The 4 Phases of Product Life Cycle consist of the following
Many experts believe there is another phase of the Product life cycle called Development. We will look into the same during the course of the blog
Strong comprehension of a Product Life Cycle is necessary for businesses, particularly those that sell products to customers. Everyone in a company, from the CEO down to the marketing executives and the teams, needs to have a solid understanding of the phases of the Product Life Cycle so that they can plan their activities appropriately.
They are able to make important decisions regarding product design, features, price points, advertisement schedules, market expansion, packaging, and other related topics as a result of having this knowledge.
One of the primary reasons why several essential decisions pertaining to a company’s operations are left up in the air is a lack of familiarity with the Product Life Cycle. For instance, if the product manager is unaware of the product lifecycle, He or she will not be able to develop strategies to improve the product. This is because the product lifecycle consists of several stages. It is possible that as a consequence of this, the product will eventually become pointless to the consumers.
In a similar vein, an executive might forget to schedule advertisements if a marketing professional is unaware of the life cycle of the product they are responsible for marketing.
When these considerations are taken into account, it is essential for professionals, and especially those who hold managerial positions, to have a comprehensive comprehension of the Product Life Cycle.
As always, we are here to assist you in comprehending the product lifecycle and/or enhancing the knowledge that you already possess in this area. Through reading the posts in this blog, you will gain an understanding of the product lifecycle in its entirety, including its phases, definitions, and examples.
Product Life Cycle Explained
A product’s introduction on the market is the beginning of what is known as its “Life Cycle,” which ends when the product is discontinued and is no longer available for purchase. At some point in time, consumers are made aware of each new product that a company offers. In a similar manner, the product goes through several stages before reaching the point where it must be withdrawn from circulation in the market.
Consider the case of software as a service (SaaS) product as an illustration. When the software is first made available to consumers, it receives positive feedback and enjoys rapid adoption; however, it is ultimately phased out of use or replaced by a subsequent version or product.
Even though the emphasis is placed more on the stages of the product life cycle that deal with the introduction and removal of the product, those other stages are still very important. The reality of a product falls somewhere in the middle of these two extreme examples. On the other hand, the product goes through stages of growth and maturation in the interim between these stages.
Product Life Cycle Explanations and Definitions
This concept can be broken down into its component parts, which are “product” and “life cycle.” Product refers to anything that is produced by the manufacturer and then purchased by the buyer in order to fulfill the buyer’s needs and requirements. When we talk about something having a life cycle, we are referring to a process or a cycle that continues to repeat itself over and over again.
However, it takes some time for the product to go through the production, then travel to the buyer, and finally be consumed by the consumer. This time frame is only referred to as the “Product Life Cycle.” The process of production and consumption of a product that occurs repeatedly over the course of its lifetime is referred to as the product’s “product life cycle.”
It is the period of time that elapses between when a manufacturer first places a product on the market and when it is finally made available to consumers who have purchased it.
In addition, the term “product life cycle” describes the period of time beginning when a product is first made available to consumers and continuing until it is taken off the market entirely. When it comes to determining whether or not it is the right time to increase advertising, lower prices, expand into new markets, or redesign packaging, management, and marketing professionals look to this concept as a determining factor.
The process of planning how a product can be continuously supported and maintained over its lifespan is referred to as the product life cycle.
The process that the product has to go through from the time it is introduced to the market until the time it is removed from the market can be broken down into four stages: the introduction stage, the growth stage, the maturity stage, and the decline stage.
The majority of the time, marketing professionals will discuss this idea with the management team. This is due to the fact that it serves as the foundation for a variety of different marketing strategies, such as increased advertising, decreased prices, expansion into new markets, etc.
Diagram for Product Life Cycle
The product Life cycle essentially is a function of 2 Variables – Time and Sales.
Generally, time is put on the X-Axis, whereas Sales are projected on the Y-Axis. A typical Product Life cycle looks like the following
4 Phases of Product Life Cycle
There are many stages in the Product Life Cycle.
Every stage of the product’s life cycle is accompanied by a unique set of opportunities, threats, and expenses, which change depending on the product. The length of time that a given product spends in a particular stage of its life cycle varies from product to product.
Depending on the demand for the product and how it is marketed, it is possible that a select few products will require more time than other products before reaching the growth and maturity stage.
In this section, we will go over the 4 stages that make up the product life cycle:
Before beginning construction on a product, its creators and developers conduct research on the product to learn more about its specifications and requirements. At this point, the team responsible for creating the product is aware of the product’s potential marketability. In addition to this, it offers insight as to whether or not the product should be released onto the market, as well as suggestions for how the team should approach the official launch.
This stage calls for a significant investment of capital, as there are significantly more expenses than there are revenues at this point. Because the research and development of certain products require a significant amount of financial resources, the associated risk is high, and the availability of outside funding is constrained.
Research and development, in addition to product design and development, take up a sizable portion of the time spent by internal stakeholders before a product is introduced to the market or made available for sale. The preliminary work that is done on a product acts as the foundation for the final result of that product.
For example, the team responsible for the development of the product needs to understand the needs of the customers and plan their features accordingly. In a similar vein, planning must take place at this stage regarding the target audience as well as the market segmentation. Additionally, the profitability of the product is evaluated during these stages. In the event that the product does not meet the anticipated levels of profitability, the product is not introduced to the market nor is it scaled up to meet demand.
Generally, the development phase is not considered a part of the Product Life cycle
The developed product is introduced to the market during the second phase of the product life cycle, which is also known as the “introduction” phase. Even though it is not the only factor that will determine a product’s ultimate level of success, the product launch is still a crucial stage in the life cycle of the product.
Objectives of Introduction Phase of Product Life cycle
During the stage in which the product is first introduced to the market, marketing and promotion of the product are at their most active. More resources are being allocated by the company toward marketing the product and getting it into the hands of consumers.
The primary objective of the stage known as “introduction” is to generate demand for the product while also introducing it to potential customers. At this point, the company is holding out hope that the product will prove profitable in the future as it gains popularity among customers.
Strategies of Introduction Phase of Product Life Cycle
This could be done in the following ways:
- Launch Events
- Distribution of Free samples
- Presenting the product in the trade shows and fairs
- Advertising the product to the list of potential buyers
- Stabilizing the manufacturing and operations of the product
- Creating Dealer Channels and Networks for Distribution
- Optimizing the Supply chain to deliver required quantities
After the consumers have shown that they are satisfied with the product, the business enters this phase, during which it works to broaden its customer base and increase its overall market share. Both consumer interest in the product and the amount of money brought in by its subsequent sales continue to rise at a healthy clip.
Objectives Of Growth Phase Of Product Life Cycle
The length of time that a company is able to maintain a steady state of growth entirely depends on the product, the adoption rate of the customers, and the current landscape of the market. If you are launching a product into a market where there is already competition, you can expect a slower response from customers than if you are launching a product into a market where there is less competition or if you have a unique product that has never been introduced before.
Strategies of Growth Phase of Product Life Cycle
This could be done in the following ways:
- Invest heavily in Advertisements and Promotions
- Focus on increasing the Profitability by revenue growth
- Create a Product Roadmap for the improvements
- Understand and listen to customer issues
- Bring quick responses to customer issues
- Stabilizing manufacturing and focusing on waste elimination
- Ensuring easy availability of products for potential customers
- Acquire new customers
- Strengthen the operations team and remove organizational silos
Maturity and Saturation
At this point, the product has successfully established itself in the market, and sales are expected to reach a plateau. This in no way indicates that there are not any sales going on at this time. This stage indicates that sales and growth are not taking place similarly to how they did when the company was in the growth stage. If you initially launched your product at higher prices, you should consider lowering those prices, offering free additions, and making other similar adjustments so that your products can compete with those of other companies.
Objectives Of Maturity Phase Of Product Life Cycle
The business has by this point gained an understanding of the errors that were made during the manufacturing process as well as other processes, and it is now able to effectively avoid these errors and save money in each department. When total expenses associated with producing a product go down, prices for that product typically go down as well.
As a result of the company’s increased awareness of the various channels through which it can connect with a larger number of customers, the costs associated with marketing the product are now more effectively managed.
At this stage, it may appear as though there are no more sales occurring and the company is not growing in volume; however, the likelihood is that the company is at its most profitable during this stage.
Strategies of Maturity Phase of Product Life Cycle
This could be done in the following ways:
- Decrease Product prices
- Leverage Economies of Scale and Scope
- Focus on Product Diversification
- Continuously improving products and removing smaller impediments
- Focus on maintaining market share
- Acquiring new features either by integration
- Focus on Diversifying to new and Unexplored markets – Refer to Ansoff Matrix
- Hyper-Optimize Manufacturing and Operations to reduce pilferages
- Optimize the Supply chain by offshoring
- Document Knowledge gained and improve processes so that it can be implemented for future products
If your product does not become a product that is preferred in the market, then eventually its sales will begin to decrease in the market. The decline stage is characterized by a decrease in revenue, which takes place as a result of increased competition, saturated markets, and shifting customer requirements.
Objectives Of Decline Phase Of Product Life Cycle
You should try to sell the manufacturing rights of the product to another company. Strategically speaking, it is desired to delay the decline of the product as much as possible or as slowly as possible
The company is tasked with calculating the costs and benefits associated with each potential course of action. The company needs to consider all of the available alternatives, which may include revising the product, introducing new features, researching new markets in which the product has not yet been introduced, and so on. You need to run multiple forecasting scenarios, choosing one that corresponds to the performance of the product.
Strategies Of Decline Phase Of Product Life Cycle
This could be done in the following ways:
- Find a Potential list of Buyers for the Product
- Outsource Manufacturing and Operations of the Product
- Develop Exit Strategies – Strategic Sell-offs and Divesting
- Incorporate learnings into the New products in the pipeline
Examples of Product Life Cycle Phases
The Numerous Illustrations of the Product Life Cycle
Product Life Cycle Phases for a Car
Product Life Cycle for a CarThe product life cycle for a car can be divided into four phases: development, commercialization, maturing, and decline. During the development phase, a car manufacturer designs and tests a new car model. This phase can take several years.
Once the car is ready for production, it enters the commercialization phase. During the commercialization phase, the car is introduced to the market and sales begin to grow. This phase usually lasts several years.
As the car matures, sales begin to decline and eventually enter the decline phase. during the decline phase, sales of the car continue to fall until it is eventually discontinued. This phase can last several years or even decades.
Product Life Cycle Phases For A iPhone
iPhone was one of the most revolutionary products of the last decade. From its introduction to current date, it enjoys significant loyalty and fan following
When it comes to high-end products such as the iPhone from Apple, the strategy is different.
Apple keeps the price of the iPhone at a premium during the Introduction Stage of the Product Life Cycle in order to ensure that only a select few people can call themselves iPhone owners.
The price of the iPhone is purposefully kept high in order to entice only a select subset of the audience, as current iPhone owners would prefer that not everyone have access to the device.
The costs of advertising, sales, and marketing are typically at their highest during the phase of introduction. When combined with low prices, this results in a period during which the company experiences negative profitability and loss.
When a product has reached the point where it is ready to enter the growth phase, the audience has already begun to form some sort of attachment to it.
Now is the time to ensure that the product’s quality is kept at a high level in order to avoid disappointing the target audience.
When it comes to marketing, businesses should start spending more money on marketing right now in order to reach out to a larger audience and become a well-known brand among the primary target audience at the same time. This is done in order to achieve both of these goals.
It is anticipated that during the growth stage, sales will pick up significantly due to the product, the reviews of the product, and the marketing activities.
In the case of Apple’s iPhone, each subsequent launch of the product generates some additional sales and contributes to the total volume of sales.
At this point, we are thinking about the iPhone as a whole; however, if we were to dig a little deeper, we would see that each model of the iPhone is in a different stage of the product life cycle for Apple iPhones.
As of September 2022, iPhones have moved from the growth stage to the Maturity stage. For the first time after its introduction, they have reported lesser selling numbers.
During this stage, there is a possibility that the rate of increase in sales will slow down, but the overall sales will remain at a consistent level.
At this point, the market is flooded with many different products that compete with each other. There’s a chance that some of them are actually high-quality products, while others will just be knockoffs of what you already sell.
At this point, the audience has likely moved on to greater and more satisfying things in life. They are no longer interested in your product because, in comparison to other products that are either in the phase of introduction or growth at the moment, yours does not offer anything new to consumers.
A product that has entered the decline phase has become out of date due to advances in technology.
If a company wants to get the most out of its product while it is in decline, the Product Life Cycle management strategies that are most commonly used include lowering prices, removing after-sales support to save money on marketing and personnel costs, or discontinuing the product altogether.
Every product has its own product lifecycle, and it is essential for businesses to know where their products stand in that cycle so that they can adapt to changes in an appropriate manner. Whether you are creating a brand-new product or working with an existing one, having a solid understanding of the product life cycle is absolutely necessary.
In addition, the company is in a position to realize that it is moving closer to the decline stage and can therefore find ways to avoid entering it. Because of this, businesses are able to spend their profits on more effective marketing campaigns, which in turn helps them increase their return on investment. This is made possible by keeping the product life cycle in mind.
Samrat is a Delhi-based MBA from the Indian Institute of Management. He is a Strategy, AI, and Marketing Enthusiast and passionately writes about core and emerging topics in Management studies. Reach out to his LinkedIn for a discussion or follow his Quora Page