What is the Product Life Cycle?
The term product life cycle refers to a period of time that starts when a product is introduced to the market until the moment it is withdrawn.
The lifecycle is a process guided by the Product Manager and divided into six phases within which important decisions are made regarding the product, its functionality, marketing, and sales strategies. Policies related to pricing, packaging, advertising budgets, customer care, and much more are discussed and re-discussed.
What are the stages in the Product Life Cycle?
In the model proposed by the Hubspot types (The 6 Stages of the Product Life Cycle – Rebecca Riserbato) there are six stages in the life cycle of a product:
- Development
- Introduction
- Growth
- Maturity
- Saturation
- Decline
It is a model that can be applied in any context. A model, useful for analyzing the product journey from its initial development to its final decline.
Let’s make it clear immediately, the product life cycle is not a linear path: regardless of whether it is a physical product or a service, it is necessary to implement different strategies for each of the different phases.
The essential task of the product manager is above all to be able to identify, recognize and understand at any moment in which phase of the journey the product is. Thus, he will be able to recognize and use the best product strategy for that specific phase, and to lead the team to the next stage.
1. Development
The development phase begins with analysis, research, and preliminary inter-department sprint meetings to define the roadmap. Before a product is developed, it is necessary to have a clear understanding of the market context – the position of the competitors, the problems the product solves, the target customers, and much more.
Whether it is an existing product or a new product, this phase can take a long time. Developing something completely new takes more time and costs. For this reason, the development phase is often very expensive for companies – the product still does not exist and does not generate profit. At the same time, however, it is also the phase in which you can begin to attract investors through the creation of prototypes and the development of a business plan. In doing so, we begin to test the effectiveness of the idea on the market.
2. Introduction
The market introduction phase is the one following the official launch when a product is first put on the market and marketers start building a narrative around it. The launch aims to establish an initial awareness of the target audience around the product. At this stage, there is no need to worry if sales are low. There is a need, however, to set up communication and marketing campaigns to make our proposal known. We also need to define a space for a dialogue with potential customers. For this reason, it is important to be able to test, together with the impact of advertising strategies, the effectiveness of distribution channels, to understand as soon as possible how to educate potential customers about the product and its features.
3. Growth
In this phase, we are reaping the fruits of the efforts made in the first two phases. Consumers responded, accepting the product on the market: finally the sales have arrived. A demand grows and profits rise, but at the same time, new concerns emerge. During the growth phase the market expands – the competition, driven by our example, begins to show signs of life.
It is important that at this stage the marketing strategies aim at branding. To obtain even greater recognition towards the product and the brand, to develop trust through support services, to raise curiosity about possible upcoming product features.
4. Maturity
When the life cycle of a product enters the maturity stage, sales begin to stabilize and the growth stops. New players have entered the market, companies are starting to lower their prices because of the competition.
But there is much more to do. To remain competitive in the maturity phase, companies must aim for efficiency, learning from the errors and feedback received in the Introduction and Growth phases. In this way, the production costs are lowered and the product improvements push up the sales once again. When adoption rates start to rise again, iteration density can be increased, and a continuous improvement strategy can be put in place. At the marketing level, storytelling must aim at the uniqueness of the brand, at differentiating our proposal from that of competitors.
5. Saturation
We enter the saturation phase when the competitors have won a slice of the market. The level of diffusion of the product among consumers is at its highest, but sales are neither growing nor decreasing. The innovations related to product features have been pushed to the limit. The market is saturated, the competition is very high.
The goal in this phase is to ‘hold up the blow’, aiming to postpone, as much as possible, the start of the product decline phase over the course of time. Once again, it is the responsibility of the marketing department to intercept the attention of consumers, to push even more on identification and on the values that unite the customer community. By investing in its user base, in order to communicate around the special product relationships that bind users.
6. Decline
Not for everyone but for many, the phase of decline comes sooner or later. There are two different scenarios of decline. Product decline starts when the competition has grown and our product is no longer the preferred product on the market – sales begin to decline. A market decline occurs when, over time, new trends, new formats, and new platforms emerge. The target market for that product is destined to disappear soon. The entrepreneur who is in this specific phase of market decline can decide to give up and sell everything or to innovate and iterate the knowledge acquired through the previous product within the life cycle of a new product.
Examples of the Product Life Cycle
There are many examples that highlight the mechanisms of the product life cycle.
Home entertainment
The appliance industry, and the home entertainment sector, in particular, has faced several methodological revolutions in recent decades. In the case of television entertainment, we have moved from black and white television to the introduction of color TVs and the first VHS video recorders in the 1980s. Then we witnessed the arrival of DVD, Blu-Ray, not to mention all those technologies that have not caught on such as LaserDiscs.
Typewriters
Another example comes from the typewriter, which began to decline with the advent of the word processor in the last decades of the last century. The product is now at the end of its decline phase, meanwhile, desktop computers, laptops, smartphones, and tablets are all experiencing their growth or maturity stages.
Always Mature Products
Many of the most successful products in the world remain in the mature stage for as long as possible, with minor updates and micro redesigns. Marketing serves to tailor a dress fresh in design and renewed in style to continue to raise curiosity, and remain at the top of the minds of consumers, as in the case of the Apple iPhone.
Electric vehicles
If we look at the automotive electrical market, we see continuous improvements in design and technologies. In their life cycle, products undergo a growth phase, but constant innovation dominates the market and the Maturity phase does not arrive. For now, we remain in the growth phase.
What is the purpose of Product Life Cycle
The product life cycle is used by companies to:
A new product, recently introduced to the market, can be advertised as an improved alternative to an existing product. An already established product must consolidate its authority together with that of the brand.
Set up a pricing strategy
Depending on the stage of your product’s life cycle, we choose what price to give it. An item or service being launched may be priced lower to attract more buyers, a growing product may be priced higher.
Follow a marketing strategy
Each stage has a marketing strategy to follow – the more mature the product, the more we know its target audience. Consequently, we will be able to offer you ad hoc content through the site and social media.
Respond before the product begins its decline
Knowing the phases of the product life cycle, we can anticipate the curve and predict when the saturation and decline phases will be reached. In this way, we can respond to the change and innovation before a decline occurs.
How to identify the status of a product
How can you precisely define which stage of the product life cycle a product is in?
The product life cycle diagram represents a model, an idealized cycle. In reality, there can be sudden drops in sales as you grow or mature.
However, there are general indicators that can be applied:
→ Table
The challenges in using the product lifecycle model are numerous and complex.
Some products have life cycles measured in months or years, others can be measured in decades or centuries. Think of Coca-Cola, for example, which has enjoyed relatively steady sales for over 100 years. For this reason, it is important to use the product lifecycle as a line.
Which users are adopting a new product and their phases
Customer adoption models are important in understanding how to market a new product. In his book, Diffusion of Innovations (1962), communication scholar and sociologist Everett M Rogers describes 5 types of adopters.
The 5 types of adopters for new products and innovations
- Innovators
- Early Adopters
- Early Majority
- Late Majority
- Laggards
Innovators
The innovators are the first customers to try the product. They are lovers of risk and discovery, they are proud to be the first. They are experts in their field of interest. Articles are generally more expensive at the time of release, so innovators are often richer than other adopters.
Early Adopters
Early adopters represent the second phase of engagement on the market. Early adopters are the most influential people within any market space and often have “thought leadership” to influence other adopters. In some cases they are very active on social media, producing reviews and unboxings, influencing a large audience of followers. These are generally people with a high level of education, a good financial situation, and a reasonable approach to risk.
Early Majority
The early majority occurs when a product begins to have a mass-market appeal. It is a risk-averse class of adopters with limited economic resources. People with an average social status, are often in contact with leaders and influencers.
Late Majority
The late majority is that part of the adopters who are most skeptical about the product. These people only turn to tried and tested solutions, have less money, lower social status, and less interaction with leaders and innovators.
Laggards
Laggards are the last to reach adoption – usually, when they show up, it means a product is nearing decline. Laggards are traditional, averse to change and risk. They have low to medium socio-economic status and in many cases are older people who are less familiar with the technology.
Conclusions
Understanding how the life cycle of a product works is important in addressing customer needs. Examining a product in relation to competition, costs and profits allows a product to maintain longevity in the market.
Knowing when a product is on the decline is essential to understand when to redesign it, change your objective, or develop something new.