The product life cycle is the process a product goes through when it is first introduced into the market until it declines or is removed from the market. When a product enters the market, it goes through various stages from introduction to growth, maturity and eventual decline. The sequence of stages is known as product life cycle. It is used to predict a likely shape of sales growth for a typical product.
Introduction of a product
Before making a product available for sale in the market, enough effort goes into researching and developing it. Once a product has been developed, the firm looks to build awareness and develop a niche for it in the market. From product branding to market pricing, distribution and promotion, many communication strategies are employed to make the consumer aware about the product. Establishing branding and assuring the market of the quality is key to the success of any new product. The principle goals of the introduction stage are to build demand for the product.
By the time the product reaches the growth stage, consumers are already taking to the product and increasingly buying it. The product concept is proven and is becoming more popular - and sales are increasing. The firm seeks to build brand preference and increase market share. By maintaining product quality, additional features or services may be added to expand market share. New promotion strategies are used to show differences between rival products. As the market expands, more competition often drives prices down to make the specific products competitive. However, sales are usually increasing in volume and generating revenue.
When a product reaches maturity, its sales tend to slow or even stop. The strong growth in sales gradually diminish. The principal goal in this stage is to defend the market share and maximise on profits. With low pricing and new enhanced features, a product is usually made to stand out from the competition. Marketing too at this point is targeted at fending off competition. The maturity stage may last a long time or a short time depending on the product.
Decline or Retirement
Although companies will try hard to draw out the maturity stage as long as possible, decline for every product is inevitable. In this stage, product sales drop as there is less demand for the product. As sales decline, the firm looks to cater to loyal customers by adding new features. If the product becomes unviable in the market, the firm eventually discontinues it or sells production rights.
The typical progress for many products follow the classic cycle with some exemptions for some products.