Understanding the product life cycle theory (with examples)
By Indeed Editorial Team
Published 21 November 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Every product introduced into the marketplace has a life cycle. Understanding each stage of the product life cycle helps brands and companies make relevant marketing decisions and maximise profit. Learning about product life cycle theory can help you to explore these stages in the workplace. In this article, we review the product life cycle theory, its phases and some real-world examples.
What is the product life cycle theory?
The product life cycle theory refers to the stages a product undergoes during its lifetime, beginning at development and ending in decline. The lifetime of a product is usually divided into six phases. Marketers and business owners use product life cycle information to make important decisions regarding product prices, advertising budgets and packaging.
Although the marketing industry recognises four stages of the product life cycle, including the introduction, growth, maturity and decline, there are two additional stages, namely development and saturation. As a marketer, knowing how to adjust your tactics and strategies at various product stages is important. Understanding these stages allows you to tailor your marketing strategies accordingly.
The 6 stages of the product life cycle
The six stages of the product life cycle include the following:
This stage of the product life cycle represents the discovery phase before introducing a product into the marketplace. Here, a company seeks investors, creates prototypes, analyses product performance, and plans its launch. A company can also make significant financial investments without earning revenue during this stage since the product has yet to reach the marketplace.
A new product often undergoes a long and challenging development stage because the first version is often less successful than later editions. The period this stage may require depends on the product complexity, newness and competition. Although the marketing campaign for a new product usually begins during the introduction stage, you can release teasers during the development stage. Here, you create anticipation around the release of the product, publish favourable consumer research, build brand awareness and establish the business you work for as an innovative company.
This stage involves first launching a product in the marketplace. Here, marketing teams invest time and resources in creating product awareness and capturing the attention of potential customers. During this stage, sales can often be low while demand for the product grows gradually. This phase focuses more on marketing campaigns and advertising. You can explore various distribution media to inform potential customers about the product.
This stage requires you to invest intensively in promoting and marketing the product. After the launch, you can employ inbound and content marketing to create awareness and promote the product. Informing potential customers about the product's uses and efficacy is important during this stage. The target customers are likely to buy the product when they understand what they're buying.
This stage refers to the phase when customers accept a product in the market and sales improve. During this phase, the product typically generates steadily increasing demand and returns. The growth stage often involves a rise in competition as the market for the product expands. Potential competitors often notice the product's success and strive to introduce something similar and better into the market.
During the growth phase, marketing campaigns often divert focus from recruiting new customers to building a brand presence. It's important to ensure that the brand you work for dominates the market, so consumers choose the product over those of developing competitors. Also, as the brand grows, you can start to open new distribution channels and include more features and support services.
During this stage, the rapid sales evident in the growth period start to stabilise. Companies often reduce product prices to stay competitive in the market. Product efficiency also starts to increase as you learn how to improve the efficacy of the product with new versions. Marketing campaigns often focus on differentiation instead of awareness, enhancing product features, lowering prices and intensifying distribution. This stage is also more profitable as the product cost declines, while sales often increase.
When the product is at the maturity stage, you often notice sales become steady with the establishment of the brand. This phase is important for solidifying the company's position in the market as a leader and differentiating the brand. During this stage, it's important to focus intensively on improving the product. Inform customers of new improvements and how the product is superior to its competitors. The success of this period prepares and protects the product during the saturation stage.
This stage involves competitors obtaining a share of the market. Here, the product neither grows nor declines in sales. Many competing brands may enter the market to displace another product as the leader. The leading brand typically tries to encourage customers to choose its product to prevent the decline stage.
When the product you're marketing is in the saturation stage, it's important to focus on brand promotion, feature differentiation, customer service and price. Highlight the superiority of the product to stay relevant amid intense competition. If no improvement to the product is necessary, focus on customer service, integrate other products and use customer testimonials for marketing.
Sometimes, a product may not be able to secure a leadership position in the market or remain preferred or relevant. This stage involves a decline in product sales and a significant rise in competition. Also, new and superior trends often emerge as time progresses. You may discontinue or innovate the product in this phase. This stage is inevitable because even if a product remains superior in the market, a decline may be evident as new products emerge.
Your marketing strategy can focus on the nostalgia the product generates. You can emphasise the prestige of the product to extend the saturation stage successfully. You can also implement new advertising programmes, lower prices, explore new markets or create a feature that keeps your product relevant in the marketplace. Also, consider introducing the product to a new country.
Product life cycle examples
Here are examples of the complete life cycles of popular products to help you understand the various product lifecycle stages:
The typewriter represents the first mechanical writing tool, taking prominence over the use of pen and paper for writing. This product experienced a decline with the introduction of superior computing and recording technologies. The various stages of the typewriter include the following:
Development: This phase started at the beginning of the late 16th century, and the idea took some time to develop into an actual product.
Introduction: The typewriter entered the marketplace at the end of the 19th century.
Growth: At the beginning of the 20th century, the typewriter rapidly became a fundamental tool for every writing purpose in offices, companies and private homes.
Maturity: This phase lasted almost 80 years, dominating the market until the late 20th century.
Saturation: This stage began when more portable computers entered the marketplace.
Decline: At the end of the 20th century, it became evident that the computer was more advanced technology than the typewriter.
There was an era when cable TV was more prominent than it is currently. The product is still around but is gradually declining due to intense competition from convenient alternatives. The stages of cable TV include the following:
Development: This stage occurred during the first half of the 20th century.
Introduction: This phase occurred in 1950 with the introduction of the first commercial television system.
Growth: The product experienced delayed growth because of regulatory restrictions, but after these regulations ended, it became popular in the market in the 1980s.
Maturity: This phase experienced intensive use of cable TV in the 1990s.
Saturation: The 21st century began with new technology like high-definition TV (HDTV), which made the market more competitive for cable TV.
Decline: This stage is ongoing with the introduction of internet streaming services and video social media services in the 2010s.
The floppy disk was once preferable for storing and sharing data between computers. Today various other convenient means of sharing data exist, from micro memory cards and flash drives to cloud storage. Here is the breakdown of the product cycle of the floppy disk:
Development: Engineers developed the first floppy disk in 1970.
Introduction: It was introduced into the marketplace in 1971 as the only way to store and share computer data.
Growth: This stage occurred during the 1980s and 1990s.
Maturity: The 1990s brought maturity to the floppy disk market, with added features like the ability to hold 200MB of storage.
Saturation: This period began with the invention of USB cables, CDs and external hard disks in the 21st century.
Decline: By the late 2010s, companies stopped producing the floppy disk, as its storage was minimal compared to newer technologies.
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