Understanding the 4 stages of the product life cycle

When we talk about products, it’s usually when they’re already available for sale. But this view actually overlooks details about key processes that affect every product. We also miss out on important indicators of how successful that product is likely to be at any given point in time.

Business owners should understand the four stages of the product life cycle. With a deeper understanding of how products go from inception to sale, you can make strategic decisions to maximize your profits and keep your business competitive.

The four stages of the product life cycle

The product life cycle refers to the amount of time that passes between when a company first introduces a product to the public and when that product is no longer on the market. Understanding where your product is in the life cycle will help you to manage it better.

Introduction stage

The market introduction and development stage encompasses everything from determining the type of product you want to create to building the physical product. This stage often includes brainstorming, market research, and product testing.

When you first introduce a product to the market, you may have little or no competition. You’ll likely need to invest heavily in advertising and marketing to spread the word about the product, and that makes this stage an expensive period when you’re unlikely to see profits.

Growth stage

Products that have successfully made it to market and get a positive reception will move on to the growth stage. During this stage, demand for the product increases, which correlates with an increase in production and sales.

If your product is a hit, demand may surge, and you’ll likely begin seeing competitors producing various versions of your product. During this stage, your branding is particularly important, since it can drive buyer loyalty and help to maintain sales.

Maturity stage

As a product enters the maturity stage, sales slow due to market saturation. This stage often correlates with an increasing number of competitors trying to promote their products and offering lower pricing. You may need to adjust your marketing strategy to focus on why your original product is superior. This is also when retailers who initially promoted your product may be reluctant to continue investing in promotion.

Decline stage

In the decline stage, sales continue to drop off, and competition continues. Other companies may release new products that are better than your original product, or your product may simply go out of style as new market trends emerge.

Some products continue to sell during the decline stage, just at smaller volumes. In this case, a business might decrease their production of the product rather than remove it from the market.

Examples of the product life cycle

Real-world examples can make these stages easier to recognize. Think of VCRs. They went through the introduction, growth, and maturity stages during the 1980s and 1990s. With the invention of DVDs and DVD players, VCRs entered the decline stage.

Products like self-driving vehicles are currently in the introduction stage, as manufacturers are working to build public trust in these vehicles. In contrast, electric vehicles, which are more established, are in the growth stage. Thanks to advertising, increasing demand, and the popularity of electric vehicles, the market is growing. Eventually, those vehicles will move into the maturity stage, and, at some point, they’ll likely enter the decline stage.

Strategies for each stage of the product life cycle

Understanding which stage your product is in can help you make the right strategic decisions to maximize its success.

For example, during the introduction stage, you can focus on strategies to ensure that you have a well-developed product. Conduct market research and identify your target audience’s pain points. Create a product that solves those pain points. Then you should thoroughly test the product to ensure not only that it works but also that your audience will be interested in it.

You’ll need to change your strategy as the product enters the growth stage. Be prepared to increase production to keep up with demand, especially if your product becomes really popular and you suddenly need to produce it at volume. This is also the time to focus your marketing on highlighting what’s unique and valuable about your product, especially as competitors release their own versions.

During the maturity stage, your focus will shift to defending your business against competitors. You may need to get creative with your marketing and consider options like customer loyalty clubs or unique product bundles to help drive sales.

As your product enters the decline stage, it’s important to take a careful look at your profits and evaluate whether it makes financial sense to continue selling the product. This is also the time to evaluate profit margins if you scale back production — you may decide that’s more effective than discontinuing the product.

Ways to use the product life cycle to your advantage

Developing and marketing products can be somewhat unpredictable, but the product life cycle gives you a sort of product road map to help guide you through the process and prepare you for what’s ahead. You can use the product life cycle to determine appropriate marketing strategies and goals to navigate different situations. It will help you plan your marketing for situations you may encounter in the future and make it easier to budget for your anticipated marketing and advertising needs.

The product life cycle becomes particularly valuable when you’re selling a product that’s somewhat similar to another product you’ve previously sold. By tracking and reviewing the life cycle of that first product, you’ll be better prepared to effectively market the second product. You can even use that information to predict potential profits for your second product — assuming it follows a similar cycle as the first.

Business strategy benefits from the four stages of the product life cycle

Think of the product life cycle as giving you extra information about the journey you’ll take with your product. Not only is the life cycle invaluable to marketing teams, but it can also help you make strategic decisions about everything from how to price your product to how much you might want to invest in a product’s development and marketing.

When it comes to running a successful business, the more information you have, the stronger your business strategy will be. Focusing on the product life cycle can give you extra information and insights, helping you maximize every product’s overall success.

Photo by Eugene Chystiakov on Unsplash