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Product Life Cycle Stages and Strategies
The product-life
cycle characteristics are similar to those of a living thing. First, the product goes through a development
process, then, is introduced to the market. Once in the market, the product may
grab customers’ interest and start to grow until maturity is reached; during
maturity, the product can go through constant innovation, or might face a
decline and possibly disappear from the market. The following graph describes
the product’s life from inception to decline and its relationship with sales and profits between the stages:
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Development Stage
The product initiates as an idea that is either acquired or created by the company. During this stage, most of the marketing strategy goes into developing the product, designing a plan to identify buyers, designing the pricing strategy, and potential distributions points. As we can see in the graph above, during the development stage sales are zero, and the company’s investments costs increase, which suggests that the company will have a loss during the development stage.
Introduction Stage
Once the product is introduced, the main strategy is to build customers’ awareness of the product and its benefits. In this stage, company will need to expend heavy in promotion to set a good customers' relationships, buyers, and the press. For example, the company can organize events, product’s demonstrations, and use the advantages of public relation (PR) discussed in previous section of these blog. Additionally, the company has to focus its selling strategy on those buyers who are the most ready to buy the product. Normally, in this stage sales growth is slow, and profits cannot be expected due to the high cost involved in the introduction process.
Growth Stage
The growth stage is characterized by a rapid market acceptance and increasing sales. In this stage, companies must be aware, that market acceptance of the product and good level of sales attract more competition. This suggests, that marketers must be ready to fight to gain market share. The best strategy is the one oriented to get loyal customers. In this way, promotion continues to be a good tool to educate customers about the product benefits. According to Kotler and Armstrong, companies can keep market growth when they “improve product quality and add new product features and models. It enters new market segments and new distribution channels. It shifts some advertising from building product awareness to building product conviction and purchase, and it lower prices at the right time to attract more buyers” (p. 276).
Maturity Stage
Maturity of a product means when a product’s sales have reached the top. However, the percentage by which sales increase slows down. The slowdown in sales is the result of having too many competitors in the market selling similar products. The maturity stage can last longer than previous stages (Kotler and Armstrong, p. 276). Unfortunately, this is not the case for weaker competitors that cannot afford competition strategies such as setting low prices in the market, increasing advertising and sales promotions, and increasing product development budgets to get better version of the existent one. Overall, the best strategy during the maturity stage is innovation of the brand, this, allow the company to re-introduce the product to the market and start the product cycle again. Otherwise, the product could enter the decline stage.
Decline Stage
A loss in sales and profits usually marks the decline stage. During the decline stage, the product starts to lose customer support. Then, managers have to think what to do with the product since, “carrying a weak product can be costly to the firm” (Kotler and Armstrong, p. 276). Basically, a product that is in the decline stage can damage inventory operations, and decrease investment for a healthy product that might bring better results to the company. Therefore, the company must decide between keeping the product, and try to refresh it in hope to put it back into the growth stage. The company can decide to harvest the product, by reducing costs like plant and equipment, research and development, advertising, sales force, hoping that sales can increase for a short period of time. And the last alternative is to drop the product from the company’s line. The company can sell the product to another firm, or liquidate it at salvage value.