Markets are constantly changing and in continuous evolution, this means that the products offered by companies have a limited life and experience an evolution from launch to withdrawal, going through different stages and suffering variations in sales.
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WHAT IS THE LIFE CYCLE OF A PRODUCT?
In marketing, the life cycle of a product is understood as the set of stages that a product goes through from its introduction on the market to its withdrawal.
The concept of the life cycle of a product arises from the analogy between the evolution of living beings and that of products, since both go through different stages throughout their existence. A living being traces a life curve that passes through birth, adolescence, adulthood, old age and death. As for the products, a similar cycle is produced, which you can see below.
STAGES IN THE LIFE CYCLE OF A PRODUCT
The identification of the factors that affect the evolution and demand of the products, as well as the duration of each of the phases, will determine the company’s ability to adapt its products to the new needs of consumers. The life cycle of a product consists of 4 main stages: introduction, growth, maturity and decline.
In the introduction stage, after developing the marketing plan , the product is launched on the market for the first time, we are faced with a first stage full of uncertainty and risk. It is also the stage in the life cycle of a product that entails a higher cost, since the first approach of the product to the consumer takes place in which both the previous market studies and the development of the product itself, as well as the investment in communication campaigns and promotional marketing actions.
Normally at this stage, demand is lower than supply, since the highest percentage of sales come from the most innovative consumers and early adopters, who are those who accept a greater risk when buying and are enthusiastic about experimenting with new products. .
The key at this stage in the life cycle of a product is to define and work on positioning and investigate the market’s response to the product, in order to react quickly and reorient strategies if necessary.
In the growth phase, the product is positioned in the defined segment, and begins to be accepted by consumers. This causes sales and therefore profits to increase .
Typically, the increase in profits occurs because manufacturing costs are reduced either by economies of scale or by gaining experience in manufacturing.
Despite this, competition in this second stage of a product’s life cycle is usually not very intense. New competitors are likely to have appeared, but these new players will try to differentiate your product and begin to build your brand positioning .
The key at this stage is to strengthen the positioning and make modifications to be able to adapt the product to the growing demand.
The maturity stage occurs when the product has reached the top in terms of market share. This stage, the third in the life cycle of a product, usually lasts longer than the rest.
Sales continue to increase, but at a slower and declining rate, until the point is reached that they stabilize and subsequently begin to stop.
At this stage, competition is already considerable, so it is not only necessary to compete on prices, but also other relevant factors for consumers must be identified and worked on, to really achieve a product and a differentiated value proposition.
The key in this stage is to anticipate the drop in sales, looking for proposals and innovations that make the product attractive again to achieve sustained sales.
No company wants to reach the decline phase, since it is the last stage of the life cycle of a product. Sales gradually begin to decline as the product has been replaced by other more attractive options for consumers.
Profits can turn into losses and, therefore, the product becomes unprofitable for the company, if the necessary measures are not taken.
At this stage, I usually recommend that the product be withdrawn from the market, since there are few opportunities to achieve a resuscitation of the same.
The key at this stage is to minimize investment and plan actions that take into account different aspects: replace the product or modify it to focus it on the market again.
LIFE CYCLE OF AN EXAMPLE PRODUCT
Apple released the iPod on October 23, 2001, beginning the introductory stage of a product’s life cycle. In 2002 sales had already reached 600 thousand units, the iPod was in the growth stage . Due to the popularity achieved, in 2003 Apple created the iTunes application, creating a new way to sell music legally and easily. In the following years, Apple developed different versions of the iPod with new technological advances, such as video playback on the device. As you can deduce, the iPod was in the maturity stage of the life cycle of a product.
After the launch of the iPhone in 2007, the course of the iPod changed, and its sales began to stagnate, entering the stage of decline . The iPhone terminal included all the functions of the iPod, plus a whole new world of possibilities. Who would buy an iPod and can buy an iPhone? Steve Jobs himself seeing the situation of the life cycle in which the iPod was in 2007, decided to make a statement stating that “the iPhone is the best iPod in the world.”
Finally, Apple eliminated many of its iPod models, and 17 years later it has been simplifying the line and has focused on two models, which do not even appear in the central line of the official website. In addition, the last renovation took place in 2017, therefore, the device continues to be on sale to satisfy the demand of a minimum percentage of consumers who continue to buy it, but in the short term it is expected to be withdrawn from the market.
As we can see, the iPod is a good example of how a product can go through all stages of the life cycle of a product.
It is important to know and know how to manage the stage your product is in, since the decisions to be made in each one vary and are different. Therefore, it is vital to carry out appropriate actions for each circumstance, in order to overcome the challenges that arise at each stage of the cycle. The marketing strategies of a company must adapt to the fluctuations suffered by products over time, in order to optimize decision-making in the best possible way. Identifying what stage your product is in will help you define your strategy and boost your marketing efforts. As you have seen throughout the article, it is important to study and work on the life cycle of a product, since it can directly affect the survival of a company.