from their resources.
The introduction stage is nearly developing a market for the product and building product recognition. Marketing costs are important at this stage, as it is essential to reach out to possible customers. This is also the stage where intellectual property rights protection is achieved. Product pricing may be high to recover costs associated with the development stage of the product life cycle, and funding for this stage is typically through investors or lenders.
In the growth stage, the product has been accepted by customers, and companies are trying to increase market share. For innovative products, there is restricted competition at this stage, so pricing can remain at a higher level. Both product demand and earnings are rising, and marketing is directed at a broad audience. Funding for this stage is generally still through lenders or increasing sales revenue.
At the mature stage, sales will level off. Competition rises, so product features may require to be improved to sustain market share. While unit sales are at their highest at this stage, prices tend to decrease to stay competitive. Production costs also tend to decline at this stage because of more performance in the manufacturing process required. Companies usually do not require additional funding at this stage.
During the product saturation stage, competitors have started to take a portion of the market and products will undergo neither increase nor reduction in sales.
Typically, this is the point when most consumers are using a product, but there are many competing companies. At this stage, you need your product to become the brand choice so you do not begin to enter the decline stage.
Once again, marketers require to concentrate on differentiation in features, brand awareness, price, and customer service. The competition reaches its top at this stage.
The decline stage of the product life cycle is connected with declining profits due to market saturation, high competition, and changing customer requirements. Companies at this level have many options: They can decide to end the product, sell the manufacturing rights to another business that can sufficiently compete or maintain the product by adding new features, finding new methods for the product, or hit into new markets through exporting. This is the step where the packaging will often announce “new and improved.”
Prosperous manufacturing companies usually have many products each at different times in the product life cycle at any given time.
These all six stages of the product life cycle are very essential, and we hope this article will help you to understand it well.