Product life cycle

Product life cycle is the series of stages products go through in the marketplace. In marketing, products are known to go through four stages: introduction, growth, maturity, and decline. While the time it takes for PRODUCTS to go through their LIFE CYCLEs can vary from days to decades, products have a life and logical marketing goals and marketing strategies differ, depending on the stage in the life of a product. During the introduction stage, the goal is to stimulate DEMAND for a new product or service. To do this requires creating consumer awareness and interest as well as trials of the new product. Marketers of personal health-care products know it is difficult to get most people to consider alternative products. Placement of samples in hotels, clubs, and spas are typical promotional strategies used to introduce consumers to such new alternatives. Marketers of electronic equipment and technological consumer products know that during the introduction stage they need to reach opinion leaders, people who seek out the latest technology and whose opinions influence others. To gain the attention of these opinion leaders, marketers will promote their new products in special-interest magazines and consumer shows to introduce their new products to people who influence others. Marketers also know that opinion leaders vary. For example, somebody who is not knowledgeable about cars or computers will consult somebody else who is knowledgeable before making a major purchase decision. Gaining the support of DISTRIBUTION CHANNEL members is often critical to success in the introduction stage. There are tens of thousands of new food products introduced each year but not enough room for all of them on supermarket shelves. Most retail stores do not have unused space, and thus for almost every new product, something is removed. To help introduce products, marketers will often provide special display racks and banners and will pay part of a retailer’s ADVERTISING cost. With all these expenses, typically during the introduction stage, a firm focuses on stimulating sales, not maximizing PROFITs. During the growth stage, sales begin to expand rapidly, new customers make their first purchases, and early buyers repurchase the product. During this stage, marketers expand their advertising, changing their messages from “Look, we have a new product” to “This is a great product, and here are the benefits.” Also at this stage, competitors, seeing sales taking off, enter the market, which increases price competition and COMPETITION for access through distribution channels. Improvements in the original product are often necessary to match competitors and respond to consumer concerns. Generally profits are maximized during the growth stage of a product life cycle. During the maturity stage, sales peak and profits begin to decline. There are usually many competitors in the market, and most consumers who want the product have already made an initial purchase. Marketers tend to advertise heavily, emphasizing differences in their products and offering additional benefits such as warranties and customer services. Because there are many producers and market demand is peaking, price competition becomes more aggressive during the maturity stage. During the decline stage, both sales and profits decrease or disappear. Declining sales often foster price cuts, which then decrease profits. Some competitors leave the market, while other firms consider strategies to extend the lives of their products, for instance introducing new and improved versions. Evaluation is made of new uses or new markets that were previously considered not profitable, and EXIT STRATEGIES are developed to minimize losses and damage to relationships with loyal customers. Sometimes small numbers of loyal customers result in a niche market for one of a few firms remaining during the product’s decline stage.
See also MARKETING STRATEGY; PRICING STRATEGIES; SALES PROMOTION.