A product has a life cycle when it first enters the market that takes it from being new and useful to eventually being retired out of circulation in the market, often without the consumer’s knowledge. As products progress from the stages of development and introduction through maturation, decline, and eventual retirement, this process continues.
Stages of the Product Life Cycle Theory
The Product Life Cycle Theory has four stages: introduction, growth, maturity, and decline.
Introduction
A business is prepared to begin the product life cycle once it has conducted research and developed a product. A company enters the introduction phase when it successfully launches a new product into the market. This stage of the process is when the company analyzes consumer demand and starts to market the new product.
Because potential customers are still learning about the product during the introduction stage, businesses can typically anticipate low sales. This, however, might alter if the company raises anticipation prior to the launch.
Businesses should devote time to educating consumers about the brand and product during this phase. This is also the time to test different distribution methods and figure out the most effective way to market the product. Since rivals have not yet tried to copy or improve upon their products, businesses can also anticipate having little competition during this phase.
Growth
The following phase is when the product’s demand starts to rise. As a result, there are more sales, which leads to greater profit. The product gains popularity during the growth stage, and rivals start to take notice. As competitors attempt to steal some of a company’s sales, businesses may start to notice similar products being released on the market.
During this phase, spending money on marketing and promotion is crucial to attracting as many clients as possible. Since interest is still growing and there is still little competition, this is usually the stage where businesses see the most sales of their product.
Maturity
The product enters the maturity phase once it is well-known and popular with consumers. Businesses must now work to maintain the relevance of their product as the level of competition rises. They invest money to maintain the product’s position as the market leader and stop sales from declining.
Saturation can be a challenge in the maturity stage. Due to market saturation, consumers now have a variety of competitors to choose from. Marketing teams need to devote time to making their product stand out from competitors and building brand awareness. Companies should expand their customer service options now to help with the growing customer base.
Customers wanting to replace their product with something new presents another difficulty during the maturity phase. They might want to upgrade to something with newer features even if the product is still in good working condition. Due to this, businesses must invest a sizable amount of resources in marketing in an effort to increase sales as much as possible.
Decline
When sales numbers start to decline despite marketing and promotion, a product has reached this stage. Customers may naturally lose interest in an older product at this stage, or it may happen as a result of competitors outperforming the product in terms of features or cost.
The company might carry on selling the product even as it enters the decline stage. Sales will most likely continue until the product’s production costs exceed its revenue. In addition, rather than relying solely on one product that is currently in decline, many businesses have a variety of products on the market that are each in a different stage of the product life cycle.
It is possible to prevent a product from going into the decline stage, at least temporarily, but this necessitates the product becoming the popular choice on the market.
What is the Product Life Cycle Theory?
Raymond Vernon created the Product Life Cycle Theory as a marketing tactic in 1966. It is still widely used today to aid businesses in strategizing the development of their new products. The stages that all products go through are described by the product life cycle theory.
There are four stages within the Product Life Cycle Theory. Each stage can take a day for some products or months or years for others, depending on the product. How quickly a product moves through the four stages depends on a variety of factors, including its marketing strategy, demand, and the product itself.
Examples of the product life cycle
Here are a few examples to show how the product life cycle functions:
VCRs
Using a VCR, you can record and watch videos on a television. Due to the development of more technologically advanced products, sales of these once-popular devices have significantly decreased. A VCR’s product life cycle might resemble this:
Smartphones
Every few months, a new smartphone model is released as manufacturers attempt to outperform their rivals. A new smartphone device’s typical product life cycle is as follows:
International Product Life Cycle Theory | International Business | From A Business Professor
FAQ
What is Product Life Cycle Theory with example?
Examples of the product life cycle can be found throughout the home entertainment sector at all stages of the life cycle. For example, videocassettes are gone from the shelves. While flat-screen smart TVs are in their mature stage, DVDs are in their decline stage.
When was Product Life Cycle Theory?
Raymond Vernon created the Product Life Cycle Theory as a marketing tactic in 1966. It is still widely used today to aid businesses in strategizing the development of their new products.
Why is the Product Life Cycle Theory important?
The economist Raymond Vernon created the International Product Life Cycle in 1966, and it is still a widely used model in economics and marketing today. Products enter the market and gradually disappear again.
