A product’s life cycle is broken into four stages – introduction, growth, maturity and decline. When marketing your product, it is important to know which stage your product is in. Product Life Cycle Management (PLM) is the process of managing the entire life cycle of your product from inception through decline and disposal. PLM integrates people, data, processes and business systems. It not only includes the manufacturing of the product, but the marketing of it as well. This concept helps businesses make better decisions including pricing, promotion, expansion and cost-controls. PLM can lower the cost and time to market for a new product.
Stage 1: Product Development –The product is conceived in the first stage. Research and development happen before the product is introduced to the market.
Stage 2: Product Growth – Your product is more than just an idea now. You begin manufacturing and marketing your product. The demand for the product and distribution will grow. Competition will also grow during this phase. Companies should invest in the product now as the profit margin grows. It is also a time to search for economies of scale.
Stage 3: Product Maturity – During this stage, your product is widely available and more competitors are in the market. Aim to maintain market share. This is a time to invest wisely and make product modifications that can improve your competitive advantage.
Stage 4: Product Decline – The product begins to lose market share. The market is saturated, and customers may be switching to a new product. During this phase, you should consider switching to lower-cost production methods and finding cheaper markets.
PRODUCT LIFE CYCLE STAGES
Knowing that your product’s life will follow this pattern will help you develop practices, policies and marketing strategies to capitalize on the stage your product is in.
In the product development stage, the product is introduced, and sales growth is slow and profit margins are very low or non-existent. Product price and promotion are very important considerations in this phase. The type of market you are in can help you decide your strategy for price and promotion. Things to consider: do you want to skim or penetrate the market? Do you want it to happen quickly or slowly?
In the growth stage, your product has gained acceptance and is growing rapidly. Your strategy should be concerned with how to sustain this growth and market share for as long as possible. The product now has market awareness, so you need to switch to a strategy to get consumers to try your product. Some strategies to consider during this phase are product improvements, widening distribution, entering new market segments, adding new models, improving the design and reducing the price to draw in price-sensitive customers and preventing competitors from entering the market.
In the mature stage, there are many competitors in the market, and everyone fights for market share. Marketing strategies should be offensive with a goal to defeat the competition. You should consider if there are ways to grow the market through either additional uses per consumer or increasing the number of consumers. You can increase users by converting non-users, winning over competitor’s customers and entering new markets. You can increase usage by convincing the consumer to use the product more often, use more of the product each time they use it or providing them with a new way to use it. This is also a time to consider product modifications and marketing mix modifications.
When a product enters the decline phase, review the product to determine the strategy. A product may be kept in certain segments if it appears the competition is moving out of the market. Product improvements may attract and keep some customers. A product may also be dropped or phased out.
As you can see, where your product lives in the product life cycle will help determine the best marketing strategy for your business. If you’d like to help develop marketing strategies and tactics for your product’s life cycle, we’re here to help. Contact Outlook Business Solutions to learn more about how to market in each stage of the product life cycle.