Product Life Cycle is a well-known framework in marketing. Products typically go through 4 stages: Introduction, Growth, Maturity, Decline. The stage of the life cycle of the product affects how it is marketed, this means at each stage, marketing strategy varies.
The need for immediate profit is not a pressure. The product is promoted to create awareness and develop a market for it. The impacts of this stage is as follows:
Product branding and quality level is established and intellectual property protection, such as patents and trademarks are obtained.
Pricing may be low (market-penetration pricing) to build market share rapidly or high skim pricing to recover development costs.
Distribution is selective until consumers show acceptance of the product.
Promotion is aimed at innovators and early adopters. Marketing communications seeks to build product awareness and educate potential consumers about the product.
Competitors are attracted into the market with similar offerings. In the growth stage, company seeks to build brand preference and increase market share. Marketing strategy is developed accordingly to the objectives on this stage:
Product quality is maintained and additional features and support services may be added.
Pricing is maintained as the firm enjoys increasing demand with little competition.
Distribution channels are added as demand increases and customers accept the product.
Promotion is aimed at a broader audience.
Competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit.
Product features may be enhanced to differentiate the product from that of competitors.
Pricing may be lower because of the new competition.
Distribution becomes more intensive, and incentives may be offered to encourage preference over competing products.
Promotion emphasizes product differentiation.
At this point, there is a downturn in the market. For example, more innovative products are introduced or consumer tastes have changed. There is intense price cutting, and many more products are withdrawn from the market. Profits can be improved by reducing marketing spending and cost cutting.
As sales decline, the company has several options:
Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
Harvest the product–reduce costs and continue to offer it, possibly to a loyal niche segment.
Discontinue the product, liquidating remaining inventory or selling it to another company that is willing to continue the product.
By: VSHR Digital Media