The stages through which individual products develop over time is called commonly known as the "Product Life Cycle".
Product life cycle stages
The table shows the product life cycle stages and the different marketing characteristics that accompany and identify them.
The product life cycle is a well-known framework in marketing. Products typically go through four stages:
After a period of development, the product is introduced or launched into the market. It gains more and more customers as it grows and, eventually, the market stabilizes and the product becomes mature. Then after a period of time, the product is overtaken by development and the introduction of superior competitors, goes into decline, and is eventually withdrawn.
At each stage, marketing strategy varies.
Strategies for the Different Stages of the Product Life Cycle
The need for immediate profit is not a pressure. The product is promoted to create awareness and develop a market for the product. The impact on the marketing mix and strategy is as follows:
- Product branding and quality level is established and intellectual property protection, such as patents and trademarks are obtained.
- Pricing may be low penetration to build market share rapidly or high skim pricing to recover development costs.
- Distribution is selective until consumers show acceptance of the product.
- Promotion is aimed at innovators and early adopters. Marketing communications seeks to build product awareness and educate potential consumers about the product.
Competitors are attracted into the market with very similar offerings. In the growth stage, the firm seeks to build brand preference and increase market share.
- Product quality is maintained and additional features and support services may be added.
- Pricing is maintained as the firm enjoys increasing demand with little competition.
- Distribution channels are added as demand increases and customers accept the product.
- Promotion is aimed at a broader audience.
Those products that survive the earlier stages tend to spend longest in this phase. At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit.
- Product features may be enhanced to differentiate the product from that of competitors.
- Pricing may be lower because of the new competition.
- Distribution becomes more intensive, and incentives may be offered to encourage preference over competing products.
- Promotion emphasizes product differentiation.
At this point, there is a downturn in the market. For example, more innovative products are introduced or consumer tastes have changed. There is intense price cutting, and many more products are withdrawn from the market. Profits can be improved by reducing marketing spending and cost cutting.
As sales decline, the firm has several options:
- Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
- Harvest the product–reduce costs and continue to offer it, possibly to a loyal niche segment.
- Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product.
By imaginatively repositioning their products, companies can change how customers mentally categorize them. They can rescue products struggling in the maturity phase of their life cycles and get them back to the growth phase. And in some cases, they might be able take their new products forward straight into the growth phase.
The Con of Using Product Life Cycles to Direct Strategies
According to Harvard Business School professor Youngme Moon, though the product life cycle concept has been used successfully over the past 40 years, it has made marketers assume that there is only one trajectory for successful products. By viewing the product life cycle in the same way, marketers pursue similar positioning strategies for products and services during each stage of the life cycle. In the process, they miss out on opportunities to differentiate themselves.