All services and products in the market have a certain lifecycle. The total time taken from the product’s first launch to the final withdrawal from the market is said to be its lifecycle.
Product Lifecycle strategies are quintessentially important to a marketing strategy as it helps to identify various solutions and tactics for showcasing a product. To help a company realize and understand the right time to introduce a product to the market, it is then when the modules of vital product lifecycle strategies come to rescue.
Aside from this, a product’s position in the market in comparison to its competitors and the product’s success or failure is widely dependent on the product experience.
In order to be neck-to-neck with the ever-demanding customer needs, the product lifecycle is divided into five stages. Each of these stages represents a different set of uncontrollable variables. That are taken into consideration in the development of product and market ideas.
The stages include namely, Product Development, Product Introduction, Product Growth, Product Maturity, and Product Decline. These phases can further be split up into smaller sections as well. It all depends on the product experience. The time when it is launched, how well it is perceived by the audience, and also the sales performance of the product.
Product Development Phase
This is the first phase of a product. It begins when a company finds a new product and develops a persistent methodology aligning with the demand. This involves translating various bits of valuable information and incorporating them to bind a new product.
Before a product is officially launched into the real market world, it runs a series of test markets. Only those products that survive the test market are then introduced to the customer base in a marketplace. Thus starts the introduction phase. One more thing to be noted is that during this stage, the revenues are negative and sales are zero. It is spending time with absolutely no return.
As the name suggests the introduction phase is wherein a product gets an introduction to the market. This stage witnesses gaining the maximum impact at the moment of sale, huge expenditure on advertising and promotion and expensive service requirements.
A company must be prepared to be financially stable throughout all circumstances. Though, a large amount of return of investment (ROI) should not be expected, at such an early phase.
One of the other important facet is pricing. It is always the rules of pricing that decide the economic stance of a product in the market range. Research says that an early customer will get convinced to pay a large amount for a relatively new product.
This is immensely helpful to minimize the loop. Another strategy is that of a pre-set price, bringing out maximized sales. The product policy should be such that it is more aggressive, so as to produce a rather competitive product.
Nonetheless, this demands an excellent knowledge and research of the market in trend and of what a customer is willing to pay for a newly introduced product.
Some of the other Product lifecycle strategies include – rapid skimming: where the product gets a launch at a high price and promotional level, slow skimming: where the product gets a launch at a high price but low promotional level, rapid penetration: where the product gets a launch at a low price and high promotion and slow penetration: where the product gets a launch at low price and promotion.
Design and Packaging
Additionally, customer requirements on various features such as servicing, design, and packaging are sometimes invaluable to the formulation of product design. Before launching the product, a pilot run or test market is a crucial step in foreseeing the success of any product.
Customers can solicit feedback on what features of the product are appealing. And what are the facets that should be given a second consideration. A customer can also suggest ways to make the product handy and easy. Following the aforementioned manner, a company can easily know what to expect from the competitors and customers. Over and above, a marketing mix can also help in this phase by defining the targeted audience during the advertising and promotion of the product.
From the growth phase itself, a company receives the satisfaction of seeing a product take-off in the market place. If the product is introduced for the first time into the market, or what we call as the virgin market, then it is in a position to gain market share much easily. As this is the appropriate timing to focus on increasing the market share, a new growing market catches the competitor’s attention.
Some of the other things that a company must research is the variety. The versatility and the variety in all the product’s offerings. And how it differs from the produce of the competition. An effective policy is to put up a frequent modification process of the product lifecycle strategies.
This not only discourages competitors from gaining market share but also refrains them from matching up to the newly acclaimed procedures. Other such barriers include licenses and copyrights, product complexity and lesser availability of product components.
Nonetheless, the advertising should not get a sudden full stop as it is in the growth phase. The promotional activities must persist but not to the extent that saw the previous stage. It should rather be into an orientation to the task of market leadership and not in raising product awareness among the general public.
The moment when the market reaches saturation with the many variations of the basic product. And most of the other competitors look for with an alternative product, this is when the maturity phase arrives. In this phase, a company receives the highest returns from the product.
A company that has already reached its target enjoys the most profitable share, whereas a company that falls behind its market share goal, must reconsider its marketing positioning in the marketing environment.
Another important aspect of this phase is its discount policies and pricing. These policies often scale up or down as per the competition in demand. This is where coupons and sales get an introduction in case of consumer products. Promotion and advertising relocated from the extent of getting new customers. And gets to the scope of product differentiation in terms of reliability and quality.
Price competition becomes intense, one can see finer differentiation in product and customer services, so as to hold brand preference. Herein, a producer must hold his distribution outlets, secure more intensive distribution, and retain shelf space. The growth of sales is largely through the growth in demand from the general public.
Certain dilemmas such as maintenance, service competitions reaction, or spare part availability. And ncrease the complexity of the decision process of a product withdrawing procedure. The verdict of erasing a product from the face of the market seems to complicate. And there are a lot of issues to get answers before doing so.
In such a case, companies retain an exorbitant price policy for the declining products. This increases the profit margin and gradually discourage the loyal remaining customers from buying it. One such example is the telegraph submission over a simple and instant e-mail.
This phase sees how the overcapacity of a product lifecycle strategies in the marketplace becoming epidemic. To hasten the competitors’ decline, some initiate depressive strategies such as proposing mergers or buy-outs and steep price-cutting techniques. Production concentrates onto fewer hands as more and more firms leave the competitive space, tagging it to be too unprofitable. This is when the product declines to death or almost a near-death position.
Challenges and Variations
First and foremost is its unpredictability. While the lifespan of a product may be limited, it is very hard for manufacturers to predict how long it is likely to be. Especially during the new product development phase.
Second would be, change. The driven unpredictability of a product’s life span comes from the fact that almost all the factors that influence the lifecycle of a product are ever-changing. For instance, the change in the price of production or a significant fall in consumer demand due to the launch of alternative products could alter the duration of the different life cycle stages.
Thirdly, the product lifecycle curve is a model. Many of the critics of the product lifecycle have claimed that manufacturers may place too much weightage. And the model makes, till a time it becomes self-fulfilling. For example, if a company uses the product lifecycle curve as a basis to decide all its deeds. We see a decrease in sales may lead them to believe their product is entering the decline stage.
Fourthly, the swift changes in the demand for a product with a certain period of time make the distinction of the product lifecycle strategies phase extremely difficult.
Fifthly, it is not the sole factor ‘time’ that the entire product adoption lifecycle is dependent on. Several other factors such as the management policy, company strategic decisions, and the emerging market trends also count a lot.
In each of the stages discussed, what is missing is a detailed and precise goal as to how exactly the desired results can be obtained. In the first stage or the development stage, it is much needed to make a newly launched product known to the audience and establish a test period for the same.
This will not only help as a back-up but also add confidence in knowing what are the strengths and loopholes in the product.
Similarly, in the Introduction stage, it is pertinent to acquire a strong market stance. As long as, the grip in the position along with the cut-throat competition from the respective competitors is strong, the status is secure.
In the third stage, which is the growth stage, it is vital to maintain a market position. In addition to that, it is equally important to build on it as far as it goes. With no compromise on quality and quantity.
For the Maturity stage, this demands the producers to defend the position of the market from the competitors. Also, versatility in the product ranges and uniqueness which is the best USP.
In the Decline stage, it is necessary to skim all the profits from the product and make a firm verdict. By this stage, it would be known whether the product is selling itself well above the margin and not. As per the decision, a stern yet valuable step should be taken.
Product lifecycle strategies will always play a critical role in marketing strategies in the future. One can always refine the marketing according to the stage of the product. This can help achieve optimal performance and results in each of the stages. Just as each stage of the product lifecycle demands a different approach to the product itself. The stages also have specific effects on the overall marketing trends.
While it can be seen that model predicts the exact sales, but when this model is used alongside the curated sales figure and forecasts, it can provide a useful guide to the marketing tactics that can be appropriate at a given time.