We all have favourite products – particular brands of food and drink, games consoles, make-up or shampoo.
In industries like fashion and electronics, products are constantly changing, whether upgraded or replaced, while old favourites like Heinz baked beans and Bisto gravy have been around for years – although not without variations and changes to packaging and branding.
The Product Life Cycle model represents how every product follows a path from when it is first launched to when it is discontinued. It explains why some products receive a big marketing push and others are left to either sell themselves or be taken off the shelves.
The four phases of the Product Life Cycle
Once a product has been conceived and developed, it will go through four phases:
To maximise profitability, a product will be marketed in different ways during each phase.
Phase 1: Introduction
During this phase, it’s likely that the product will bring in less in revenue than it is costing to launch and promote. Marketing activities that promote and advertise the product will raise awareness among consumers and draw in the early adopters who like to be the first to own new or cutting-edge products.
In sectors such as technology, a new product usually comes with a high price tag to earn back the high cost of its development. In others, the product might be given a cheap price to achieve market penetration and compete with existing products, for example a new laundry product.
Phase 2: Growth
As the marketing of the product takes effect, sales increase and start to bring in more revenue. At this point, promotion of the product will be aimed at broadening its market into new segments.
To reach new audiences, the product might be promoted in particular areas of the country or exported, and/or marketed at new demographics, for example repackaged to appeal to a younger audience. This is the point that variations might be introduced: with a new brand of crisps this could be new flavours or family-size sharing bags.
Phase 3: Maturity
At this stage, the product is expected to sell itself and marketing tends to drop off.
There may be some promotional spend to increase market share and to remind consumers about the product and how it differs from the competition. There may also be a branding or features refresh.
Phase 4: Decline
Once a product is in this phase, there will be little if any marketing spend. Sales will slow and will mostly be to people who have always bought the product and remain faithful to it.
This is when the risk arises of the product costing money rather than making money, and the producer has to decide at what point they should take it off the market. A long-established product can have sentimental value to a business, but there’s no point in keeping it on the shelves if it takes up time and energy, loses money and prevents newer more profitable products being developed to replace it.
How long do Product Life Cycle Phases last?
This is a difficult question to answer as there is only a certain amount of control that a business can have over the various phases.
Because the Maturity phase tends to be the one when the product brings in the most profit, companies should focus on extending this phase. This can be done by encouraging existing consumers to use more of the product, launching price promotions to lure customers away from other brands, and promoting it to people who don’t usually use the product at all. The product can also be upgraded with new or updated features.
Does the Product Life Cycle Model have any drawbacks?
There are a few issues with the Model, including:
- If a product is not selling well, the producer might decide that it is moving into the Decline phase and stop marketing it, which will become a self-fulfilling prophecy and speed up its decline
- The Model doesn’t help producers to forecast sales or predict how long each phase will last
Some products have achieved longevity by being continually promoted and upgraded at a high level, extending the Growth and Maturity phases. To achieve this, producers should look at data across the board, analyse it carefully and draw the right conclusions about where a product is in its Life Cycle – and how to keep it in the profitable phases for as long as possible.