Product life cycle management is how the goods are handled in their lifecycle. Here are some of the different fundamentals of the business concept. The term ‘product life cycle’ was first used in 1965 by American economist Theodore Levitt. In one of his articles, he used the management concept to explain to product managers and brand leaders how to successfully apply it to their business processes. In his article, Levitt discussed what the product life cycle is and how the concept can be used to gain a competitive advantage. The American-German professor also mentioned how the concept could reap benefits for businesses when applied correctly.
In this article, we will discuss what is a product life cycle, what are the 5 stages of the product life cycle and what is the importance of the product life cycle. Let’s begin with answering the simple question- what is product life cycle?
What is the Product Life Cycle?
How have brands like Coca-Cola, Apple, and Pepsi Co remained relevant for decades? It’s because they have adapted the product life cycle concept into their business ideation and analysis process successfully. Understanding the meaning of the product life cycle becomes easier if you trace these brands’ journeys and understand how they tackled crises by applying this management concept.
So, what is the product life cycle? It traces the time from which the product is introduced in the market to when it is removed from there. It is a management tool that marketing managers and brand leaders mostly use to analyze a product’s behaviour from its inception to its end.
Furthermore, analyzing the product life cycle helps to determine and implement effective marketing and advertising strategies, competitive prices, packaging redesign, and more. Therefore, the process of analyzing the product life cycle is called product life cycle management. Below, we will discuss in detail what is product management life cycle.
What is Product Life Cycle Management?
Product life cycle management (PLM) summarizes the process of managing a product’s life cycle from its inception to the end. From design to pricing, everything comes under PLM. The process is carried out with the help of software, which makes it easy for PLM managers to track progress and changes.
Besides analyzing and managing a product, PLM also plays a critical role in the ideation and development of new products that offer a competitive advantage. Interestingly, many businesses undertake a product management life cycle to stay ahead of their competition and bring new innovations into their existing products to increase brand loyalty. In the succeeding part of the article, we will be looking at the 5 stages of the product life cycle, the importance of the product life cycle, and the uses of the product life cycle.
What Are The 5 Stages of The Product Life Cycle?
Five stages of the product life cycle start with the ideation and end when the product reaches saturation. The knowledge of different product life cycle stages helps evolve marketing and business strategies from time to time for success and product management. The product life cycle consists of the following stages:
This stage starts with market research and analyzing the competitor’s product, pricing, and marketing strategy. It also deals with ideating product ideas that align with the strategic objectives. Product ideas can come from internal and external sources: existing customer data, competitor activities, logistics personnel interactions, industry leaders and experts, online websites, social media portals, etc.
This phase begins with the product launch. In this stage, the sales will be less than in other phases, especially because the product is finding its niche in a new market. Therefore, product managers would create awareness in the market by devising marketing strategies and novel promotional campaigns. In addition to this, product managers will spend more time and cost on research, designing, and building a product that can withstand the market’s uncertainties.
The next phase in the product life cycle is growth. In this phase, the product has gained maximum traction and is growing leaps and bounds with each passing day. Product managers concentrate on attracting more customers and increasing their market share, ensuring that the demand for the product is at an all-time high or at least better than the introduction phase.
The start of the maturity phase is marked by the decline in the sale, which increases gradually. This stage is the longest as well as the most prosperous phase in a product’s life cycle. Product managers, in this stage, concentrate on maximizing profits and ensuring that the maturity phase lasts long enough to reap its benefits. In this phase, profits and customer loyalty, engagement and satisfaction will be at an all-time high.
Every product becomes redundant with time, and it is inevitable. However, this phase can be delayed with the right marketing strategies. There could be multiple reasons for the decline of a product. Here are some reasons why a product declines gradually:
- Technological advancement
- Product innovation
- Change in habits and attitudes of the customers
The start of this phase is marked by a decline in sales figures, which then reduces to nil. Product managers play a pivotal role in this phase, and they help businesses make a turnaround strategy. Additionally, they pivot the product to a new segment or develop a new product in the same segment.
Now that you are well-versed with the product life cycle and the phases, let’s understand what the importance of the product life cycle in businesses is and the uses of the product life cycle in an organization.
What is the Importance of the Product Life Cycle?
- Aids product development and planning
Market research is an integral part of the product life cycle because it helps understand the market dynamics and evaluates the competitor’s product, marketing strategy, pricing strategy, and product design, among others. A product manager aids the product development and planning process by undertaking market research. As a result, they develop a product that meets the customers’ demands and faces the stiff competition of the market hands-on.
- Helps in assessing and achieving profit margins
Every business releases a product to attract customers and make a profit. The product life cycle helps in actualizing the same goal for the business. Businesses monitor the product from time to time, which helps implement changes in the marketing and promotional campaign, product plan, etc., leaving a positive impact on the profit and sales margin.
The product life cycle helps forecast how the product will perform in the market. It estimates the market share it will hold in the existing market. Furthermore, the product life cycle also lays a product roadmap, which helps in navigating through success and recognition when executed properly.
The product life cycle plays an important role in businesses as it eases different product development and management processes. Some of the other reasons why product life cycle is important are – provides information about the marker, collects data for decision making, predicts the decline of the product, and delays the decline of the product by implementing different strategies.
What is the Product Life Cycle Used for in an Organization?
A product life cycle is used by business organizations for multiple reasons, here are some of the uses of the product life cycle:
- Sales forecast
- Gaining competitive advantage
- Implementing strategies
- Decision making
- Market research
- Product positioning
- Product pricing
In a company that undertakes umpteen processes daily, the product life cycle is a common process that hardly piques interest. However, it is an integral part of product development and cannot be eliminated. Many product managers are struggling to understand the basic concept of the product life cycle. Herein, undertaking product management courses can be of great help as these courses take you through the basics as well as advanced level training of product management, depending on the course you choose.
If you are an aspiring product manager and want to be well-versed with the product life cycle’s techniques, concepts, and processes, then enrol yourself for Emeritus India product management courses. Our online certification courses are offered in collaboration with reputed business institutes and give aspirants deep insight into the product life cycle’s mechanism.