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What Is the Life Cycle of a Product?

The product life cycle is the process that a product goes through from the time it is initially presented to the market until it is discontinued. Introduction, growth, maturity, and decline are the four stages of the life cycle.

While some products may continue to mature for a long time, all products eventually exit the market owing to a variety of circumstances such as saturation, greater competition, diminished demand, and declining sales.

Companies utilize PLC analysis (the process of assessing a product's life cycle) to establish strategies for extending the life of their products, changing them to meet market demand, or adapting to new technology.

The Product Life Cycle’s Four Stages

After being produced, a product normally passes through the four stages of the product life cycle—from launch to decline—before being phased out of the market.

1. Introduction

After a product has been developed, the PLC's introduction stage begins. The product is introduced to the market for the first time at this stage. The launch of a product is generally a high-stakes period in its life cycle, though it does not always determine the product's ultimate success.

Marketing and promotion are at an all-time high during the introduction stage, and the corporation frequently invests a significant amount of time and money in promoting the product and getting it into the hands of consumers. Apple's (AAPL) - Get Apple Inc. Report legendary launch presentations, which highlight the new features of their recently (or soon-to-be) announced products, are possibly the best example of this.

The corporation may first get a feel of how people react to the product if they enjoy it, and how successful it might be at this time. However, it is generally a period of high spending for the corporation, with little guarantee that the product will be profitable.

During this stage, costs are normally very high, and there is usually little competition. The main goals of the introduction stage are to create demand for the product and get it into consumers' hands, with the hope of profiting later on its growing popularity.

2. Growth

Consumers begin to respond to the product and purchase it throughout the growth stage. The product concept is proving itself as it grows in popularity and sales.

As the product draws more attention and generates more revenue, more companies become aware of it and its place in the market. If there is a lot of rivalry for a product, the corporation may nevertheless spend a lot of money on advertising and promotion to beat out the competition. The market tends to expand as a result of the product's growth. During the development period, products are frequently adjusted to improve their functions and features.

As the market grows, more rivalry pulls down prices, making certain products more competitive. Sales, on the other hand, frequently expand in volume and create revenue. The goal of marketing at this stage is to increase the product's market share.

3. Maturity

When a product approaches maturity, sales tend to slow, indicating that the market is largely saturated. Sales may begin to decline at this point. Because of the weight of outside influences like increasing competition and decreasing demand, profit margins begin to decline as prices begin to fall. At this time, marketing is focused on fending off competition, and corporations frequently produce new or modified products to appeal to different market segments.

Because the market is so crowded, less successful competitors are frequently forced out during the mature period.

The saturation point has been reached, and the sales volume has been attained. Companies frequently begin innovating to preserve or enhance their market share, modifying or enhancing their product to meet the needs of new demographics or to stay up with technological advancements. 

Depending on the product, the mature stage might last a long time or a short time. The mature stage for some brands and goods, such as Coca-Cola (KO) - Get Coca-Cola Company Report, lasts a long period and is highly drawn out.

4. Decline

Although most companies strive to keep their products in the mature stage for as long as feasible, practically every product will eventually deteriorate.

In the decline stage, product sales plummet and consumer buying behavior shifts as demand for the product declines. The company's product continues to lose market share, and revenues are declining as a result of increased competition.

When a business is in decline, marketing is frequently sparse or targeted at existing consumers, and prices are decreased.

Unless the product can be redesigned to remain relevant or in demand, it will eventually be phased out of the market.

Products like typewriters, telegrams, and muskets, for example, are in serious decline (and in fact are almost or completely retired from the market).

The Product Life Cycle is exemplified by the following examples.

Any product's life cycle constantly takes it from its introduction to its inevitable demise, but what does this cycle look like in the actual world? The following are four examples.

Typewriter

The typewriter is a famous example of the product life cycle's extent.

Typewriters gained popularity as a technology that improved the ease and efficiency of writing when they were initially introduced in the late 19th century. However, new electronic technologies like as computers, laptops, and even smartphones swiftly displaced typewriters after their introduction, resulting in a reduction in typewriter demand and revenues.

Typewriters are nearing the conclusion of their decline phase, with low (if any) sales and dramatically reduced demand, having been surpassed by corporations such as Microsoft (MSFT) - Get Microsoft Corporation Report. In today's world, typing is nearly entirely done on desktop computers, laptops, tablets, or cell phones. As a result, these products are in the maturation and growth stages of their product life cycle.

VCR

Many of us grew up watching VCRs (videocassette recorders) in our homes, but you'd be hard-pressed to locate one nowadays. VCRs have been effectively phased out and are deep in decline due to the rise of streaming services such as Netflix (NFLX) - Get Netflix, Inc. Report and Amazon (AMZN) - Get Amazon.com, Inc. Report (not to mention the interim phase of DVDs). VCRs, which were once revolutionary technology, are now in very low demand and generate almost no sales.

Vehicles that are powered by electricity

The product life cycle for electric vehicles is still in its early stages. For years, companies like Tesla (TSLA) - Get Tesla Inc. Report have profited from rising demand, yet recent setbacks may signal a shift for that firm. Even if the electric car isn't necessarily new, the improvements made by firms like Tesla in recent years to react to new changes in the electric car market indicate that the product is still in its early stages of development.

Artificial Intelligence Products

While AI (artificial intelligence) has been in development (and deployment) for years, the industry is always pushing the envelope and inventing new products that are currently in the PLC's launch stage. Existing products, such as AI-infused humanoid robots or self-driving cars, are still in the early stages of development. Those that have been released to the market are still being tested and adopted by consumers, thus they are in the early stages.

What Is PLC Analysis and Why Is It Important?

PLC analysis is the process of thoroughly examining a product and making strategic design, price, and marketing decisions in order to optimize the product's performance at each stage of its life cycle. Conducting a PLC analysis can assist organizations to identify if their products are effectively serving the market they are targeting, and if so, when they may need to adjust their focus.

 Companies can better decide how to pivot and develop their product in regard to the market as a whole, their competitors, sales, and expenses by evaluating their product in relation to the market as a whole, their competitors, sales, and expenses.

 Companies must determine if they need to develop new products to continue generating sales by looking at their product life cycles—specifically, where their products are in the PLC. This is especially true if the majority of their products are in the maturity or decline stages of the product life cycle.

Pricing Strategies Used by PLCs

There are numerous pricing models available for companies with new products in the early stages of development. 

Skimming the prices

Price skimming is a marketing approach that involves first establishing a product's price high, then dropping it as the market grows to "skim" additional groups of customers. When a product is first produced, it is expensive, and early adopters, or people who are ready to pay a premium for the latest product, are the only ones who want it. Once that group's demand has been met, the price is reduced to appeal to a new, more price-sensitive set of customers, and so on.

 Price Penetration

Price Penetration is a marketing technique that involves lowering a product's original price in order to gain market share as rapidly as feasible. This method aids in increasing customer awareness, which leads to increased demand. As demand for the product grows, the price is raised.

How Can Startups Take Advantage of the Product Life Cycle?

When startups don't comprehend the introduction stage of their product's life cycle, they frequently get into difficulty, especially when buyers don't respond favorably to the original offering (either because of pricing or the inherent value or usefulness of the product).

Along with cost, it's critical to look at product advertising and packaging. Is the product meeting the needs and demands of its target segment? Many organizations contemplate adjusting their marketing approach and focusing on marketing to new demographics to help introduce their product to a new area of the consumer market if sales are stagnant.

Conducting a PLC analysis can assist organizations in determining when they need to reinvent or pivot their product. Netflix, for example, pivoted its offering by moving away from DVD shipping and toward streaming movies and television series straight online, which was a huge success.

Companies may continue innovating to keep up with new technologies, diversify their products, keep up with the competition, and potentially extend their product's lifespan in the market by assessing where their product is in the product life cycle.