Product Life Cycle
There are four major phases in the Product Life Cycle. We can establish distinct product life cycle strategies for the four phases of launch, growth, maturity, and decline. These are determined by the properties of each PLC step. It’s critical to understand which product life cycle techniques should be used at each step in order to appropriately manage the PLC.
Stages of the Product Life Cycle
Stage 1: Introduction
After being created in the product development stage, a new product is initially disseminated and made available for purchase in the introduction stage. As a result, when the product is initially introduced, the introduction stage begins. However, product launch might take a long period, and sales growth is often moderate. Today’s profitable items, such as frozen meals and HDTVs, languished for years before accelerating their development.
Furthermore, earnings are negative or low at the debut period owing to poor sales on the one hand and expensive distribution and advertising costs on the other. Obviously, a large sum of money is required to recruit distributors and increase their stock levels. In addition, advertising costs are considerable in order to notify customers about the new product and encourage them to try it.
The emphasis throughout the introduction stage is on selling to the most ready-to-buy customers (innovators).
We can identify the correct launch plan for product life cycle strategies: the corporation must adopt a launch strategy that is compatible with the targeted product positioning. Without a doubt, this first approach may be seen as the first phase of a larger marketing strategy that will cover the product’s whole life cycle.
The primary goal should be to raise product awareness and encourage people to try it.
To be more specific, the corporation manufactures rudimentary versions of the product since the market is often not ready for product enhancements or refinements at this time. To recoup the charges, cost-plus pricing should be applied. Early on, selective distribution allows you to concentrate your efforts on the most significant distributors. The goal of advertising should be to raise product awareness among early adopters and innovators. Heavy sales marketing is required to encourage trial. The firm and the new product are ready for the next stages after following these product life cycle methods for the initial PLC stage.
Stage of development
The growth stage is when the product’s sales begin to rapidly increase. The rationale for this is that early adopters will continue to purchase, and subsequent consumers will begin to follow their example, especially if they receive positive feedback. More rivals join the market as a result of the increase in sales. Competition will be severe, and the market will increase, as these will launch new product features. As a result of the increased competition, the number of distribution outlets has increased, and sales have increased as a result of resellers building stockpiles. Profits improve during the expansion stage because marketing expenditures are now distributed across a bigger volume and unit production costs are lower.
The primary goal of the growth stage is to increase market share.
To maintain fast market expansion for as long as feasible, many product life cycle techniques for the growth stage might be implemented. The quality of the product should be increased, and new features and models should be introduced. With the product, the company may also reach new market sectors and distribution channels. Prices either stay the same or fall in order to get into the market. The corporation should maintain, if not increase, its promotional investment. There is now more than one core goal: market education is still crucial, but so is keeping up with the competition. Simultaneously, some advertising must transition from increasing product awareness to increasing product conviction and purchase.
The growth stage is an excellent illustration of how product life cycle strategies are linked. The corporation must pick between a large market share and significant present earnings during the expansion period. The corporation may achieve a dominating position by spending a lot of money on product enhancements, advertising, and distribution. However, it will have to give up the majority of present revenues in order to make up for them in the following stage.
Maturity level
After hitting a peak, the product’s sales growth slows or levels out, which is known as the mature stage. Because the market is saturated, this will happen at some time. The mature stage, on average, lasts longer than the two previous phases. As a result, marketing management has significant hurdles, necessitating the careful selection of product life cycle methods. The majority of items on the market have reached maturity.
Because there are so many manufacturers with so many things to offer, sales growth has slowed. Similarly, increased competitiveness is a consequence of overcapacity. A profit decline happens when rivals lower their pricing, boost their advertising and sales promotions, and raise their product development expenditures to discover better versions of the product. In addition, some of the lesser rivals leave the business, leaving just well-established competitors.
The primary goal of the corporation should be to maximise profit while maintaining market share.
Several product life cycle solutions are available to achieve this goal. Although many mature goods seem to stay unaltered for lengthy periods of time, the most successful ones are continually updated to satisfy changing market demands. The reason for this is that the corporation cannot just follow or defend the mature product – the greatest defence is a solid offence. As a result, the company should think about changing the market, product, and marketing mix.
Modifying the market is attempting to enhance consumption by identifying new customers and market niches. Additionally, current customers’ consumption might be increased. Changing product attributes such as quality, functionality, appearance, or packaging to attract new consumers and encourage greater use is referred to as “modifying the product.” Finally, adjusting one or more marketing mix parts to improve sales is referred to as tweaking the marketing mix. For example, pricing might be reduced to attract new users or clients from rivals. The company might also invest in more effective advertising campaigns or aggressive sales promotion.
Stage of decline
Finally, methods for the decline stage of the product life cycle must be selected. The decline stage is when a product’s sales start to drop. At some point, most product formats and brands experience this. The fall might be gradual, as in the case of postage stamps, or it can be quick, as in the case of VHS cassettes. Sales may fall to zero, or they may fall to a low level that lasts for several years.
Sales declines may be caused by a variety of factors. Technological advancements, adjustments in consumer preferences, and greater competition, for example, may all have an impact. Some rivals may exit the market as sales and profitability drop.
A thorough selection of product life cycle strategies is also essential during the decline stage. The reason for this is because carrying a subpar product may be very expensive to a company, not only financially.
There are several hidden fees as well. A poor product, for example, may eat up too much of management’s time. It necessitates marketing and sales efforts that may be better spent on other, more lucrative items at a later time. The fact that carrying a subpar product slows the hunt for alternatives and generates an unbalanced product mix may be the most critical factor. It also has a negative impact on present profitability and the company’s future prospects.
As a result, effective product life cycle methods are essential. The corporation has to pay greater attention to its ageing items in order to spot those that are on their way out sooner. The company must then decide whether to keep, harvest, or drop the deteriorating product.
During the decline period, the primary goal should be to cut costs. Cutting prices, adopting a selective distribution by phasing out unproductive outlets, and reducing advertising and sales promotion to the level required to keep just the most loyal clients are all general techniques for the decline stage.
Repositioning or reinvigorating the product or brand may be a possibility if management chooses to keep it. The goal of these solutions is to get the product back into the PLC’s growth stage. If the company intends to harvest the product, expenses must be cut and just the final sales must be gathered. However, this will only boost the firm’s profitability in the near run. Selling the product to another company or just liquidating it at salvage value are two options for removing it from the product line.
All of the features of the four phases of the product life cycle are mentioned here. Product life cycle strategies for product, pricing, and distribution, as well as advertising and sales promotion, are established for each. Choosing the best product life cycle strategy is critical to a company’s long-term success.