Product life cycle: what it’s, the 5 phases and examples
When working with sales, knowing the product lifecycle model is almost mandatory.
The model describes the phases that a product goes through on its way from creation to discontinuation.
Why do you need to know?
Because products at different stages require different strategies, be it for physical products or for services.
Do you think you can attract customers to a new product by using the same promotions that are used on products that have been in the market for years?
At best, it's a missed opportunity. In the worst case, a total failure.
To learn about the stages of the product lifecycle, examples and how to apply this concept, don't forget to read this article to the end!
What is the product lifecycle?
The Product Life Cycle is a management tool that makes it possible to analyze the behavior of a product from its development to its withdrawal from the market, taking into account its market launch, its growth and its readiness for sale.
It's like a product journey, or to refer to a more well-known example in marketing, the customer journey.
The brain behind this concept is Theodore Levitt, a German economist who lived in the United States and worked at the renowned Harvard Business School.
Levitt proposed a five-stage model that he called the Product Life Cycle.
The stages are development, introduction, growth, maturity, and decline.
Before I explain them, it is interesting to understand why Levitt found it useful to define this model.
During his research, he discovered something that seems obvious, but had not yet been shown: the properties of a product change significantly over the course of its life cycle.
Any strategies around it must take into account the specific problems and characteristics of each of these phases.
This applies to sales and marketing, but also to product development and decision-making in management.
For example, when is the right time to invest and make a product explode in the market?
When is it time to step on the brakes and maybe even replace an item that has been hugely successful on another occasion?
You can answer these questions with a product life cycle analysis.
The 5 phases of the product life cycle
It's time to take a closer look at the product lifecycle model.
Now that we know the stages we will see what characteristics each of them has and also the best practices to use to achieve your marketing goals.
1. Development phase of the product life cycle
Product development is always a very sensitive phase.
The project can still be iterated. You can have great expectations of this, but before the product generates revenue, you need to improve your offering, run tests, validate the hypotheses, and make any necessary changes.
This phase is of course integrated into the process of startup companies, but not limited to it.
An automobile manufacturer, for example, does not bring a new car onto the market without first having a consistent project and examining its introduction and acceptance in the market.
To present a real example, you may have seen the Walkee Paws brand's collection of leggings for dogs, released in late 2018.
We can imagine that this launch was preceded by careful planning, resulting in the shape of the pieces, the material used and the patterns selected.
If a product is in development, no sales effort is required, but the promotion should already have started.
Imagine the potential for success of a Walkee Paws marketing campaign to announce this novelty to dedicated dog lovers.
It could be entertaining posts on social networks that arouse curiosity and encourage engagement.
There may also be press releases, posters or even interactive actions on the streets, among other things.
The fact is that the company has to take all of this into account in the development phase.
2. Introductory phase of the product life cycle
The Walkee Paws example is about introduction.
The product then goes through all stages of development and is considered ready for the market.
We are introduced to new elements every day at this stage of the cycle.
For big brands, television is a choice for advertising.
Proof: All you have to do is turn on the TV for a few minutes to see advertisements for a new lemonade, different motorcycle model, smartphone with new and superior features, etc.
It is no accident that this phase of the product lifecycle is the one that demands the most marketing investments from the company.
In fact, at this stage, it is not uncommon to see negative financial results even after the sale has already begun.
This is also due to the production costs related to product distribution.
In order to reduce the damage, it is imperative to define the target group and the persona that represents the ideal customer profile for your products.
This exercise will make it possible to optimize your marketing investments by using the right platforms to get the best message across and reach exactly the audience you want.
It is good practice to rely on inbound marketing and ensure that the user discovers the company and its offers through relevant content
This strategy is also used to get potential consumers to confirm sales.
3. Growth phase of the product life cycle
When the product lifecycle works as it should, the next step is the growth phase.
The main features of this stage are scalable sales and keeping the amounts invested in marketing.
It is not possible to predict the exact point in time as it depends heavily on the details of the product and the market in which it is located.
But it's worth repeating: if you follow the plan correctly, even if it takes a while, you will likely achieve your goals.
So don't get discouraged before you reach the growth stage.
Your investments must continue, either to increase your market participation or to keep production / output in line with your sales rates.
This applies to selling marketing services to training salespeople to physical products.
Many companies fail in this phase and sales of their products decline without ever having reached maturity.
You may remember a beer brand that did funny TV commercials with a short and chubby actor with a mustache as the protagonist.
It was one of the leading brands for a long time, and the ads generated comments on what was then the only social network at the time: word of mouth.
The product is still in the market and there has been no news of any changes to its formula, but it has been swallowed up by the stiff competition inherent in the industry.
Less investment in marketing would certainly be high on a list of possible reasons for this change.
So the lesson is clear: when a product is in the growth phase, it is important to have a strategy in place to keep it there, even as new competitors battle for its audience.
4. Maturity phase of the product life cycle
Maturity is the peak, the highest point in the product life cycle.
Then the product reaches its maximum potential and sales stabilize.
Once the peak is reached, growth is no longer possible, but the company can act to avoid significant setbacks.
The challenge in this phase is to get good results over time.
There is no easy way to do this.
All of the famous brands that come to mind now are where they are today because they invested in that phase.
Coca-Cola, for example, does not leave the media even though it “does not depend on marketing”. The company understands that brands don't last forever and are subject to market instability and changes in audience behavior.
Imagine a competitor develops a new soft drink and people discover that that flavor is essential for their family weekend dinner.
Without visibility, Coca-Cola would lose space in the market and, in that situation, possibly even its place as a leading brand.
5. Decline phase of the product life cycle
It's interesting to imagine the end of Coca-Cola, a company with over 100 years of existence and so much financial success.
But Coca-Cola will also end one day. Maybe not the company, but its main product.
This can take 100, 200 or even 1000 years. It is impossible to predict.
But every product reaches the end and completes its life cycle.
In this case, the company needs to realize the painful truth of its performance indicators and prepare a replacement product.
Usually, if everything works to stop the product, it is too dangerous to invest heavily in marketing to try to reverse the situation.
It could work of course. But what if not?
The company as a whole, and not just the product, can be at risk.
Why it is important to understand the product lifecycle
Hopefully, if you have made it this far, you understand the concept of the product life cycle and the characteristics of each of its phases.
You should also understand why it is important to apply this model to your business.
To rule out all questions, here are the most important advantages and benefits of adhering to the product life cycle model:
- Enable decision making with better support
- Optimize marketing investments
- Qualify sales efforts
- offer more control over the results
- give better long-term strategic planning
- offer better organizational and process management
- ensure more longevity for products
- Better prepare for the competition
- Market leadership becomes a feasible goal
Does the product life cycle only apply to products?
This is an interesting question about this tool.
If it were limited to products, the audience that could use it would be much smaller.
On the one hand, the idea that the product lifecycle works better for physical products is correct given its properties.
On the other hand, it is possible to be creative and think about adapting the model.
Let's take a large company with offices in different cities as an example.
Each of these units can be viewed as a product using this product lifecycle model; All you have to do is analyze each individual's performance one by one.
Another example is a company with many brands, each with their own products.
To better understand this, take a look at the Procter & Gamble website, which shows that the company has several active brands in the US market.
What stage of the cycle are each of these brands at?
Are you planning new brands that are currently in the development phase?
Finally, let's look at another example.
Could services replace products of the model proposed by Theodore Levitt?
Depending on the company's activities, this is entirely possible.
Take a home renovation company, for example.
It can provide a variety of construction services such as B. laying floors and tiles, painting, plastering, electrical and hydraulic work, masonry and more.
The product lifecycle method allows you to observe the lifecycle of each of these services in order to estimate the type of investment required and the potential for returns.
Practical examples of the product life cycle
How does the product life cycle work in practice in real cases?
We're going to look at two cool examples: Havaianas and Coca-Cola.
The Havaianas product lifecycle
- development: the traditional flip-flops were inspired by Japanese sandals made of wood or straw; In Brazil, rubber was chosen as the material because it was assumed that it would be the most popular among the public
- introduction: Wanted or not, the launch was a great success with classes C, D and E.
- growth: Havaianas flip-flops have been growing for most of their existence and eventually dominate over 90% of the flip-flop market
- Maturity: Maturity didn't come until the 90s, with new product design aimed at a different audience and big marketing investments, especially with the now classic TV spots that were fun and always starring famous actors
- decline: So far there is no indication that Havaianas flip-flops could go through this phase in the short term
The Coca Cola product life cycle
- Development: Very little is known about the development of Coca-Cola and the creation of the mysterious formula
- introduction: The brand already seemed to have the right project in the founding year 1886
- growth: Less than ten years after its introduction, Coca-Cola was already consumed in all US states
- Maturity: It is impossible to say exactly when the brand has matured, but it is safe to say that it has spent most of its history in this phase so far
- decline: Since 2012 Coca-Cola's net operating sales have fluctuated in the direction of declining; While a small decline is within what is expected for the maturity phase, investments in marketing and new products must continue
Product life cycle vs. BCG matrix
A product is born, grows, decays and dies.
Isn't this model the same as that of the BCG matrix?
If you thought about it, you were very clever.
The BCG matrix is another amazing management tool developed by the Boston Consulting Group (the model is named after their initials).
The BCG matrix is very similar to the product lifecycle, although there are some differences.
First, there are four instead of five levels: question mark, star, cash cow and dog.
Second, these strange names refer to specific characteristics of the stage the product is in and don't necessarily analyze the entire life cycle.
Are you confused? I will explain.
Take a look at the table below:
Question marks are new products that do not yet have a market, but have great growth potential.
As the name suggests, stars are right at the top: They generate good sales.
Cash cows are the future of the stars: their performance has peaked, but its decline is expected.
And dogs are a problem: end-of-line products that no longer sell well and are unlikely to regain their place.
In general, question marks and stars require marketing investments, cash cows no longer need investments, and dogs will not recover even with investments.
Conclusion on the product life cycle
By now you should understand the product lifecycle and the characteristics of each of its five phases. You've also learned tips for creating an appropriate strategy for each of them, even if you're a digital marketer and don't sell physical goods.
If you need help with digital marketing at any stage of the product lifecycle model, let our agency know.
Now is the time to devote yourself to maturity and extend it for as long as possible.
Speaking of which, what phase is your main product in? Leave a comment and share the article!
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