What is the Product Life Cycle?
The product life cycle (PLC) is the course of a product’s sales and profits over its lifetime. There are 4 stages to this cycle: 1. Introduction 2. Growth 3. Maturity and 4. Decline. This cycle helps companies determine and foresee where their product will go, and what moment in time improvements and changes need to be made.
This is the point when a company introduces a new product to the public. The company determines pricing strategies, whether it wants to use price skimming, penetration pricing, bundle pricing, etc. This is the time the company determines how to advertise, and will spend more money on advertising than it makes on selling the new product. Also, it’s important in this stage to reach out to early adopters or other influencers in the market.
In the second phase, the company is hopefully seeing an increase in sales and a decrease in manufacturing costs. But, it doesn’t want to get too comfortable. In the growth stage, the company should be looking for ways to innovate and add value to its customers. It may be looking for options to expand its target audience and break into a more massive market. Look at different options of distribution, what is working well, and what could work better.
Maturity is when a product has reached a peak in sales and costs of production have dropped. This stage is when the company should make changes to the product so the maturity stage lasts longer and the lifetime of the product is extended. This can be done by launching a new version of the product. Apple is a great example of this. They are always launching a new and improved product to keep their customers interested and satisfied. Evaluate where the company’s prices are sitting and whether there is a need to increase or decrease the price based on cost and current revenue.
The fourth stage is the time to contemplate whether to let a product fade out or not. The company can choose to invest in more marketing, an added feature, or another product to add to your line. But if it does choose to let a product fade out, it is good to have an exit strategy! The way a product exits the market says a lot about the company and leaves a reputation, so it’s best to do it tastefully.
The product life cycle is important in helping products take off and become successful. Always be ready to change and improve throughout the product lifecycle and this will create a successful product.