Why is the Product Lifecycle Important?
As a kid, racing home from whatever we were doing to see who might have called our landline was a high point of the day. Fast forward some years, and all of a sudden, everybody seemed to have this sleek mobile phone. Landlines, once central in our daily lives, no longer were as central; they had become replaced by the convenience and portability of mobile technology. This transformation is a perfect example of the Product Lifecycle (PLC) in action. While no business owner or product team wants their product to become obsolete, it is an inescapable reality that many businesses face. This is why it is important to understand what stage your product is in so you can make better marketing and business decisions. In this blog, we explore the journey of a product from birth to decline and explore how mastering this lifecycle can lead to lasting success.
What is the Product Lifecycle?
First things first—what exactly is the product lifecycle? To describe it in simple words, it is the journey of a product from its launch until it finally dies out.
If you are a business owner, marketer, or member of a product team, the product lifecycle can help you make important decisions and strategies regarding advertising budgets, product prices, packaging, among other things.
What are the Stages of the Product Lifecycle?
This product lifecycle journey is divided into four main stages:
A. Stage 1: Introduction
This stage, as must be evident, is introducing a product to the market. The primary objectives at this stage are to build awareness and generate interest. This is often accompanied by heavy marketing efforts, promotional activities, and even introductory pricing to attract early adopters.
For instance, electric vehicles some years ago were barely scratching their way into the market. Companies, especially Tesla, had to invest in marketing and consumer education to explain to people why EVs were the future of transportation. They had to build infrastructures for charging incentives and generate a buzz around electric mobility.
Moreover, this is the phase where you really need to communicate the selling proposition of the product and why people should try it out. You may still have to bear high costs and low profits, but that is all part of the game. One requires a lot of patience and persistence at this stage.
B. Stage 2: Growth
The next step will then be the Growth stage. At this point, things tend to get pretty exciting. Your product is finally starting to take off, and sales begin to rocket. The market grows, and more people are aware of and interested in your product. The time to maximize your market share and cash in on the growing demand is now.
For example, take smart home gadgets—voice-activated assistants like Amazon Echo or Google Home. Just a few years ago, they were pretty new devices used almost exclusively by early adopters who love technology. Then more people started seeing how convenient and useful they were, and suddenly sales took off. Now, demand has driven them to fill out their product lines with new features and improve the user experience.
The growth phase is when you want to enhance your product while improving distribution channels and even reconsidering your pricing strategy. Keeping a tab on the competitors is also a good move at this point. After all, it is not only about gaining new customers, but about keeping the old ones and creating brand loyalty.
C. Stage 3: Maturity
After an exciting period of growth comes the time of maturity. The product is well established in the market by now, and sales growth has started slowing down. The market may be getting saturated, and competition may be extremely tough at this stage. This is when you innovate and differentiate to maintain product relevance.
Smartphones are, again, probably one of the best examples of a product in the maturity stage. Companies such as Apple and Samsung continue to innovate with better cameras, faster processors, and sleek designs to keep their products looking attractive. They focus on ecosystem integration as well, like Apple does, so its products work seamlessly with each other to create brand loyalty among users.
D. Stage 4: Decline
Finally, we have the decline stage. This is a period of falling sales and profits. Some causes can be market saturation, new technology, or simple changes in taste. By now, businesses must make hard choices about their product’s future.
Think of the traditional desktop computers. The ever-growing demand for laptops, tablets, and now cloud computing made demand for desktops nosedive. This meant companies had to face a critical decision on whether to continue investing in them, finding niche markets, or shifting to more portable and versatile devices.
Moreover, the decline phase options are to rejuvenate, discontinue, or target a niche market. Rejuvenation may consist of major changes or innovations that can regain interest in a product. Discontinuation would allow the winning resources to be released for other, more promising activities. Targeting a niche market will retain its profitability in a smaller, narrower market segment.
Importance of the Product Lifecycle for Businesses
So, why does any business need to understand the product lifecycle? Simply put, it would support strategic planning, resource allocation, and competitiveness. This will help you adapt your strategies accordingly to the exact needs of your stage. Using the product lifecycle has additional advantages that include:
- Make wiser choices and investments in marketing
- Making long-term strategies is easier
- Enables more informed decision-making with precise performance data
- Easier to simplify the procedures that your business currently uses
ALSO READ: Understanding Tech for Better Product Lifecycle Management
How to Use the Product Lifecycle in Your Business?
Understanding the product lifecycle is not just an academic exercise but a practical tool that aids in making business decisions. Here is how you can apply the product lifecycle model in your business:
1. Market Research and Planning
Do detailed market research concerning current demand, potential competitors, and consumer behavior before the launch of a product. Plan how your product will enter the market based on the derived information.
2. Strategic Marketing
Tailor your marketing strategies according to the product’s lifecycle stage. For example, create awareness and educate customers at the introduction stage and differentiate at the growth stage.
3. Resource Allocation
Be smart about resource allocation across the lifecycle. For instance, increase investments in R&D and marketing right at the beginning, preferably during the introduction and growth stages. At the maturity stage, give more emphasis on efficient use of operations and better cost management. Consider investing resources in other promising projects at the decline stage.
4. Product Innovation
Keep innovating to keep your product relevant. This is most needed during the maturity stage. Innovation may be in features, new services, or new markets.
5. Pricing Strategy
Adjust pricing strategy according to the different stages of the PLC. You might start with a penetration pricing strategy during the introduction stage in order to attract early adopters. Competitive pricing is important in the maturity stage.
6. Customer Engagement
Develop close relationships with your customers along the product lifecycle. Engage them through feedback, loyalty programs, and excellent customer service. These satisfied customers can become brand advocates, helping you to sustain the product at many stages in its lifecycle.
7. Exit Strategy
Be prepared for the decline stage. Whether by phasing out the product, selling to another company, or finding a niche market, an exit strategy means you will be ready to see the decline effectively.
ALSO READ: How Does Product Life Cycle Analysis Help Attain Competitive Advantage?
In conclusion, understanding the product lifecycle is about wielding a strategic map to navigate your product’s journey. Each stage is a unique landscape, brimming with challenges to conquer and opportunities to seize. By becoming a master of adaptation, you can make razor-sharp decisions, craft winning strategies, and stay miles ahead of the competition.
Ready to know more about product lifecycle? Check out Emeritus’ online product management courses to master this crucial aspect of product management!
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