Product lifecycle management is a widely used theoretical model for developing marketing and business strategies. It predicts the stages of sales growth the product will go through from the time it’s manufactured and launched into the market all the way to its demise. In simple words, every product that is introduced in the market has a life span described in four lifecycle stages – introduction, growth, maturity, and decline.
The four stages of the product life cycle begin from the introduction phase, where the product is launched into the market. The sales grow gradually in this phase, but as the revenues and sales accelerate, the product moves to the second stage known as the growth phase. This is where we see an abrupt increase in the sales potential, after which it enters maturity. Here, sales grow slowly. In other words, not as fast as during the growth phase. Then comes the point where the sales begin to decline, sometimes quite abruptly.
It is a pretty useful model as it assists in analyzing where a company should position a product or brand in the market. It also helps people in finance decide whether or not they should invest in merchandise that is close to the end of their life cycle.
Many big companies utilize the PLC analysis for evolving their products to meet the demands of the market. However, there’s a decent amount of people in the business world who aren’t familiar with its usefulness.
Let’s look at some of the lifecycle stages!
Lifecycle Stages: Product Life Cycle Curve Explained
To predict the sales trend of a product lifecycle, the model is divided into two proportions, sales and time. The graph below will let you know how the product lifecycle management works, and what can cause changes in product sales over time.
1. Introduction Phase
After developing the product, it enters the introduction phase, where the main focus is on launching the product into the market. In this stage, the companies find out whether the market is accepting their concept or not.
Also, as most of the customers aren’t aware of the product, the company spends heavily on promotion to reach their target consumers.
In this period, a business doesn’t know how well the product will do in the market, or if they’ll be able to generate enough sales to recover the spent amount. However, the primary goal of this phase is to simply introduce the product to target consumers and keep hopes high.
2. Growth Phase
Once a product enters this stage, a business can identify the growth of the product. They can determine things like how many units were sold, which units sold particularly well in a target area, and how much revenue does this mean for the business.
The growth stage is categorized by fast revenue growth, rapid customer acquisition, and the beginning of competitors trying to replicate a product.
If you get to this stage, competitors will inevitably try to achieve the same success that your product has had. This is also where you’ll notice the product costs slowly begin to fall, and the generating of a positive cash flow.
3. Maturity Phase
When the product enters the maturity stage, things get a little challenging. This is especially true for businesses whose product sales are poor. For big businesses, this phase is quite beneficial as the products will enter a competition for getting a share of the market.
Big businesses reduce the unit costs to keep the sales going and this way they can overtake businesses who don’t have the same resources and who can’t take the market hits.
4. Decline Phase
This stage is bad news for businesses as they start seeing a reduction in cash flow. There are various reasons why a product would enter this stage, but the primary one is technological change. As technology rapidly evolves, it has a ripple effect on the product life cycle curve of many goods and services.
Businesses can quickly run into a decline phase if they get complacent and don’t constantly innovate. It doesn’t even have to be a case of reinventing the wheel with an earth-shattering product. Competitors innovating on just one or a couple of features can be enough to push you out.
A clear example of this is how Instagram achieved mind-blowing growth after copying Snapchat’s Stories idea. They made the interface better, more appealing to a wide range of users (400 million daily users and counting to be exact), and turned Snapchat into an afterthought in today’s social media landscape.
Image Source: Vox
Product Lifecycle Management Marketing Examples
Let’s look at some concrete product life cycle examples:
Some products don’t get a chance to move to the next stage, and remain in the introduction phase. The one I’ll talk about is the phone with 360 degrees wrap-around display, the Xiaomi MI MIX Alpha.
Image source: Gearbest
Even after spending a great deal of money on promotions, this product failed to grab consumers’ attention because of its new type. It was a good project, but they were unable to enter the planned small-scale production phase.
The release kept hitting new dates, and due to manufacturing complexities, it’s never coming out now. It’s also noteworthy that the marketing was not clear and Xiaomi never justified the benefits of the cool features they were offering.
There is a massive list of products that haven’t been affected by time or competition. Some goods of brands that we know have remained stable for a considerable amount of time. Companies like Nestle, PepsiCo, Coca-Cola, and Kellogg’s are incredibly stable and are practically immune to changes brought to market by challengers.
Their size, seasoned leadership, and considerable resources also allow them to acquire innovative businesses and tech that constantly keep them relevant.
Some products are stable from their inception. Phones released by Apple, Samsung’s Galaxy series, and Microsoft products are all excellent examples of the mature phase.
They have been updating the same product by bringing exciting new changes to them. As all new products are related to previous versions, they don’t need to go through the introduction phase.
A thing to remember is that product life cycle management is a theoretical concept, and it’s not meant to predict precise sales growth. Also, it isn’t easy to deduce how long a product life cycle will last because a lot of factors influence its evolution in different stages of the product lifecycle.
Product Life Cycle Management And Marketing
There are very few products that are “destined” for success. The determination of each end-product is analyzed and depicted in the product life cycle. With thoughtful planning and rigorous investment in the R&D department, products can stay in the maturity phase for a long time.
However, the first and foremost phase of any product begins with planning. Businesses prepare to face all sorts of complications by devising layout, purpose, and other strategies for their upcoming development. Moreover, the product life cycle is highly associated with the marketing department. Take the introduction phase as an example, which is all about promoting!
The product life cycle analysis can help generate reports for failure and success probabilities. Time spent in research and planning can bring new prospects to light, which can prove valuable in developing strategic moves when the product launches. For example, time spent in research in planning could bring about angles to pivot to if the initial launch is a flop.
Below are some areas of product marketing that are widely adopted by businesses:
In the initial period, you have to be observant and keep an ear to the ground. Take notes of how customers respond to the initial product offering and see which channels are the most effective/least effective.
The expenses are usually at the highest point during this introductory phase. It is why a business does not expect to earn a profit just yet. It is until after the product makes its way to the second phase that you can expect to.
Questionnaires play a pivotal role in product and market research. They are essential feedback tools that help you understand areas of improvement with your product. They are also a powerful engagement tool that turns passive customers into engaged customers. This matters because highly engaged customers buy 90% more often and spend 60% more per transaction.
There are different types of pricing models out there. Each one has its pros and cons. Some of the most popular pricing models include market price, flat pricing, customary pricing, and subscription model. If you’re wondering about some of the best pricing strategies, here’s an actionable read.
Planning is the key to managing the product lifecycle. It envelops all of the vital considerations as the product develops with time. If you’re not using a product lifestyle model yet, it’s worth trying out. Even if it’s a theoretical one, it can help you better plan out the strategic steps to product success.
In this article, you learned all about Product Lifecycle Management. You discovered the Product Life Cycle curve and it’s 4 stages. You learned about the importance of planning and how it impacts a product flopping or becoming a success.
You got real-life examples of innovation in action and how businesses should never get too complacent. Lastly, you learned how Product Lifecycle Management and Marketing are interdependent.