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Can you imagine a world without smartphones, smart watches, smart TV, or any technology? With time, our lifestyle evolved, and the need to introduce products that could meet our needs was realized. But did the evolution stop with the invention of the telephone in 1875 or television in 1927? Well, that certainly isn’t the case.
The products went through significant changes to keep up with the trends. If you look at mobile phones, you will see how all mobile companies felt the need to implement new elements to sell more products. The facts prove that no one product can cater to the needs and wants of customers for an indefinite period. Hence, the significance of the product life cycle cannot be negated.
The 1966 product life cycle concept is a brainchild of Raymond Vernon. Innumerable companies still tend to follow the theory to make assumptions and understand the need to develop new products or implement new elements in existing products.
On that note, let us take a deep dive into the concept of the product life cycle!
Simply put, the product life cycle is the time spent by a product in the market until the company takes them off. Let’s take the example of smartphones. You will see many smartphones are introduced by companies with new features and are removed after two to three years. What’s the reason? Frankly, mobile phones are the most trending products and companies have to update the technology constantly. So, from the time a mobile phone is launched till the time it stays in the market is defined as the product life cycle.
A lot depends on the concept, and companies plan their marketing campaigns and understand if there’s a need to launch a new product or modify the existing one. The planning depends on the product life cycle stages. Companies have to understand at what stage their product is before investing. On that note, let’s learn about the various stages of the product life cycle.
Let’s look at the stages one by one:
By the first stage, companies have already identified the target market and have ensured that the product is fit for the market before introducing it to the market. The introduction stage demands heavy investments in advertisements and promotional campaigns and is one of the riskiest stages in the entire product life cycle.
Companies use various strategies to introduce the products, such as:
The companies can choose from any of the following strategies to promote their products at this stage:
The marketing strategy of the ‘American Razor Company’, now known as ‘Gillette’, is one of the remarkable examples of introducing new products and using the correct promotional means to reach out to the masses.
Once the product has been introduced successfully and has been liked by the mass, the process of mass adoption begins. While the growth is slow initially, companies accelerate the production of goods, leading to a rapid increase in sales. In this stage, companies share various offers to get things going, and as more customers demand these products, the brands also find new suppliers to keep up with the demand.
Companies look to expand their market in the growth stage and approach supermarkets in addition to small retailers to reach out to more customers. There are also chances for companies to explore new markets apart from the ones they have already penetrated. The aim is to sell a maximum number of products and reach their full potential by collecting customer feedback & improving the products.
One of the best examples of marketing strategies can be Coca-Cola. The company, founded in 1886, went through massive changes over the years. A drink that was served as a patient’s medicine turned into a refreshment drink and still continues to be one of the popular beverage companies across 200+ countries.
At this stage, the product has reached its peak and enjoys maximum sales. The increase in sales is slower compared to the growth stage, but the product reaches its best version at this stage. However, the companies cannot relax even when they are enjoying maximum profits. The maturity stage invites stiff competition from other companies.
If you look at the mobile phone market, you will see many players like Redmi, Realme, Poco, etc., that sell mid-range phones with great specifications. As it is affordable to many, the competition here is stiff, and companies have to continuously implement new technologies to attract the crowd. Realme X7 Max with Mediatek 1200 density flagship processor faced stiff competition from Poco when they launched their F3 GT phones. Realme soon launched their GT edition phones to keep up with the competition.
Only a few products can keep up with the changing trends and adapt to the tastes of customers. For example, Gillette continues to have a monopoly business in the safety razor segment. The reason here is there are no new players and, thus, no competition. However, maximum products face a decline at some point in time. In this stage, customers either look for better products or look for better value for money.
Smartphones happen to be some of the great examples where a small change in technology leads to the decline of products. The constant evolution of technology is a major hurdle in the market of smartphones, and companies are forced to withdraw the old products and launch new ones to maintain their market share. You will not see anyone using a Nokia 1100 phone in the smartphone era. The keypad phones lost their importance as smartphones entered the market.
There are various products that are in the decline stage, and companies are in pursuit of finding alternatives to such products. The following are a few examples of products that are in the decline stage:
Being in the decline stage does not mean the products are obsolete. Instead, it means that products are on the verge of being obsolete. As technology advances, newer products will be introduced, and companies have to go with the flow to keep their products up and running.
Now that you know the four product life cycle stages, let’s understand the benefits of implementing a proper PLC strategy.
The father of modern marketing, Philip Kotler, said, “Watch the product life cycle, but more important, watch the market life cycle.” Companies must keep track of the ways customers respond to their products or services. Also, it is important to keep a close watch on their competitors and how they are developing products to retain their market share.
Before moving on to the significance of proper PLC strategies, let’s understand how these strategies are beneficial for companies:
Product life cycle paves the way for better product management and has helped companies cater to the need of the hour since time immemorial. So, how does it help companies in the long run? Let’s take a look.
Businesses need to be on top of product life cycle management before making any decisions. PLC helps businesses decide on launching a product, spending more or less on advertisements, understanding the market, and many other things.
The following six points will help you understand how the product life cycle is critical in businesses:
One of the major advantages of a product life cycle is that it acts as a forecasting tool and helps in predicting sales, thus helping companies understand which stage the product is in. Also, it helps understand if a company needs to invest more in the product or take them off the shelves and launch a new one. In short, the product life cycle is the best way to understand the market conditions and make business decisions correctly.
How to keep up with the trends? How to beat the competition? The product life cycle helps get answers to all these questions. Businesses use this as a way to plan their marketing strategy and compilation policies. Further, PLC allows businesses to adopt competitors’ policies and programs, thus formulating a perfect marketing strategy.
PLC allows businesses to be in control of the market. Understanding the right time to launch a product or making the necessary arrangements to make the products available in the market are something PLC allows businesses to do. It acts as a control tool for marketing managers and helps in understanding and repairing the losses incurred during the process.
Each stage of a product life cycle demands proper strategies to keep things on track. So, if a product is in the introduction stage, businesses need to plan things properly to launch the product and attract new customers. The stage needs a lot of planning and heavy investments in marketing. Similarly, when the product is approaching the decline stage, businesses need to make quick decisions, stop spending on advertisements and start planning a new product.
Studying product life cycles helps businesses understand whether or not the product can earn profits. If a product fails to reach breakeven at the growth stage, it is time to think about a new product or add some new features to keep the business running. Businesses cannot keep spending on advertisements for long. It is crucial to understand if the product has the potential, and product life cycle management can help businesses understand the same.
The product life cycle helps businesses understand how the product is doing in the market and about the competitors and be one step ahead of them. The product life cycle acts as the best tool to gain insight into the market. Following the process properly has helped businesses earn profits and make decisions at the right time.
Despite the advantages of the product life cycle, there are a few challenges that businesses must keep in mind:
It is difficult to understand how long a product can be the best fit in the market. There are many companies that have the best minds and are very good with predictions, but understanding the changes in customer demands can be difficult. So, decisions based on life cycles are not always right.
The factors affecting the life cycle of products are constantly changing, and it is difficult for businesses to understand what can make a product stay in the market for long. A simple fall in demand can ruin everything, and businesses have to take all their products off the shelves within a short time.
The product life cycle has been criticized by many. Critics feel that the process is self-fulfilling, and businesses relying completely on the model are prone to making bad decisions. So, when a product is not selling, businesses might feel that the product has entered the decline stage. Fewer sales are not always about products going into the decline stage; the economic conditions or any other external factor might affect the same. Therefore, before making any decisions, businesses must look into all these factors and take steps to ensure everything is right on track.
Businesses that are aware of the challenges and take steps keeping all these things in mind are successful and are able to maintain their market share. The product life cycle helps in a lot of ways, but following the same blindly is not wise. Hence, to make ends meet, businesses must understand the cycle as well as the challenges and follow the process properly.
The product life cycle has proved to be one of the best ways to understand and plan things well to maximize business. Despite having a few challenges, the process has helped businesses flourish and combined with a few other processes, companies have been able to earn profits and strengthen their position in the market. For aspiring entrepreneurs, understanding all aspects of the product life cycle will be beneficial and help them start their business on the right note.