The 4 Stages of Product Life Cycle
Every product has a limited
life and variable sales and profit margins. A product has different stages
which represents different challenges. The Product require different marketing,
financing, manufacturing and human resource strategies in each stage. It passes through four stages including introduction,
growth, maturity and decline. These stages which represent the whole life of
the product are illustrated below in detail.
Introduction Stage
In the introduction stage, the
firm seeks to launch the product first time in the market. This stage may be
very expensive because the company will have to incurred the cost of research,
development, advertisement and product testing if it’s a competitive
sector. The goal of any firm is to meet
consumer’s needs with a quality product and lowest possible price. In the
introduction stage sales volume may be low as the firm tries to build awareness
of its product among potential customers. In this stage the firm central focus
is to create awareness not to make profit. Most of the companies study different
markets and looks those areas where consumer’s needs are not being met by
current products and tries to introduce new products that could meet that
need.
Growth Stage
In the growth stage, there is
growth in the sales volume as more customers are using, trying and are becoming
aware of the product. Profitability begins to rise. Competition begins to
increase as awareness of the product builds. Minor changes may be made as more
feedbacks are collected or new markets are targeted. In this phase, most of the
companies advertise the products to a wider audience and expand their
distribution channels to make their products available in more places. Once the product has been success, sales will
increase further as more retailers become fascinated in buying it. In short,
rapid sales, public awareness of the product and profits are the
characteristics of the growth stage.
Maturity Stage
In the maturity stage, Changes
are made and new features are added to differentiate the product from the
competing products. Competitors may offer a high-quality version of the product
at a lower price. New distribution channels are made and incentives may be
offered to encourage preference over rivals’ products. The marketers spend more
and more on promotion to persuade customers to buy the product. At this phase,
the primary objective of marketers to defend market share and maximize profit.
Decline Stage
In the decline stage, sales
begin to fall as consumers change tastes and fashion or the product is no
longer relevant or useful. Consequently, profits decline to the point where it
is no longer economically feasible to continue producing the product or
service. Producer attempts to upgrade the existing product or create new
product more efficiently. Generally, product decline is not about the end of
the business cycle, rather it is about the termination of a single product. It
should be noted that every product does not go to the decline stage. There are
numerous products like Pepsi, Coca Cola, Nestle and many more that remain in
the maturity stage.
It is important for marketers
to analyze the product life cycle to manage their product well, take corrective
actions, prevent it from incurring losses and stay in business. When the
product life cycle is managed effectively it leads to rise in sales and
profits.
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