Product life cycle: key stages and importance
May 12, 2024
The product life cycle is not limited to humans or living organisms; the same rules apply to everything around us. Just as a person is born, grows, reaches the peak of youth, and then begins to decline toward old age, products go through similar stages known as the Product Life Cycle. This is an important concept in marketing and business administration, as it helps businesses of all kinds understand consumer behavior and make the right strategic decisions regarding launching, developing, marketing, and pricing their products to achieve desired goals and increase profits.
Let's explore together the concept of the product life cycle, the stages of the product life cycle, and the most important strategies followed to extend the product life cycle in the market.
What is the Product Life Cycle?
It is a term used in business administration and marketing to describe the stages a product goes through from research and development and launch until its decline and withdrawal from the market and replacement with an alternative product.
The product life cycle, simply put, is a theoretical model that illustrates the performance and sales trajectory of products over time, encompassing the various stages a product goes through, starting from its entry into the market, passing through the stage of fame and widespread use, reaching its peak in terms of sales, and finally its gradual decline due to many reasons that cause it to lose its position in the market until it becomes economically unviable.
Product Life Cycle Development Stages
The product life cycle goes through five main stages, and we will take Digital Video Discs (DVDs) as an applied example to explain these stages:
First: Research and Development (R&D) Stage:
The Research and Development (R&D) stage represents the vital beginning of any product's life cycle. In this stage, efforts are made to arrive at an idea that can be transformed into a tangible, viable, and promotable reality to solve a problem or meet a specific need.
This is exactly what happened when DVDs were invented, originating as an idea in the 1980s with the goal of recording sounds and movies as an alternative to the Floppy Disk, which had very little space and was prone to quick damage.
This stage requires:
Identifying and understanding market needs
By conducting intensive research to understand the needs and desires of current and potential customers, along with analyzing market trends and competitors to identify opportunities that can be seized to achieve success and growth.
Idea generation
By encouraging the creative thinking of the work team and creating a suitable environment for generating new ideas, and relying on different techniques for idea generation, such as brainstorming and the SCAMPER model, and then evaluating and selecting ideas to determine the viable idea that has the potential for success.
Converting selected ideas into testable prototypes
By using design and engineering techniques to create prototypes that can be tested and evaluated for their effectiveness.
Conducting a comprehensive feasibility study
For all aspects and stages related to the product, including production, development, and marketing costs, evaluating potential risks associated with the project, and its economic feasibility in terms of achieving profits.
Preparing a business plan
Including the goals to be achieved, the marketing and sales strategies to be implemented, and the financial and human resources necessary for the product's success in the market.
This important stage forms the core of the product life cycle and determines whether it is long or short based on study, understanding, and adaptation to market and consumer requirements, and the ability to meet them ideally to gain a competitive advantage.
Second: Introduction Stage:
This important stage resembles the birth of a human, where the product's birth begins in the market, necessitating doubled efforts on all sides to prove the product's quality, effectiveness, and ability to meet consumer needs.
Therefore, high profits are not expected in this stage due to low sales, which requires businesses to spend a lot of money to promote the product and raise awareness of its benefits and features. The pivotal goal of this specific stage of any product's life cycle is to generate awareness about the product and introduce the target audience to the nature, features, and benefits of this product for them, to capture their attention and encourage them to purchase. Consequently, spending is much higher than revenue.
Thus, DVDs faced some challenges upon launch due to their high initial prices, which prompted decision-makers to intensify marketing efforts to raise product awareness and attract the audience.
Success in this pivotal stage of the product life cycle requires:
Continuing market research
To understand the needs and desires of your target audience and know their motives for purchase.
Understanding the product well
By asking many questions that reveal the unique benefits it offers to consumers, and how it stands out as a product from competing products to be able to formulate effective marketing messages that contribute to achieving the desired goals.
Building a strong marketing strategy
Including identifying the most effective marketing channels to reach your target audience and creating engaging content that encourages them to interact and make purchases to increase sales volume.
We advise you not to expect immediate results once the product is launched in the market and promoted. The matter requires more patience, perseverance, and continuity in investment to build a strong marketing strategy to promote your product and increase your chances of achieving success and gaining more long-term profits.
Third: Growth Stage:
This stage represents an increase in demand for the product and an increase in sales volume, reflecting the product's vitality in the market and thus achieving more profitability. This is exactly what happened with DVDs, which witnessed rapid growth during the 1990s, driven by lower prices and technologies that contributed to improving the image quality via DVD. This stage is not without some challenges, represented by the intensification of competition with the entry of new players into the market, inspired by your product's success, which requires intensifying marketing efforts and innovating effective strategies that contribute to maintaining the loyalty of current customers and attracting new ones, which contributes to strengthening the product's position and increasing its market share, as well as strongly enhancing its presence among consumers.
The growth stage in the product life cycle is a golden opportunity to enhance product quality and develop its features by utilizing customer feedback to make necessary adjustments that help improve their experience and enhance competitive value.
In general, this stage forms the cornerstone of any product's success journey; it requires high focus and diligent effort from business owners to maintain growth and achieve market leadership.
Fourth: Maturity Stage:
This is the stage that expresses the peak of product sales and its spread among consumers, while competition intensifies among similar brands, all seeking to control the largest market share. In this stage, the product has achieved great prosperity and gained a prestigious position in the market among its competitors, allowing the product owner (whether a good or service) to reach the pre-established pivotal goals, which focus on increasing sales volume and achieving the greatest possible profit. DVDs enjoyed a long period during this stage, gaining great popularity for more than a decade. This stage has features and characteristics that distinguish it from the rest of the stages, which are:
Increased competition among different brands.
Stabilization of sales, reaching the peak of the product's sales volume, and the growth rate rising slightly or stopping completely.
Decrease in profit margin due to increased competition and reduced product prices.
To achieve success in this stage, you can use these tips:
Be sure to direct efforts to maintain market share instead of focusing on increasing sales by offering innovative and attractive products and services to consumers.
Focus on enhancing brand loyalty by offering referral programs and excellent customer service.
Launch surveys and questionnaires to collect feedback from customers with the aim of developing the product to maintain its position in the market.
Focus on improving the efficiency of operational processes and rely on shipping portals like Oto, the leading shipping gateway in the Arab world, to reduce shipping costs and improve the profit margin.
Know that the maturity stage does not last forever. Over time, the product may begin to decline, leading to a drop in sales and loss of market share. Therefore, it is important to monitor market trends and adapt to changes to maintain the product's success and stability.
Fifth: Decline Stage:
This is one of the most dangerous stages in the product life cycle, a moment feared by every business owner, but inevitable, just like death. In this stage, businesses of all kinds face significant challenges, as sales, profits, and market share significantly decrease due to various reasons, the most important of which is market saturation with similar products, or consumers turning to alternative products, which leads to the deterioration of the product's position in the market and a drop in its market share, until its profits reach very low levels, and the maximum ambition for some companies is limited to reducing costs and expenses. This is exactly what happened with DVDs, which faced fierce competitive challenges, especially with the emergence of new technologies such as Blu-ray discs and streaming services, causing sales to begin to decline in the early twenty-first century, especially with the increased popularity and spread of these products among consumers.
Know that the product decline stage is a real test of the capabilities and intelligence of businesses. Through careful analysis, understanding market trends and consumer behaviors, and making necessary adjustments, products can be revived and achieve a strong comeback.
Sixth: Revival Stage:
Success in this stage requires courage, innovation, and a full awareness of the challenges and opportunities available to develop a professional and systematic plan to exploit them optimally, which contributes to reviving the product, strengthening its position and market share, and thus achieving the maximum possible returns on investment. To do this, one should:
Work to accurately evaluate the product to identify its strengths and weaknesses, and understand the reasons for the decline in demand for it.
Analyze financial data to determine the impact of the product's decline on company profitability.
Make adjustments to the product to improve its features and characteristics, and meet changing consumer needs.
Introduce new products that align with market trends and meet consumer needs.
Redesign the brand to renew the product's image and enhance its attractiveness.
Target new segments of consumers and offer attractive deals and discounts to attract and motivate them to buy.
Rely on new technologies to improve product quality and enhance production efficiency.
We point out that the product life cycle may differ from one product to another, as not all products go through all the stages of the life cycle, nor do they take the same period of time between transitioning from one stage to another. Therefore, it is necessary to understand the specific product life cycle of your product to develop effective marketing strategies that achieve the goals you seek.
How to Manage the Product Life Cycle?
The meaning of this term differs from what we reviewed during our discussion of the nature of the product life cycle, as it refers to the strategic approach followed to manage all aspects of the product life cycle, starting from the initial idea up to decline and withdrawal from the market if it fails to be brought back into competition. This approach aims to improve the efficiency and effectiveness of product-related operations by integrating information and processes across different departments within the company, including design, development, quality, and marketing. Success in product life cycle management requires attention to all stages by applying these tips:
Understand the nature of the market and customer needs by conducting intensive research and analysis, and rely on market studies, reports, and opinion polls to obtain valuable information.
Determine the goals to be achieved for each stage of the product life cycle, and be keen on developing a marketing strategy that suits each stage to achieve the desired goals.
Rely on appropriate design and development technologies and tools to improve the product and meet customer needs, and be sure to conduct tests and analyses to ensure that the product meets the required standards.
Within the product life cycle management process, ensure that effective processes exist for manufacturing and supplying the product by professionally managing the supply chain to ensure the provision of necessary materials and presenting the product with the highest quality and at the right time.
During the product launch stage, be keen to attract customers by offering reduced prices for your product at the beginning of its launch in the market, while paying attention to making the product easily available to customers through multiple distribution channels.
Be sure to review new innovations in your field of work to develop new features in the product to enhance its value to customers and strengthen its position in the market.
Evaluate the product's performance throughout its life cycle and monitor the results by conducting periodic analyses and evaluations to determine the extent of achieving goals and identifying weaknesses that need improvements.
Applying professional product life cycle management benefits businesses in many aspects, which we review below.
Importance of Product Life Cycle Management:
Product life cycle management gains great importance due to the benefits it achieves for various businesses, including:
Improving the efficiency of product-related operations by integrating information and processes across different departments within the organization.
Achieving profitability at different stages of the product life cycle. In the growth and maturity stages, the brand can increase its market share and revenues. In the decline stage, it can take measures to reduce costs and expenses and maintain profitability.
Meeting customer needs better by monitoring feedback and market requirements, and then improving and modifying the product according to changes in demand and trends.
Achieving competitiveness by providing innovative and modern products that meet customer needs. By continuously updating and developing products, the company can stay ahead, outperform competitors, enhance customer satisfaction, and thus increase the return on investment.
Making informed strategic decisions. By understanding the different product life cycle stages, businesses can determine the best strategy for each stage, whether through expansion and investment in marketing during the growth stage, or redesign and improvement during the decline stage.
Managing risks associated with the development and launch of new products. The business can work to assess potential risks and take early measures to deal with and mitigate them.
In general, product life cycle management is a crucial process for commercial companies to ensure continued growth, prosperity, and profitability, as this innovative strategic approach helps enhance efficiency and the ability to meet customer needs and adapt to dynamic market changes.
Finally, the Best Ways to Extend the Product Life Cycle:
Businesses rely on extending the product life cycle to prolong the life of products beyond their expected life cycle, and here are some of these common methods:
Improving the product by adding new features or making it more advanced to help extend the product life cycle, thereby increasing sales and maintaining customer interest and enhancing their loyalty.
Expanding the target area by targeting new markets or different categories of the audience to prolong and extend the product life cycle.
Diversifying products by adding new products or complementary products alongside the core product.
Increasing marketing and promotional activities through offers and discounts to enhance product awareness and renew attraction and interest.
In Conclusion:
Paying attention to understanding the product life cycle and the stages it includes is not a luxury, but a necessary imperative to ensure continued success in the changing world of business. Products that are neglected and left without renewal or development quickly lose their luster and become vulnerable to oblivion, which threatens a decline in sales and loss of market share, and over time, their complete disappearance from the scene. Therefore, businesses should constantly review the latest trends and innovations, and develop strong strategies to protect products from the risk of obsolescence and decline, and ensure their survival in competition for a longer period and desired by consumers, which leads to enhanced sustainability, growth, and achieving a higher return on investment.
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