Product life cycle stages and how to use them
Any organization that develops physical or digital products will navigate the product life cycle. Business leaders with a strong understanding of the product life cycle and how to use it can put their organizations in positions to succeed.
To help you optimize your product life cycle strategies, this post will cover every stage, including examples and strategies.
- What is the product life cycle?
- The stages of the product life cycle
- Examples of the product life cycle
- Product life cycle strategy
What is the product life cycle?
A product life cycle is the total amount of time that a product is available to consumers, from when it’s first introduced until it’s removed from the market. A product’s life cycle begins when it’s initially developed and introduced to the market and ends when the product is no longer available for purchase.
Marketing professionals and organizational leaders can map a product’s lifecycle to guide core decision making processes. This lifecycle map will help leaders determine product price points, identify ideal audiences, select advertising strategies, design packages, and more. The product life cycle map also outlines a product’s path from development to market maturity.
The product life cycle is divided into four total stages, including development and introduction, growth, maturity, and decline.
The stages of the product life cycle
The exact trajectory and overall viability of each product varies, but every item that is brought to market will progress through each phase of the product life cycle. Being able to identify each phase will help you market a product appropriately, based on where it is in its lifecycle.
1. Development and introduction
Development and introduction are sometimes considered two separate stages, but they are so closely linked that it’s usually more practical to consider them together.
The development phase of the product life cycle is when raw ideas are refined into a marketable concept. From a business standpoint, product developers conduct market research, determine whether the concept is viable, and identify their target audiences. After product ideation, organizations solicit investments from third-party entities, create prototypes, conduct product testing, and begin to plan the product’s launch.
The development phase of the product life cycle is one of the most challenging to navigate, because it requires businesses to invest lots of capital without generating immediate revenue. Depending on how complex the product is, the development phase could last for several years.
In the latter stages of the development process, businesses will also create a marketing plan. If the product is getting close to launch, marketers may start releasing teaser ads on social media or their website. Publishing feedback from consumer testing can also help generate buzz about an upcoming product.
It’s critical that businesses devote serious time and effort to creating a marketing plan for a new product. An outstanding marketing strategy will set the stage for a smooth introduction to the market and expedite the time to value.
The introduction phase of a campaign is the time when consumers are first made aware of a product. During this phase, it’s critical that marketers use multiple channels to target their ideal audiences. An introduction comes just before a product’s release and can set the stage for a successful launch.
Marketers should provide clear details about the product before it’s available for purchase. Examples include a thorough list of features, pricing information, and when the product will be launched.
Keep in mind that sales may be low when a product is in its infancy, even if it’s expertly marketed.
There are some rare instances when products sell out rapidly upon release. Highly touted products such as the original iPhone, new gaming consoles like the Playstation 5, and other groundbreaking innovations have experienced great sales figures immediately. But these are the exceptions. Most often, new products experience minimal sales and slowly build momentum in the weeks or months following launch.
A product’s growth stage is when consumers begin to believe in its capabilities and view it as something that will add value to their lives. Demand and profits are both on the rise when a product is in its growth phase.
As the growth phase enters full swing, it’s vital that product marketers alter their tactics. Marketing materials should bolster the brand’s presence and demonstrate why the product is superior to any potential competitors.
This is usually the stage in a product’s life cycle when other businesses will attempt to capitalize on a competitor’s momentum. Once a business has proven there’s a market for a particular solution, other organizations in their industry will try to grab a share of the profits. In this stage, companies should advertise their product’s modifications and highlight how they are enhancing the customer experience to stay one step ahead of new competition.
The growth stage is one of the easiest times to market a product. By this point, the product has already established a following among its consumer base. Marketers can nurture those relationships to increase loyalty among current customers while also encouraging them to provide product feedback, which will provide social proof that can be used for ongoing marketing efforts.
It’s critical that marketers do not allow momentum to wane. If they do, it will be difficult to regain traction, especially if competitors are already threatening their market share.
In a product’s maturity stage, sales grow at a slow but steady pace. The rapid growth period has ended and supply has balanced out with demand. Competitors have established a foothold and are threatening the original manufacturer’s market share, but most original producers have mastered the processes of sourcing raw materials and manufacturing enough to cut prices to encourage continued sales.
The first company to bring the product to market has also had time to learn from consumer feedback and optimize its product and advertising. During the maturity phase, marketing campaigns are geared toward demonstrating why a product remains better than competitors’.
In the maturity stage, marketing products become very brand dependent. If the market is crowded, brands may have limited options when it comes to differentiating their actual product so customer experience, customer relationship management, and customer loyalty efforts become more valuable.
The maturity stage of the product life cycle is also the most profitable. Sales remain consistent while manufacturing costs drop. Business leaders try to prolong this period of the product life cycle so that they can maximize their return on investment (ROI). Top-performing products can stay at or near their peak for years, though there will be some natural fluctuations in sales, especially if a product has a prolonged maturation phase.
All good things must come to an end, and the end of the maturity stage is what many call the saturation stage. This is when sales begin to stagnate. They have not yet begun to decline, but they are no longer rising either.
At this point, competitors will have finally caught up to the original product manufacturer. Some may even be preparing to enter their own maturity stage. As a result, the market is inundated with options, making it nearly impossible for the original product to experience any further growth.
During the saturation stage, marketers must be at their best, and each campaign must be carefully designed using relevant data. Every time marketers fall short with a campaign, competitors gain more ground and the core product loses market share. Marketers should still be working to acquire new customers, but much of their effort will be focused on encouraging customers to purchase the latest and greatest model of their product.
Businesses can continue to thrive when the market becomes saturated by focusing on optimizing customer service and product differentiation. However, it’s only a matter of time before the product reaches the final stage of its life cycle.
All products eventually reach the end of their life cycle. This period is marked by a decrease in sales and is most commonly referred to as the decline phase of the product life cycle.
Oftentimes, out-of-date products are replaced by modern alternatives. In these instances, aging products are more likely to experience a rapid drop in popularity as opposed to a gradual decline.
A prime example is the DVD. Just as this technology replaced VHS tapes, DVDs were eventually pushed out by online streaming services. While DVDs and online streaming services briefly coexisted, the market for the former reached a tipping point where it no longer presented a viable viewing option.
Some companies can avoid this stage with a strong brand or by retiring the product to introduce a newer version of it. Sometimes, a product can sit in decline for years without actually being sunsetted, but it’s important that businesses don’t allow products to limp along indefinitely. A long decline can hurt profitability and the brand’s reputation.
During this phase, marketers must carefully choose how much to invest in their efforts. Products experiencing a slow decline may reach several plateaus along the way, each of which can last weeks or months. It’s during these plateaus that marketers can reevaluate their advertising strategies and determine whether there are any opportunities for sales to rebound.
Eventually, products will reach a point when investing in advertising is no longer pragmatic. At this point, businesses usually pull the product. When a product is not worth marketing, it has reached the end of its lifecycle.
Examples of the product life cycle
Now that we have covered each phase of the product life cycle in detail, let’s examine three real-world examples of products, each in a different phase of their life cycle.
Product life cycle stage: Decline
The typewriter was once an innovative product that revolutionized the writing world. It represented a massive upgrade over handwritten letters, books, journals, and other documents.
The typewriter went through every phase of the product life cycle. As it reached maturity, it became more cost-effective to produce and as the cost of the typewriter decreased, the technology was more accessible to households around the world.
Although the typewriter remained in the maturity stage for decades, it eventually transitioned into a decline after the introduction of the personal computer. Now, typewriters are little more than decorative pieces of history.
Virtual reality headsets
Product life cycle stage: Growth
Virtual reality headsets are in their infancy. They are available to consumers but are also still being developed and refined. As such, this technology falls somewhere between the introduction and growth phase of the product life cycle.
VR technology has had a slow ascent to its tentative growth stage. The tech was not the most user-friendly or reliable in its early days, so adoption was slow. The high cost of VR headsets has also hindered early adoption and negatively impacted accessibility.
As prices come down, wider adoption should begin. If so, the product will fully transition to its growth stage. Eventually, virtual reality headsets will reach maturity and likely remain in that phase for an extended period of time.
Product life cycle stage: Maturity
Smartphones are a prime example of a product that has reached the maturity stage. Millions of people use them every day, and the market has become mature enough to not only generate billions in revenue but also support multiple successful brands.
Smartphones will likely enjoy a prolonged maturity phase. While they’re now joined by wearable tech like smartwatches, smartphones will likely remain a staple of modern life for the foreseeable future.
Product life cycle strategy
Once you have a firm grasp of each stage of the product life cycle, you can begin to tailor your product marketing strategies. The focus of your campaigns will vary based on what stage of the life cycle your product is in. A product in its growth stage needs to be marketed differently than a product in its maturity stage.
If you know the exact stage your product is in, you will never be caught off guard by sudden market changes. Instead, you will be able to adapt quickly, reinventing your product or moving on to another one.
For example, the development and introduction stage represents the toughest part of the product life cycle to navigate, so two strategies related to pricing are frequently used.
One tactic is price skimming. As the name implies, this tactic involves intentionally setting the price of a product high. After you sell it to the early adopters, slowly start lowering the price to make it appealing to new pools of customers.
Alternatively, you can use a strategy known as price penetration. Price penetration is the inverse of price skimming. With this approach, you price your product low to fuel demand and then increase the price after you have established yourself among your target audience.
Managing and marketing through the product life cycle
Clarifying your approach to the product lifecycle is the first step toward successfully bringing new items to market, but it’s only a piece of the puzzle.
In addition to understanding the product life cycle, you also need a way to properly market your products, regardless of what stage they are in. To do that, you need a solution that merges marketing and sales together across every channel — that solution is Marketo Engage.