All products introduced to markets have a life cycle. The Product life cycle is an important part of marketing. It describes the period of time in which the product is launched, brought to market and eventually withdraw from the market. The cycle is divided into four stages: introduction, growth, maturity and decline. These stages are analyzed by market managers to decide when to promote the product, discover new markets, reduce prices, add new features or create new packaging. When the life of a product starts, it may have a little or no competition in the marketplace but when the product becomes successful it faces increasing number of competitors which may lead to decline of sale.
The 4 Stages of Product Life Cycle
Every product has a limited life and variable sales and profit margins. A product has different stages which represents different challenges. The Product require different marketing, financing, manufacturing and human resource strategies in each stage. It passes through four stages including introduction, growth, maturity and decline. These stages which represent the whole life of the product are illustrated below in detail.
In the introduction stage, the firm seeks to launch the product first time in the market. This stage may be very expensive because the company will have to incurred the cost of research, development, advertisement and product testing if it’s a competitive sector. The goal of any firm is to meet consumer’s needs with a quality product and lowest possible price. In the introduction stage sales volume may be low as the firm tries to build awareness of its product among potential customers. In this stage the firm central focus is to create awareness not to make profit. Most of the companies study different markets and looks those areas where consumer’s needs are not being met by current products and tries to introduce new products that could meet that need.
In the growth stage, there is growth in the sales volume as more customers are using, trying and are becoming aware of the product. Profitability begins to rise. Competition begins to increase as awareness of the product builds. Minor changes may be made as more feedbacks are collected or new markets are targeted. In this phase, most of the companies advertise the products to a wider audience and expand their distribution channels to make their products available in more places. Once the product has been success, sales will increase further as more retailers become fascinated in buying it. In short, rapid sales, public awareness of the product and profits are the characteristics of the growth stage.
In the maturity stage, Changes are made and new features are added to differentiate the product from the competing products. Competitors may offer a high-quality version of the product at a lower price. New distribution channels are made and incentives may be offered to encourage preference over rivals’ products. The marketers spend more and more on promotion to persuade customers to buy the product. At this phase, the primary objective of marketers to defend market share and maximize profit.
In the decline stage, sales begin to fall as consumers change tastes and fashion or the product is no longer relevant or useful. Consequently, profits decline to the point where it is no longer economically feasible to continue producing the product or service. Producer attempts to upgrade the existing product or create new product more efficiently. Generally, product decline is not about the end of the business cycle, rather it is about the termination of a single product. It should be noted that every product does not go to the decline stage. There are numerous products like Pepsi, Coca Cola, Nestle and many more that remain in the maturity stage.
It is important for marketers to analyze the product life cycle to manage their product well, take corrective actions, prevent it from incurring losses and stay in business. When the product life cycle is managed effectively it leads to rise in sales and profits.