Product Life Cycle Pdf
Hadda Condino
Product life cycles are used by management and marketing professionals to help determine advertising schedules, price points, expansion to new product markets, packaging redesigns, and more. These strategic methods of supporting a product are known as product life cycle management. They can also help determine when newer products are ready to push older ones from the market.
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Writing in the Harvard Business Review in 1965, marketing professor Theodore Levitt declared that the innovator had the most to lose as many new products fail at the introductory stage of the product life cycle. These failures are particularly costly as they come after investment has already been made in research, development and production. Because of this, many businesses avoid genuine innovation in favour of waiting for someone else to develop a successful product before cloning it.
At this stage, sales tend to be slow as demand is created. This stage can take time to move through, depending on the complexity of the product, how new and innovative it is, how it suits customer needs and whether there is any competition in the marketplace. A new product development that is suited to customer needs is more likely to succeed, but there is plenty of evidence that products can fail at this point, meaning that stage two is never reached. For this reason, many companies prefer to follow in the footsteps of an innovative pioneer, improving an existing product and releasing their own version.
If a product successfully navigates through the market introduction it is ready to enter the growth stage of the life cycle. This should see growing demand promote an increase in production and the product becoming more widely available.
At this point a product is established in the marketplace and so the cost of producing and marketing the existing product will decline. As the product life cycle reaches this mature stage there are the beginnings of market saturation. Many consumers will now have bought the product and competitors will be established, meaning that branding, price and product differentiation becomes even more important to maintain a market share. Retailers will not seek to promote your product as they may have done in stage one, but will instead become stockists and order takers.
Eventually, as competition continues to rise, with other companies seeking to emulate your success with additional product features or lower prices, so the life cycle will go into decline. Decline can also be caused by new innovations that supersede your existing product, such as horse-drawn carriages going out of fashion as the automobile took over.
Many companies will begin to move onto different ventures as market saturation means there is no longer any profit to be gained. Of course, some companies will survive the decline and may continue to offer the product but production is likely to be on a smaller scale and prices and profit margins may become depressed. Consumers may also turn away from a product in favour of a new alternative, although this can be reversed in some instances with styles and fashions coming back into play to revive interest in an older product.
Product advertising and packaging are equally important in order to appeal to the target market. In addition, it is important to market your product to new demographics in order to grow your revenue stream.
Many products or brands have gone into decline as consumer needs change or new innovations are introduced. Some industries operate in several stages of the product life cycle simultaneously, such as with televisual entertainment, where flat screen TVs are at the mature phase, on-demand programming is in the growth stage, DVDs are in decline and video cassettes are now largely redundant. Many of the most successful products in the world stay at the mature stage for as long as possible, with small updates and redesigns along with renewed marketing to keep them in the thoughts of consumers, such as with the Apple iPhone.
The typewriter was hugely popular following its introduction in the late 19th century due to the way it made writing easier and more efficient. Quickly moving through market growth to maturity, the typewriter began to go into decline with the advent of the electronic word processor and then computers, laptops and smartphones. While there are still typewriters available, the product is now at the end of its decline phase with few sales and little demand. Meanwhile, desktop computers, laptops, smartphones and tablets are all experiencing the growth or maturity phases of the product lifecycle.
Having first appeared as a relatively expensive product, VCRs experienced large-scale product growth as prices reduced leading to market maturation when they could be found in many homes. However, the creation of DVDs and then more recently streaming services, VCRs are now effectively obsolete. Once a ground-breaking product VCRs are now deep in a decline stage from which it seems unlikely they will ever recover.
Electric vehicles are experiencing a growth stage in their product life cycle as companies work to push them into the marketplace with continued design improvements. Although electric vehicles are not new, the consistent innovation in the market and the improving sales potential means that they are still growing and not yet into the mature phase.
Like electric vehicles, artificial intelligence (AI) has been in development and use for years, but due to the continued developments in AI, there are many products that are still in the market introduction stage of the product life cycle. These include innovations that are still being developed, such as autonomous vehicles, which are yet to be adopted by consumers.
Understanding the product life cycle can inform the strategic actions of a company or business, allowing management and decision-makers to work out staff allocation and resources, budgeting, and what should be prioritised, as well as the next areas for innovation and development.
A new product can be promoted as a ground-breaking or an improvement on existing products, while an established product can be promoted based on a long, successful and trusted history in the marketplace.
Of course, those products that are in decline or have saturated the market will need a different strategy again, allowing you to maintain your position in the marketplace even as you look at reinvigorating your product or innovating new ideas.
As highlighted above, the product life cycle in marketing is also an important consideration for businesses. Products need to be addressed differently according to their position in the life cycle, as follows:
With the full launch of your product you can begin to promote it in earnest. This could include reaching out to industry experts or influencers within your target market who can review and promote your product, using their endorsement to create credibility and reach a wider audience. This stage is all about educating the marketplace about the key selling points and benefits of your product.
At this point the focus shifts to establishing a brand presence to create customer loyalty over any competitors. Marketing strategies at this point can include social media advertising and promotion, search engine optimisation (SEO), content marketing and partnerships with industry experts or influencers. Companies will also seek new distribution channels, add additional features and develop support services. Exploring new markets and e-commerce platforms as well as partnering with retailers could also boost your customer base at this point.
The International Product Life Cycle (IPL) is a way of keeping track of how you need to manage and market your product in different international markets. Companies will often explore other markets globally to avoid reaching the decline stage for their product or service. Others will seek to move manufacturing and production to other countries as well, either to meet the demands of other markets or to reduce production costs.
The stages of an IPL are the same as those for a normal product life cycle, although some stages may be approached differently to take account of local customs and cultures as well as regulations. Exploring other markets gives you the opportunity to learn from prior mistakes and innovate into new regions. An IPL will not prevent decline altogether as competitors may also decide to move into the same markets, creating a shift in life cycle stages towards saturation and decline.
The marketing theory behind product life cycles interacting with international trade was developed by Harvard Business School professor Raymond Vernon in the late 1960s, to take account of trends in international trade.
Vernon stated that products in international markets had three phases; new products, maturing products, and standardised products. He believed that products would perform best in their country of origin as this would keep manufacturing and production costs low. However, once demand increased, companies can start exporting to other countries, as well as building local production plants in each new location. These plants would provide the flexibility to make changes to a product locally, without incurring large costs.
Knowing when a product is going into decline prevents your company from following as a result of being overly reliant on a fading market. A product life cycle strategy means that you can reinvigorate an existing product, develop a new replacement product or change direction to stay abreast of a changing marketplace.
Ariel Courage is an experienced editor, researcher, and former fact-checker. She has performed editing and fact-checking work for several leading finance publications, including The Motley Fool and Passport to Wall Street.
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