Having a life cycle that seems to be everlasting for decades instead of a one-hit wonder of some companies who create products only present in our perception, if only, for a short period of time.
Whit this article we want to take you with us into the importance of product life cycles and what marketers need to know and understand.
Recently the well known strategy consultancy McKinsey published in their Quarterly “Between rising customer expectations and unpredictable moves by digital attackers, R&D organizations at incumbent companies are under intense pressure. They’re being asked not only to push out innovative products and services—which is key to ramping up organic growth—but also to support the formation of digital business models that compete in new markets.”
This brought us to the research for this article, as it is absolutely necessary to include as many customer and market demands as possible into the product life cycle and the product development.
Every product introduced into the market has a life that is known as “product life cycle”, during this lifecycle, a product goes through the development phase before the introduction phase, then it reaches the market and grows, later it matures and is readily available, finally comes the time, when it’s no longer needed, and there is less demand, so the production declines.
During the development phase; product idea and marketing strategy is developed, the company invests and develops the product, at this time revenues are zero. Every business and its marketing team has to understand the inevitable that it is possible within a few years, their product would be replaced by a new product, and the demand would decrease.
The life of most products is finite, and there will come a time when the company needs to reinvent its product according to the current market and needs of the customers. In this article, we are describing the four distinct stages of a product life-cycle.
The first stage of the product life-cycle is the introduction phase, the marketing team devises the introduction of the new product in the market, and this stage requires a lot of planning, strategy, market research and thought process. The ultimate success or failure of the product lies mainly in this initial stage.
If the marketing team hasn’t done enough smart planning, and the product story is confusing, it won’t appeal to the masses. This stage requires investment and the development of the product according to the target market. Poor market research could doom the product in its initial stages, and that is why it’s very important that the whole team; from branding and marketing to planning and distribution, technical team and sales team – and all members need to be on board.
As we mentioned in previous articles, the quality of the product matters, if it’s sellable and offers something unique and exciting, there is no stopping it from becoming successful. Initially, the product is introduced with a high price tag, as the company has to recover development and initial investment cost. But, slowly and gradually, as it makes a mark, the price would be lowered considering the competition.
If customers could connect with the product and the product story answers their queries and problems, it would be available through selective medium showing some initial sales. Pertinent to note is that every new product should come with enough details to satisfy the customers, details shouldn’t be ambiguous. There will be products that would never go beyond the initial introductory phase, and won’t create hype, and others will have a complete life-cycle.
The second stage is the growth of the product, and it entirely depends upon the quality of the product and the quality and quantity of its marketing – of all the product life cycle stages, this stage shows whether your product has the ability to grow and strike a chord with the masses. In this stage, the popularity of your product grows, and so does the sales of your product.
The distribution of the product will increase, and as the demand increases, production and distribution will increase, as we have mentioned distribution is limited and selective in the introductory phase, in this second stage, the availability of the product increases, and the price decreases, slightly. This decline in price in the second stage is due to the fact that your product is being bought in larger numbers, therefore, it covers the initial cost of development and introduction. Once those initial costs have been covered, you can afford to slightly lower the price of your products.
In this stage, the focus is on the availability and distribution of the product, as the demand is increasing, there is less focus on similar products by competitors. Product lifecycle management requires the team to focus on the quality of the product, add-on features, and ways to utilize the market share for this product. The company can start to gain some profits at this stage, but the consistency in the quality of the product is very important.
A similar type of products will enter the market, and the competition for your product will increase. The customer support team should be well qualified at this stage to answer customer queries and give solutions to their problems. As the product distribution and demand increases, along with the increase in the popularity of the product, the company has to broaden advertising and market their product efficiently.
According to the basic product lifecycle definition, the product now enters the third stage, this is the time for the product to mature, as its popularity increases, so does the demand. The product is known to mature when the sales increase tremendously, and the product speaks for itself and markets for itself.
The company now has to shift focus on marketing; why the product is better than the competitors, and featuring occasional add-ons. When any product reaches this maturity phase, it’s a time of rejoicing for the company and the marketing team, as they can finally see the fruits of all the hard work. The profits for the said product will increase and the volume increases and a steady decline in the price are noticed. The company can now afford to lower the price due to the increase in sales.
The maturity of the said product means it is readily available and accessible everywhere, and its distribution isn’t limited. Promotion is focused on the edge the product has over other similar products in the market. This is a very important and productive phase of a product lifecycle development, during this stage, the company offers new variants of the product, offers incentives to distribution channels, offers incentives to the buyers in the form of vouchers, discount schemes, seasonal and occasional sales, gift cards and other forms of promotions and incentives.
The product can start to reach out to a new market, can go on to become a globally acceptable and sellable product. This is marked as low growth, but intense competition phase and the company is liable for maintaining consistency in quality. The customer support associated with the product should also be top notch.
According to the product lifecycle theory, the final stage is the steady decline in the popularity of the product, and this can happen due to many reasons. Distributors of the product decide to decline taking up the product and distribute a better or newer product. As time progresses, new, better and innovative products take up the market, and customers are now looking for something else.
It happens mainly because the competition becomes severe and there are better and well-priced alternatives out there. As our product lifecycle analysis suggests, most products would reach a decline stage, where they are no longer in demand, and slowly and steadily they have to go into ambiguity. If the marketing team could take over at this stage and promote it better than the competitors, or the development team adds new features and makes it more interesting, the lifecycle can extend.
One such product lifecycle example would be of smartphones, how new phones are added every now and then to the market with newer features and better processors. Also, when the older phones and models have generated enough revenues, and there is no need to keep them in the market.
Some IT giants had products that did so well initially, but now are unheard of, one prime example is of Nokia phones, especially Nokia 1100. While Samsung and Apple have attracted the majority of the smartphone market, there are few products by the smartphone giant Apple, that didn’t do so well, for example, Apple’s iPod, it still seems to be a lost cause. But, there are other companies and products with global market penetration, which still are household names, such as Coca-cola, Kellogg’s corn flakes, American express, western union, Wells Fargo.
Evidently, not every product goes through the decline process, and not every product vanishes, or goes into oblivion after some years. If we look at a product lifecycle curve, it does show us a steady decline once it reaches maturity. But, some products are everlasting, this could be due to the universal appeal of the product, or killer marketing, or due to the fact company decides to reinvent and innovate the product, and due to this innovative extension, a product’s lifecycle increases.
Sometimes, tweaking the packaging of the product and adjusting the price point can do wonders for it. Product lifecycle in marketing is all about generating as much revenue as possible during the growth and maturity phase, these phases should be able to generate profits to cover up the investment and other costs. Finally, it is all about staying relevant, surveying and seeing what works and what doesn’t and why, and re-inventing and re-entering the market with zeal.
As marketers we need to be aware in which phase our products and services are. Especially when opening markets or starting new products, it is essential to take the right steps within introduction.
As a founder and entrepreneur, I experience every day how important customer centricity is for companies.
Integrate the essential customer perspective into your product genesis and marketing processes. That puts horse powers on the street, until it runs.