Products evolve through stages, from introduction to decline. Understanding these stages helps companies tailor their strategies. The product life cycle model guides decisions on marketing, pricing, and product development as products move through different phases.

Companies must adapt their approach at each stage to maximize success. This involves creating awareness early on, expanding market share during growth, maintaining position in maturity, and deciding whether to revitalize or discontinue declining products.

Product Life Cycle Stages

Introduction, Growth, Maturity, and Decline

• The product life cycle (PLC) is a model that describes the stages a product goes through from introduction to decline in the market
• The four stages of the PLC are introduction, growth, maturity, and decline, each with distinct characteristics in terms of sales, profits, competition, and marketing strategies

Characteristics of Each Stage

• The introduction stage is characterized by low sales, high marketing costs, limited competition, and negative or low profits as the product is launched and awareness is built
  • Example: A new smartphone model with innovative features enters the market with heavy advertising and promotional campaigns to generate interest and sales
• The growth stage sees rapid sales growth, increasing competition, improving profits, and expanding market share as the product gains acceptance
  • Example: The smartphone gains popularity, attracting more buyers and competitors, leading to increased production and distribution to meet the growing demand
• The maturity stage is marked by peak sales, intense competition, stable or slightly declining profits, and a focus on differentiation and cost reduction to maintain market share
  • Example: The smartphone market becomes saturated, with multiple competitors offering similar features, leading to price competition and a focus on brand loyalty and incremental improvements
• The decline stage exhibits falling sales, reduced competition, declining profits or losses, and a need for decisions on product continuation, modification, or discontinuation
  • Example: The smartphone model becomes outdated as new technologies emerge, leading to declining sales and the need to consider upgrading or discontinuing the product

Marketing Strategies for Each Stage

Aligning Strategies with PLC Objectives

• Marketing strategies should be adapted to align with the characteristics and objectives of each PLC stage to optimize performance
• In the introduction stage, strategies focus on creating product awareness, stimulating trial, and establishing distribution, often through heavy promotion and introductory pricing
  • Example: Offering free trials, demonstrations, or introductory discounts to encourage consumers to try a new food processor and build initial market share
• Growth stage strategies aim to expand market share, improve product quality, enter new market segments, and build brand loyalty while adjusting prices to match demand
  • Example: Expanding the distribution of a successful fitness app to new geographic regions and introducing premium features to attract a wider user base and increase revenue
• Maturity stage strategies emphasize product differentiation, cost reduction, market segmentation, and promotional efforts to maintain market share and profitability
  • Example: A mature shampoo brand introduces new formulations for specific hair types, offers larger value packs, and engages in targeted advertising to defend its market position against competitors
• Decline stage strategies involve deciding whether to continue, modify, or discontinue the product based on its profitability and strategic fit, while reducing costs and harvesting remaining value
  • Example: A declining DVD player line is streamlined to focus on the most profitable models, with reduced marketing expenditure and inventory levels to maximize remaining cash flows

Market Dynamics and Product Life Cycle

Impact of Market Factors on PLC Duration and Shape

• The duration and shape of the PLC can vary significantly depending on market dynamics, such as the rate of technological change, consumer preferences, and competitive landscape
• Products in fast-changing markets, such as technology, tend to have shorter life cycles due to rapid innovation and obsolescence, requiring more frequent product updates and launches
  • Example: Smartphones and laptops often have shorter PLCs compared to household appliances due to the rapid pace of technological advancements and changing consumer expectations
• Intense competition can shorten the PLC by accelerating the transition between stages, as rivals introduce new products, imitate successful offerings, or engage in price wars
  • Example: The intense competition in the fashion industry leads to shorter PLCs as brands continuously introduce new collections and styles to stay ahead of rivals and meet changing consumer tastes
• Consumer preferences and adoption rates influence the shape of the PLC, with faster adoption leading to a steeper growth stage and slower adoption resulting in a more gradual curve
  • Example: The rapid adoption of social media platforms like Facebook and Instagram led to a steep growth stage, while the slower uptake of electric vehicles results in a more gradual PLC curve

Disruptive Innovations and PLC Patterns

• Disruptive innovations can significantly alter the PLC by rendering existing products obsolete or creating entirely new market categories, leading to abrupt changes in the life cycle pattern
  • Example: The introduction of streaming services like Netflix disrupted the traditional video rental industry, leading to the rapid decline of DVD rental businesses and the emergence of a new market for on-demand video content
  • Example: The rise of smartphones disrupted the PLC of traditional mobile phones, digital cameras, and portable music players by combining their functions into a single device, leading to the obsolescence of these standalone products

Product Portfolio Management

Balancing Product Mix Across PLC Stages

• Product portfolio management involves managing a company's collection of products to ensure a balanced mix of offerings at different stages of the PLC
• A well-balanced product portfolio helps mitigate risks and ensure long-term growth by offsetting the decline of mature products with the introduction of new ones
  • Example: A consumer electronics company maintains a portfolio that includes innovative new products (smartwatches), growing products (wireless earbuds), mature products (laptops), and declining products (CD players) to ensure stable revenue streams and future growth opportunities
• Companies should allocate resources strategically across their product portfolio, investing in new product development to replace declining products and support future growth
  • Example: An automotive manufacturer invests in the development of electric and autonomous vehicles to prepare for the future while continuing to produce and improve its existing internal combustion engine models

Portfolio Analysis and Decision-Making

• Regular portfolio analysis helps identify underperforming products, prioritize investments, and make informed decisions on product modifications, extensions, or eliminations
  • Example: A cosmetics company conducts an annual review of its product portfolio, identifying low-performing lipstick shades for discontinuation and allocating resources to develop new, on-trend color palettes
• Effective product portfolio management requires aligning product strategies with overall corporate objectives, market trends, and customer needs to optimize value creation and competitiveness
  • Example: A food and beverage company adapts its product portfolio to align with changing consumer preferences for healthier options by introducing low-sugar and plant-based alternatives while phasing out or reformulating less healthy offerings