Many of you have probably come across the product life cycle when you were doing some business course or class. You might as well have passed it off as just some academic material meant for assignments and exam purposes. Well, you aren’t the only one as studies have shown that even most business people don’t place any serious attention to it at all – but that isn’t wise. Today I’m here to impress upon you that an understanding of the product life cycle is indispensably central to your business. Let me show you why:
First off, a product life cycle denotes the stages (or phases) a product or service goes through in the market space. Sales & competition management along with pricing regimes are 3 of the key attributes influenced by the product life cycle. That implies that it is central to the marketing matrix of any business – an understanding of each stage dictates the direction you assume marketing-wise. That’s why it’s not something you can ignore. The number of stages can differ but the commonly used ones are the ones I’m covering herein.
Stage 1: Introduction (Development) – Building Familiarity
This is when you take that leap of faith and launch your product or service onto the market. It’s akin to launching into the great unknown because you are not yet sure how people are going to respond to your brand. People tend to be skeptical of new products and as such, they exercise utmost caution by not warming up to your offering immediately. This will be evident in the snail pace you’ll see in your initial sales. Bear in mind that a completely novel offering (no matter how relevant) takes lots of time & effort to be accepted. Your main focus here is to raise awareness of your products or services.
This is also the stage at which you enact your distribution mechanisms. You are driving towards familiarity by endeavoring to appeal to customers in convincing them your value proposition is superior and unique. Therefore, in terms of marketing, you’ll use any available means to ensure the word gets out. There are two main pricing strategies to use here i.e. penetration pricing & price skimming. Penetration pricing refers to placing prices as low as possible to attract customers so as to secure a market share. Price skimming entails initially setting prices as high as possible so as to realize quick profits then lowering them strategically as the market evolves.
Stage 2: Growth – Building Preference
Your market share generally increases here as does the demand for the type of products or services you have. When you get to this stage the aforementioned liberty becomes increasingly unavailable. At this point, your product is known and copycats and fast followers have already caught up with you. The competition begins to stiffen at this stage. Certain choices or decisions you have to make become forced – due to market forces. Your marketing needs to become targeted, thus, your website along with social media becomes your most strategic channel. It becomes a necessity to adjust pricing (if need be) so as to outsmart your competitors and lure more customers. Growth also entails up-scaling & refinement of your brand through customer feedback. Therefore, you must ensure continual & consistent engagement with your customers &/or prospective customers. You also have to keep an eagle eye on your competition and current market trends. You are fighting for people to prefer your brand despite everything else.
Stage 3: Maturity – Building Loyalty
Once you get to this stage it’s most usually the case that most people now have your products or services. This somewhat causes sales to remain constant with no significant new customer sign-ups. By this time other low-key competitors who have dropped out of the race. You have basically hit a high note and you are bent on maintaining it. You spend lots of effort in consolidating your market share whilst still clawing to get more customers. You also work on distinguishing your brand by exhibiting how unique your value proposition is. This here is also when you can now explore vast expansion initiatives i.e. on a national, regional or international scale. You now have the popularity of your brand to leverage on. At this stage, you have the adequate financial muscle to do brand ambassadorships or brand endorsements with well-known public personalities. If you are enterprising enough you can actually realize a migration of customers from other brands to yours.
Stage 4: Decline – What Now?
This is when virtually everything begins to wane i.e. product or service relevance, its appeal, etc. You might witness an outbound migration of customers to other newer and more creative product or service offerings. At this stage, you face the daunting task of making a decision on what to do next. Some options to pick from can be to terminate the product or service, to explore and attach new value-added services to it so that it becomes more appealing again or to do a clearance sale, etc. In some cases some people at this point opt to go into partnerships, mergers or to do acquisitions – the options are several.
So, this is a walk-through of what the product life cycle is and what its implications are for your business at every stage. It’s actually a very good tool to use in guiding you to develop strategic plans. You can forecast sales, can appropriately price your products and services & market innovatively. If you are in business right now or are contemplating to, I implore you to closely examine the product life cycle so that you make smart business moves at any given time.