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In the mid-1990s, when 11-year-old Varun would browse through his father’s vast collection of audio cassettes, he often felt puzzled. He was already listening to music on compact discs (CDs), and everyone, including his parents, agreed that CDs made for a superior and far more comfortable listening experience. To him and many others, audio cassettes were effectively obsolete. Varun felt the same way about video cassette tapes; with digital versatile discs (or DVDs) entering the market, he didn’t see people using VCRs and video cassettes for much longer.
20 years later, Varun, who now works in the sales department of a record label, introduces his daughter to his collection of CDs. And while the young girl understands the sentimental value of her father’s CDs, she doesn’t get why anyone would need such devices when they can just use iTunes to access all of their favorite music and artists.
Varun explains to her that in the 1990s, cassettes were becoming relics of the past while CDs were the future. Now, two decades later, CDs are effectively on their way out, being replaced with easier and better formats for accessing music. This, he says to his daughter, is how a product life cycle works – from the creation of the product till its discontinuation.
What Is A Product Life Cycle?
While the above instance constitutes two apt product life cycle examples, it’s imperative to define a product life cycle to better understand how it works. There are several ways to outline the product life cycle definition. In the simplest terms, it’s a model that traces the successive stages a product goes through while it exists, right from its development and introduction to consumers till its decline and eventual removal from the market.
The product life cycle stages are important components of this process. They help to determine the viability of a product during each point in its life. Managers and marketing teams regularly use the product life cycle model to help strategize and plan advertising campaigns, market expansion, and pricing. Knowing how to manage a product life cycle helps marketing professionals make important changes to the product as and when required and determine when to start phasing out older products in favor of new ones
Now that we’ve covered the definition of a product life cycle, let’s identify each of the product life cycle stages and examine how they work.
Product Life Cycle Stages
A keen understanding of the product life cycle stages is crucial for maximizing profits and identifying the right time to introduce or pull a product from the market. Let’s look at what these stages are and what they entail.
The Development Stage
Several products never advance beyond this stage. The development stage involves in-depth study and research ahead of a product or service being launched. During this phase, organizations run trials, develop samples, bring investors on board, assess the product’s efficacy and plan its introduction into the market.
This phase is often the toughest in the product life cycle. Since development costs money and there are no sales, the development stage typically involves high expenditure and generates no revenue. The duration of this stage depends upon several factors, including how competitive the market is and how sophisticated the product is. Moreover, if the product is the first of its kind in the market, developing it might take longer. This is why companies should consider generating curiosity and favorable buzz around the launch right from the development stage.
The Introduction Stage
Out of all the product life cycle stages, this is possibly the most sensitive stage where the product finally launches into the market. Now’s the time for the company to pay attention to several factors, including product branding, awareness, wooing a potential client base and examining distribution channels. Customers will need to be convinced about the quality of the product and its use in their lives. This is when effective advertising campaigns and building client trust are imperative.
Patience is vital at this stage of the product life cycle, as the buzz and demand will take time to build up and sales will most likely be low. This stage also allows marketing teams to develop fun, innovative marketing strategies to educate the client base about the product. If all goes well, then growth is on the cards for the product.
The Growth Stage
This stage is when the moment of truth in the product life cycle occurs, as consumers begin to notice the product in the market, get curious and start buying it. With increasing attention comes more demand, which can fuel sales, growing profits and product expansion. Rival brands will also start noticing the product and will want to get in on the action.
The company needs to focus on increasing sales and find newer ways to reach out to the target client base. All of this will likely increase the product market share. Stiff competition may lead to greater investments in promotional campaigns. Out of all the product life cycle stages, this is the phase when the product’s features can be modified and improved for better functionality and value.
The Maturity Stage
Now that the product has been in the market for a while, production and marketing expenditures will decrease; companies will revise their price points to remain competitive and grow profit. This is the stage when sales will also start leveling out after a speedy growth phase.
The work isn’t over. Now that the product is established in the market, companies must find ways to keep consumers interested in it so that their attention doesn’t waver and competitors can’t lure them away. This can be achieved with the help of discounts, added features and other incentives. Marketing campaigns at this stage should move away from awareness and highlight the advantages of the established product over those of rival brands. If handled correctly, the growth stage can be the most profitable stage of the product life cycle.
The Decline Stage
It’s natural for products that fail to become preferred market brands to enter a stage of decline. This can happen due to rival companies bringing out similar products with newer features and at lower prices. Innovations that render a product obsolete can also accelerate the decline.
When it’s clear that a product will be obsolete or will no longer yield significant profits, companies will often shift their focus onto other innovations. Can there be ways for organizations to give a product a fresh lease of life and revive interest in it? This can be achieved by adding dynamic new features or cutting production and marketing it as a rare product to grow demand. Usually, though, companies find it financially prudent to discontinue the product.
An examination of the stages of a product life cycle brings with it a greater understanding of the product life cycle definition. Let’s look at some product life cycle examples to illustrate how some products get discontinued while others find ways to adapt and live on.
Product Life Cycle Examples
It helps to examine how the product life cycle in practice works differently for different products. Here are a few product life cycle examples to illustrate this point.
Video Cassette Recorders (VCRs)
When VCRs were launched, they were relatively expensive and became a revolutionary product in home entertainment. They gained mass acceptance, were found in homes everywhere and witnessed significant growth and market maturity. Their decline began with the advent of the DVD. Now, with streaming services taking over, VCRs are obsolete and will probably never recover.
iPhones
The story of the iPhone is one of those product life cycle examples that demonstrate a product’s ability to beat the curve and last longer. Apple employs an effective product life cycle management strategy by tweaking the product at regular intervals to make it newly attractive to its loyal customer base. This effectively holds the competition at bay and buys more time for the product before it reaches its stage of decline.
Electric Vehicles
These aren’t new products in the market, but the growth potential for sales and the ongoing market innovation by companies like Tesla show that electric vehicles are still in the growth stage of their life cycle.
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