In marketing, the life cycle of a product is understood as the set of stages through which a product passes from its introduction in the market until its withdrawal.
The concept of the life cycle of a product arises from the analogy between the evolution of living beings and that of products, since both go through different stages throughout their existence. A living being traces a curve of life that passes through birth, adolescence, adulthood, old age and death. As for the products, a similar cycle is produced.
STAGES OF THE LIFE CYCLE OF A PRODUCT
The identification of the factors that affect the evolution and the demand of the products, as well as the duration of each one of the phases, will determine the capacity of the company to be able to adapt its products to the new needs of the consumers. The life cycle of a product consists of 4 main stages: introduction, growth, maturity and decline.
- INTRODUCTION
In the introduction stage, after developing the marketing plan, the product is launched for the first time to the market, we are facing a first stage full of uncertainty and risk. It is also the stage of the life cycle of a product that entails a higher cost, since it produces the first approach of the product to the consumer in which it is contemplated both the previous market studies and the development of the product itself, as well as the investment in communication campaigns and promotional marketing actions.
Normally at this stage, the demand is lower than the supply, since the highest percentage of sales come from the most innovative consumers and early adopters, who are those who accept a greater risk before buying and are excited to experiment with new products .
2. GROWTH
In the growth phase, the product is positioned in the defined segment, and begins to be accepted by consumers. This causes that the sales and therefore the profits go in crescendo.
Normally, the increase in profits occurs because manufacturing costs are reduced either by economies of scale or by acquisition of manufacturing experience.
The key in this stage is to reinforce the positioning and make changes to adapt the product to the growing demand.
3. MATURITY
The maturity stage occurs when the product has reached the top in terms of market share. This stage, the third of the life cycle of a product, usually lasts longer than the rest.
Sales continue to increase, but at a slower and decreasing pace, until the point that they stabilize and then begin to stop
At this stage the competition is already considerable, so it should not compete only on prices, but also must identify and work with other relevant factors for consumers, to really get a product and a proposal of differentiated value.
The key at this stage is to anticipate the fall in sales by seeking proposals and innovations that make the product attractive again in order to sustain sales.
4. DECLINE
No company wants to reach the phase of decline, since it is the last stage of the life cycle of a product. Sales begin to decrease gradually because the product has been replaced by other options more attractive to consumers.
The profits can become losses and, therefore, that the product stops being profitable for the company, if the necessary measures are not taken.
In this phase I usually recommend that the product be removed from the market, since there are few opportunities to achieve resuscitation.
The key in this stage is to minimize the investment and plan actions where different aspects are taken into account: replace the product or modify it to focus it again on the market.
When we are in the phase called «decline» or at the end of «maturity», we are forced to take an alternative to get through this critical period of stabilization and stagnation. It should be analyzed if it is more convenient to abandon the product or launch it again with a series of modifications. Once we have opted for the latter, called «product life extension policy», then we will promote sales of the same by different paths that will be marked by the head of the marketing department, as an example we will indicate the following:
Promoting more frequent use among current consumers or users of the product.
Developing a more diverse use among current consumers or users of the product.
Creating new uses for the material or basic product.
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