A person goes through different phases during their life. We start as a baby, grow into a teen age, then mature (hopefully) into an adult, and finally begin to decline towards our final years. Although your product is not living, it goes through the same phases during its ‘life’. As a small business owner it is your job to maximize your revenue during the product’s lifecycle and find ways to keep the product alive. Below, you’ll see the stages of the product lifecycle and ‘treatment’ methods for your dying products.
Stages of the product lifecycle
Development – In the development stage, the company is spending most of its money on research and development. Since the product has not been released, there are no sales and you’re losing money in this stage.
Introduction –The goal with the introduction of your product is to establish the marketing mix.
- Product: Typically there is one product or a closely related product line, since sales are usually low while the firm establishes the product in the market. Business owners should also be claiming their territory in this stage with product patents or trademarks.
- Price: The price is usually higher in the introduction stage than other stages, due to the company’s attempt to quickly recover the high costs associated with the development stage. Think of Apple’s iPhone – when a new phone is released the prices are high, and then begin to decline in subsequent years.
- Place: Small strategic areas are chosen for distribution locations until the product has proven its acceptance with target customers.
- People: Target customers in this introduction stage are the innovators and early adopters.
- Promotion: Advertising costs are typically high as you spend money on product awareness.
- Product: The quantity of products demanded by the market steeply increases, as more customers accept the product and your sales rise.
- Price: During the growth stage new competitors enter the market and prices are reduced to undercut competition.
- Place: Distribution becomes more intense and your company begins to decrease trade discounts with resellers.
- People: Early adopters and early majority
- Promotion: Advertisers now shift from product awareness to a campaign focused on building brand loyalty.
- Product: Although your product sales are still increasing, the rate has slowed since the growth stage.
- Price: Competitors have increased in number, and the market is now saturated with similar products. To keep sales up, your prices will be determined by competitive or promotional pricing.
- Place: With all of the increased competition, incentives or promotions are given to distribution channels to keep the product selling.
- People: Late majority
- Promotion: Marketing is increased to maintain sales growth.
- Product: In the decline phase, sales decrease as the product becomes outdated or the market is saturated with competitors.
- Price: The prices are the lowest at this phase, and to stay in business the firm should work on prolonging the product lifecycle.
- Place: Slow distribution channels are closed and the firm becomes more selective with partnerships.
- People: Laggards
- Promotion: Advertising is heavily reduced or stopped.
Ways to extend the product life cycle:
- When your product is in the late growth/early maturity stage the company can begin to make variations of the product
- While the product may be declining in one market, it can be introduced to other markets to increase its life span.
- The company can also create other products that are compatible with their mature product to increase its usability.
So in summary, long before your product is heading for the old folks home, there are measures you can implement that will extend its lifespan…and your profits!