As mentioned above, there are four stages in a product’s life cycle - introduction, growth, maturity, and decline – but before this a product needs to go through design, research and development. Once a product is found to be feasible and potentially profitable it can be produced, promoted and sent out to the market. It is at this point that the product life cycle begins.
![Product Life Cycle Diagram]()
The various stages of a product’s life cycle determine how it is marketed to consumers. Successfully introducing a product to the market should see a rise in demand and popularity, pushing older products from the market. As the new product becomes established, the marketing efforts lessen and the associated costs of marketing and production drop. As the product moves from maturity to decline, so demand wanes and the product can be removed from the market, possibly to be replaced by a newer alternative.
Managing the four stages of the life cycle can help increase profitability and maximise returns, while a failure to do so could see a product fail to meet its potential and reduce its shelf life.
Writing in the Harvard Business Review in 1965, marketing professor Theodore Levitt declared that the innovator had the most to lose as many new products fail at the introductory stage of the product life cycle. These failures are particularly costly as they come after investment has already been made in research, development and production. Because of this, many businesses avoid genuine innovation in favour of waiting for someone else to develop a successful product before cloning it.
There are four stages of a product’s life cycle, as follows:
1. Market Introduction and Development
This product life cycle stage involves developing a market strategy, usually through an investment in advertising and marketing to make consumers aware of the product and its benefits.
At this stage, sales tend to be slow as demand is created. This stage can take time to move through, depending on the complexity of the product, how new and innovative it is, how it suits customer needs and whether there is any competition in the marketplace. A new product development that is suited to customer needs is more likely to succeed, but there is plenty of evidence that products can fail at this point, meaning that stage two is never reached. For this reason, many companies prefer to follow in the footsteps of an innovative pioneer, improving an existing product and releasing their own version.
2. Market Growth
If a product successfully navigates through the market introduction it is ready to enter the growth stage of the life cycle. This should see growing demand promote an increase in production and the product becoming more widely available.
The steady growth of the market introduction and development stage now turns into a sharp upturn as the product takes off. At this point competitors may enter the market with their own versions of your product – either direct copies or with some improvements. Branding becomes important to maintain your position in the marketplace as the consumer is given a choice to go elsewhere. Product pricing and availability in the marketplace become important factors to continue driving sales in the face of increasing competition. At this point the life cycle moves to stage three; market maturity.
3. Market Maturity
At this point a product is established in the marketplace and so the cost of producing and marketing the existing product will decline. As the product life cycle reaches this mature stage there are the beginnings of market saturation. Many consumers will now have bought the product and competitors will be established, meaning that branding, price and product differentiation becomes even more important to maintain a market share. Retailers will not seek to promote your product as they may have done in stage one, but will instead become stockists and order takers.
4. Market Decline
Eventually, as competition continues to rise, with other companies seeking to emulate your success with additional product features or lower prices, so the life cycle will go into decline. Decline can also be caused by new innovations that supersede your existing product, such as horse-drawn carriages going out of fashion as the automobile took over.
Many companies will begin to move onto different ventures as market saturation means there is no longer any profit to be gained. Of course, some companies will survive the decline and may continue to offer the product but production is likely to be on a smaller scale and prices and profit margins may become depressed. Consumers may also turn away from a product in favour of a new alternative, although this can be reversed in some instances with styles and fashions coming back into play to revive interest in an older product.
Having a properly managed product life cycle strategy can help extend the life cycle of your product in the market.
The strategy begins right at the market introduction stage with setting of pricing. Options include ‘price skimming,’ where the initial price is set high and then lowered in order to ‘skim’ consumer groups as the market grows. Alternatively, you can opt for price penetration, setting the price low to reach as much of the market as quickly as possible before increasing the price once established.
Product advertising and packaging are equally important in order to appeal to the target market. In addition, it is important to market your product to new demographics in order to grow your revenue stream.
Products may also become redundant or need to be pivoted to meet changing demands. An example of this is Netflix, who moved from a DVD rental delivery model to subscription streaming.
Understanding the product life cycle allows you to keep reinventing and innovating with an existing product (like the iPhone) to reinvigorate demand and elongate the product’s market life.
Many products or brands have gone into decline as consumer needs change or new innovations are introduced. Some industries operate in several stages of the product life cycle simultaneously, such as with televisual entertainment, where flat screen TVs are at the mature phase, on-demand programming is in the growth stage, DVDs are in decline and video cassettes are now largely redundant. Many of the most successful products in the world stay at the mature stage for as long as possible, with small updates and redesigns along with renewed marketing to keep them in the thoughts of consumers, such as with the Apple iPhone.
Here are a few well-known examples of products that have passed or are passing through the product life cycle:
1. Typewriters
The typewriter was hugely popular following its introduction in the late 19th century due to the way it made writing easier and more efficient. Quickly moving through market growth to maturity, the typewriter began to go into decline with the advent of the electronic word processor and then computers, laptops and smartphones. While there are still typewriters available, the product is now at the end of its decline phase with few sales and little demand. Meanwhile, desktop computers, laptops, smartphones and tablets are all experiencing the growth or maturity phases of the product lifecycle.
2. Video Cassette Recorders (VCRs)
Having first appeared as a relatively expensive product, VCRs experienced large-scale product growth as prices reduced leading to market maturation when they could be found in many homes. However, the creation of DVDs and then more recently streaming services, VCRs are now effectively obsolete. Once a ground-breaking product VCRs are now deep in a decline stage from which it seems unlikely they will ever recover.
3. Electric Vehicles
Electric vehicles are experiencing a growth stage in their product life cycle as companies work to push them into the marketplace with continued design improvements. Although electric vehicles are not new, the consistent innovation in the market and the improving sales potential means that they are still growing and not yet into the mature phase.
4. AI Products
Like electric vehicles, artificial intelligence (AI) has been in development and use for years, but due to the continued developments in AI, there are many products that are still in the market introduction stage of the product life cycle. These include innovations that are still being developed, such as autonomous vehicles, which are yet to be adopted by consumers.
Importance of the Product Life Cycle
Understanding the product life cycle can inform the strategic actions of a company or business, allowing management and decision-makers to work out staff allocation and resources, budgeting, and what should be prioritised, as well as the next areas for innovation and development.
An overview of the product life cycle is integral to marketing and promotions as well as informing long-term planning. In addition, it helps with streamlining processes within an organisation.
It is always easier to make better decisions with accurate information and the product life cycle can be an important facet of this.
When to Use the Product Life Cycle
The product life cycle can be used across your business from advertising to pricing and innovation to marketing.
A new product can be promoted as a ground-breaking or an improvement on existing products, while an established product can be promoted based on a long, successful and trusted history in the marketplace.
The pricing of your product should also be informed by the life cycle, with newer products being priced to entice buyers and more established products in their growth stage can be priced higher.
Marketing strategies can also be based around the product life cycle, audience awareness and market maturity means that a product will be marketed differently to a new and emerging product. Consumers will also be aware of a product’s life cycle and will know if you try to promote a new item as something that is well-established.
Of course, those products that are in decline or have saturated the market will need a different strategy again, allowing you to maintain your position in the marketplace even as you look at reinvigorating your product or innovating new ideas.
Product Life Cycle Marketing Strategies
As highlighted above, the product life cycle in marketing is also an important consideration for businesses. Products need to be addressed differently according to their position in the life cycle, as follows:
Development Stage Marketing Strategies
You don’t need to wait until your product fully launches to begin to build customer interest. You can place your product with selected voices in your industry to start to build a ‘buzz’ around your upcoming product or promote a limited release to create an air of exclusivity and build anticipation for the full market release. An early, limited release can create positive feedback that can be used to build awareness and excitement around your product.
Introduction Stage Marketing Strategies
With the full launch of your product you can begin to promote it in earnest. This could include reaching out to industry experts or influencers within your target market who can review and promote your product, using their endorsement to create credibility and reach a wider audience. This stage is all about educating the marketplace about the key selling points and benefits of your product.
Growth Stage Marketing Strategies
At this point the focus shifts to establishing a brand presence to create customer loyalty over any competitors. Marketing strategies at this point can include social media advertising and promotion, search engine optimisation (SEO), content marketing and partnerships with industry experts or influencers. Companies will also seek new distribution channels, add additional features and develop support services. Exploring new markets and e-commerce platforms as well as partnering with retailers could also boost your customer base at this point.
Maturity Stage Marketing Strategies
As your product reaches maturity, you may feel that you can rest on your laurels and reap the rewards of having an established product in the marketplace. However, work is still required in order to position yourself as a leader in your field and differentiate yourself from your competitors. As with the introduction stage, you could seek to educate the marketplace, except this time it will be from a position of authority, letting your customers know about the benefits of your product. This can be achieved via blog posts and industry insights. In addition, you will want to continue improving your product, offering more features for example, and informing your customer base of the improvements and their associated benefits. This will help protect your product or business as you reach the saturation stage…
Saturation Stage Marketing Strategies
Once the market becomes saturated you will need to lean into your brand and how it differentiates you from the competition. You can tailor your marketing efforts to appeal to specific customer segments in your market, highlighting their preferences and needs. As well as directly targeting parts of your market, you need to strengthen your relationship with your existing customer base. A more personalised customer interaction, new product features, special product bundles with similar items, exclusive packaging options, product personalisation, and customer loyalty programmes are just some of the techniques that are used according to product and industry. This is when the competition will be at its highest and there may not be many available tweaks to your product, so excellent customer service is vital in order to maintain a good position in the marketplace. To stay at the forefront, your customers need to know your product (and business) is the best – and you need to back it up with your product, service, and delivery. Good customer testimonials are a good addition for your marketing plan at this time.
Decline Stage Marketing Strategies
Companies don’t want to see their product go into decline, but sometimes it can’t be avoided. When the entire market goes into decline – as was the case with video cassettes – it might be impossible (or at least inadvisable) to fight against the tide. However, a decline doesn’t always mean a total collapse and strategies such as improved advertising campaigns, reduced prices, new product features, improved branding, or even new market penetration can allow you to flourish while other, lesser products fall aside as the market balances out. The key is in emphasising the superiority of your product and professionalism, using many of the same strategies from the saturation stage. Of course, if a product goes or is going obsolete, then it is best to plan for a timely exit from the market or a pivot to new products.
International Product Life Cycle (IPL)
The International Product Life Cycle (IPL) is a way of keeping track of how you need to manage and market your product in different international markets. Companies will often explore other markets globally to avoid reaching the decline stage for their product or service. Others will seek to move manufacturing and production to other countries as well, either to meet the demands of other markets or to reduce production costs.
The stages of an IPL are the same as those for a normal product life cycle, although some stages may be approached differently to take account of local customs and cultures as well as regulations. Exploring other markets gives you the opportunity to learn from prior mistakes and innovate into new regions. An IPL will not prevent decline altogether as competitors may also decide to move into the same markets, creating a shift in life cycle stages towards saturation and decline.
The marketing theory behind product life cycles interacting with international trade was developed by Harvard Business School professor Raymond Vernon in the late 1960s, to take account of trends in international trade.
Vernon stated that products in international markets had three phases; new products, maturing products, and standardised products. He believed that products would perform best in their country of origin as this would keep manufacturing and production costs low. However, once demand increased, companies can start exporting to other countries, as well as building local production plants in each new location. These plants would provide the flexibility to make changes to a product locally, without incurring large costs.
As with the saturation phase of regular product life cycles, which grew from Vernon’s original theory, he said there would be an influx of competition once a product entered its standardised phase. At this point companies need to reduce production and manufacturing costs to stay competitive, as well as exploring new markets or products to begin the life cycle process again.
Understanding how a product’s life cycle works allows companies to work out whether their products are meeting the needs of the target market and, thereby, when they may need to change focus or develop something new.
Examining a product in relation to market needs, competition, costs and profits allows a company to pivot their product focus to maintain longevity in the marketplace.
Knowing when a product is going into decline prevents your company from following as a result of being overly reliant on a fading market. A product life cycle strategy means that you can reinvigorate an existing product, develop a new replacement product or change direction to stay abreast of a changing marketplace.
While all products have a life cycle, many of the most successful ones are able to maintain the mature stage of the life cycle for many years before any eventual decline.