Managing your product lifecycle stages for strategic success
Model Name : Product Life Cycle
Creator : Raymond Vernon
Year : 1966
Purpose : Cash flow management | new product introduction | management of product portfolio | pricing strategies | increasing market share | product positioning | improving sales | devising marketing strategies | prolonging product lifecycle
Nothing lasts forever. Well, I admit that’s a pretty depressing way to start an article, but it is precisely the point of this topic.
As consumers, we purchase millions of products each year. And just like plants, animals, and even us mortal humans, these products also have a life cycle. No product immortalizes – they are all finite.
The birth and death of a product
One day, a product is conceptualized, and then designed and manufactured. This is how it comes to be.
Just like that, a day comes when it officially becomes irrelevant and disappears from the market, thus concluding its cycle and making way for future products to begin cycles anew.
Even long-established products eventually have to see a time when they decline in popularity, often in contrast to a growing demand for newer, modern alternatives.
Why should I care about the product lifecycle and its stages?
If you do not understand product lifecycle stages, or worse, don’t care to, you are setting yourself up for failure before you even develop a product. This is the significance of this seemingly simplistic model.
Let’s first establish that there is no set time span of any product’s life cycle. The duration could be merely a few months for a fad item, or it could last over a century for stronger product categories.
Product lifecycle management is the art and science of strategically managing product development, manufacture, sales, and marketing, according to the various stages that the product undergoes throughout its life.
Don’t forget that with the initiation and continuation of the life cycle of each product, companies are constantly provided opportunities to understand their customers, markets, and competitors.
This is what ultimately aids them in the creation of successful new products.
New product development in the competitive global market of today is no easy feat. To sum it up in a few words, it is product lifecycle stages management that provides the most valuable information for businesses’ extended supply chain enterprise.
The stages of the product lifecycle
Product lifecycle stages management is a vast realm of business management which integrates data, people, processes as well as business systems.
Get familiar with the product life cycle stages in order to understand where which strategies need to be applied.
Introduction Stage
The market introduction stage is where heavy marketing and promotional activity takes place to launch the new product. Sales take off is slow at this stage, but that’s fine. The goal of this specific stage is to create awareness rather than profits.
The good news? There is little to no competition. The bad news? There’s hardly any demand, either – it has to be created.
CYCLE HACK: Don’t be afraid to invest in consumer testing, research and development, and marketing efforts in this stage.
Growth Stage
The second stage is where sales shoot up. Your company can start to benefit from economies of scale in production. Profitability rises – hurrah!
CYCLE HACK: This is the time to invest further in the promotional activity so that you capitalize on the lucrative growth stage as much as possible.
Maturity Stage
The maturity stage is where sales growth rates slow down a tad and eventually stabilize to a standard. With market saturation achieved, you will look around at this stage and notice increasing competitors entering the market.
Product modifications and improvements to the production process are welcome at this time, but you must invest carefully in any market undertaking. Weaker players often exit the game at this point.
CYCLE HACK: Focus on brand differentiation and feature diversification to maintain your market share in the maturity stage.
Decline Stage
Ultimately, the product for the market will start getting smaller, typically due to market saturation or increasing availability of newer products. This stage is inevitable, but businesses can still make the profit in it.
CYCLE HACK: The strategy to apply in the decline stage is to switch to more cost-effective production methods and enter cheaper markets.
Life cycles, big and small
Every company understands that any and all products they sell are fated to have a limited lifespan. This is the main reason that ongoing product development should be a key investment sector for all businesses; otherwise, business growth would halt forever with the decline of their existing product line.
As I mentioned previously, life cycles can be of many different time durations. Generally, of course, industries have a much longer life cycle than products. The products of certain industries are bound to experience a longer life cycle than the products of another.
EXAMPLES
A Long Lifecycle Product of Maruti 800
Take the automobile industry, for example, which continues to thrive over 100 years into the cycle. Within the industry, there are countless products in different stages of their respective cycles.
Take, for instance, Suzuki’s Maruti 800, a small city car which was initially introduced to the Indian market in 1983. Here is an abridged version of the product lifecycle of Maruti 800:
As another example, the large family sedan appears to be in its decline stages, with very few models now being designed and manufactured.
A Short Lifecycle Product
On the other hand, fad items like fidget spinners and silly bands, as well as most technological devices, have relatively shorter life cycles. This is because they are continually being replaced by something newer and better and more interesting. In technology, for example, innovators keep deriving new ways to do more than what the current technology is capable of – that too at reduced costs.
Final Thoughts
Although predicting the time span of a product lifecycle is impossible, businesses do prefer to have a general idea of the expected life cycle length, as this optimizes production and marketing endeavors.
It is vital to recognize beforehand, for the sake of successful sales and marketing, whether you are promoting a stable, reputable and consistent brand with higher longevity, or a new, cutting-edge product will soon be replaced by something that is even more cutting-edge.