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Your marketing plan should include strategies to make the most out of each stage of your product life cycle. But before you can start formulating strategies, you need a clear understanding of the product life cycle stages, how to determine what stage your product is in and how to use market research to inform your efforts throughout the life cycle. SurveyMonkey is here to help you with that.
What is a product life cycle?
The product life cycle is the progression of a product through five distinct stages: development, introduction, growth, maturity and decline. The concept was developed by German economist Theodore Levitt, who published his Product Life Cycle model in the Harvard Business Review in 1965. We still use this model today.
Basically, the product life cycle is the time from the product concept until its eventual withdrawal from the market. The product life cycle is used for decision-making and strategy development throughout each stage.
Marketers use the product life cycle to customise messaging for each stage, using market research to guide their efforts. Managers use the product life cycle to make strategic decisions about pricing, expansion into new markets, packaging design and more.
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Advantages of product life cycle management
There are many benefits to life cycle management. Your position in the cycle impacts everything from marketing strategy to profitability.
With product life cycle management, you can:
- Make informed decisions based on the life cycle stage
- Increase ROI on product launch
- Increase company profitability
- Proactively tweak your marketing messages to stay connected with targeted audiences
- Maintain and improve product appeal, reputation and customer loyalty
Those who don’t adequately manage a product life cycle will encounter consequences such as:
- Failure of the product to meet its potential
- Reduced shelf life
- Excess inventory
- Loss of profits
- Early entry into the market decline stage
The 5 stages of the product life cycle
Market research plays an integral role in each stage of the product life cycle. Use the ultimate guide to market research developed by SurveyMonkey to help you understand how research is key in managing the life cycle of your product.
Every product spends a different amount of time in each stage, so there is no definitive timeline to reference. Each stage has its own costs, risks and opportunities, and you’ll have to adapt your strategies depending on where you are in the life cycle.
1. Market development
The first stage in the product life cycle is development. This is where your market research journey begins. Before your product hits the marketplace, you will be refining your concept, testing your product and creating a launch strategy. Concept testing with real potential users is an important part of this step. With concept testing, you’ll know your target market’s reaction to your concept and make changes according to their feedback, before you’ve even begun to create.
During this initial phase, you’ll encounter a lot of costs without producing any income from this new product. You may be funding this stage yourself or you may be seeking investors. Either way, the risk is high and outside funding is often limited. Market development can encompass anything from a brief sketch to a prototype of your product. All you need is enough to show potential investors and customers. Validate your market potential early, so you can begin raising funds to launch.
2. Market introduction
When your product launches, you’ve entered the introduction stage of the life cycle. Your marketing team will be focused on building product awareness and reaching your target market. Typically, all content marketing and inbound marketing are based on promoting the product.
Depending on the complexity of your product, the competition, how new and innovative it is, and other factors, you may spend more time than you expected at this stage. The good news is that if your marketing is successful, you’ll move on to the next stage of growth.
Get in touch with our sales team to learn more about product optimisation after your product has been introduced to the market.
3. Market growth
At this point in the life cycle, consumers have embraced your product and are buying into your marketing. Demand and profits are growing, and the competition is looking to interrupt your success.
Marketing in this stage moves from getting attention from consumers to establishing a brand presence. Show them why they should choose you over the competition. As your company grows, you may add new features to your product, beef up your support services and open new distribution channels. All of these efforts will feature solidly in your marketing.
4. Maturity
When sales begin to level off from rapid growth, you’re entering the maturity stage. You may have to reduce prices to stay competitive.
Now, your marketing campaigns focus on differentiation instead of awareness, pointing out your superior product features. During this stage, production costs decline and sales are steady. It’s tempting to sit back and enjoy the steady sales, but you must make ongoing improvements to your product and let consumers know that it’s continuing to get better.
At this point, market saturation can occur. Competitors have begun taking a portion of the market. Although many consumers are using the product, there are too many competitors. The only way out of this dilemma is to focus on your strengths – differentiation, features, brand awareness, price and customer service – to become the brand of choice. If not, you’ll enter decline.
Get in touch with our sales team if your product maturity has led you to re-evaluate your pricing for price sensitivity and Van Westendorp research.
5. Market decline
If your brand isn’t a marketplace favourite, you’ll start to experience the last stage. You’ll be facing more competition and they’ll be taking a share of the market. Sales will typically decrease in the face of rising competition.
Market decline may be related to:
- Too much competition from products with similar features
If you can’t differentiate your product, you won’t be able to stand out from the crowd. Think about how the arrival of Facebook as a social media app affected the downfall of MySpace.
- Outdated or replaced product
This may be the case if you have a product that has reached the limit of its ability and is just no longer marketable. For example, VHS tapes reached this point when DVDs came out, and DVDs are reaching this stage as more people choose streaming entertainment. Ultimately, it was a bad day for Blockbuster, which was the largest video shop in the UK.
- Loss of customer interest
In 2000, Heinz, the maker of food condiments and sauces, introduced EZ Squirt colourful ketchup. Initially, it was a huge success, but the novelty wore off and the product failed.
- Damaged brand image
- McDonald’s fast-food restaurants took a blow to their supersize menu after a documentary about how the chain’s food affects overall health.
When a company sees market decline, leadership may discontinue the product, sell the company or innovate the existing product. In the meantime, your marketing may try to foster nostalgia or the superiority of your product to extend the life cycle.
Companies that are seeking new ways to grow and move out of market decline may try:
- Extending the product line, like fizzy drinks brands Coca-Cola or Pepsi adding cherry, vanilla and other flavours.
- Repackaging the product as in the example of Listerine, which was formerly a surgical antiseptic. Listerine was then repackaged and rebranded to become a mouthwash that cures bad breath.
- Trying new pricing strategies, as Dollar Shave Club did. The company uses subscription pricing as well as pricing based on the number of blades in each razor.
- Launching new versions of the product like Apple, which maintains the hype with every new iPhone release.
- Moving into new product categories would mean moving back to the beginning of the product life cycle, and sometimes that’s what it takes to survive. Nintendo is a great example of this. They went from making video arcade games to video game systems for personal use.
Product life cycle examples
While all products go through the life cycle, some have already gone through the entire cycle and fallen by the wayside. Here are a few examples of products that are either currently in their product life cycle or have been discontinued.
Typewriters
- Christopher Latham Sholes of Milwaukee, Wisconsin, patented the first typewriter in 1868. It had been in development for nearly 300 years as inventors tried to perfect a design.
- By the late 1800s, the introduction stage of the life cycle began when commercial typewriters were made available to the public.
- Shortly thereafter, in the growth stage, typewriters were used in businesses, homes and offices.
- Typewriters lingered in the maturity phase until the 1980s when emerging technologies pushed them to decline.
- The typewriter market declined. Typewriters were, for the most part, discontinued in favour of computers, tablets and smartphones. Most typewriters available today are novelty items and vintage collectibles.
VCRs
- Believe it or not, VCRs were being developed in the 1950s as a method of watching VHS tapes from recorded TV. The first actual prototype was as big as a desk and cost nearly $50,000 (approx. £40,000) in 1950, which translates to over $500,000 (approx. £400,000) today. All that to record television shows to watch at a more convenient time.
- In 1977, the first (small and affordable) VCR was introduced to the public for recording and playing back video on television screens.
- From the late 70s to the early 2000s, most homes had a VCR in them, along with a plethora of tapes. This was definitely a period of extreme growth.
- As the VCR entered maturity, companies were searching for ways to reduce the cost and add features.
- Technology led to the decline of the VCR, eventually giving way to the DVD and now streaming services.
Electric vehicles
- Electric vehicles were first developed in the early 1800s. They fell out of favour because charging was an issue for the average consumer. Fast-forward to today when Automakers, most notably Tesla, are shifting their focus to all-electric or hybrid technology.
- They have been introduced to the market with a focus on innovation and eco-friendliness as their marketing messages.
- Electric vehicles are currently in their growth stage as companies continue to improve the design and features of their offerings. The growth stage is extended because ongoing market innovation leads to improvements and that, in turn, increases sales potential. For now, they are seeing continued growth and the maturity stage is nowhere in sight.
Artificial intelligence (AI)
- AI was first conceptualised in the 1950s, but the cost was prohibitive for most companies. Development continued through the 1970s, with better, more affordable computers. One of the most notable proof-of-concept moments was in 1997 when world chess champion, Gary Kasparov, was defeated by IBM’s Deep Blue chess-playing computer program.
- There are several types of AI products in the product life cycle. Because of the nature of AI and the wide array of uses, it’s impossible to classify it into one part of the life cycle. Some products are in development, many are in the introduction stage and products like Amazon’s Alexa are going through the growth stage.