What Is a Product Life Cycle?
Products, like people, have life cycles. The product life cycle is broken into four stages: introduction, growth, maturity, and decline. This concept is used by management and by marketing professionals as a factor in deciding when it is appropriate to increase advertising, reduce prices, expand to new markets, or redesign packaging.
The process of strategizing ways to continuously support and maintain a product is called product life cycle management.
[Important: The stage of a product's life cycle impacts the way in which it is marketed. A new product needs to be explained, while a mature product needs to be differentiated.]
Product Life Cycle
How Product Life Cycles Work
A product begins with an idea, and within the confines of modern business, it isn't likely to go further until it undergoes research and development and is found to be feasible and potentially profitable. At that point, the product is produced, marketed, and rolled out.
The product introduction phase generally includes a substantial investment in advertising and a marketing campaign focused on making consumers aware of the product and its benefits. Assuming the product is successful, it enters its growth phase. Demand grows, production is increased, and its availability expands.
As a product matures, it enters its most profitable stage, while the costs of producing and marketing decline. However, it inevitably begins to take on increased competition as other companies emulate its success, sometimes with enhancements or lower prices. The product may lose market share and begin its decline.
The stage of a product's life cycle impacts the way in which it is marketed to consumers. A new product needs to be explained, while a mature product needs to be differentiated from its competitors.
Examples of Product Life Cycles
Many brands that were American icons have dwindled and died. Better management of product life cycle might have saved some of them, or perhaps their time had just come. Some examples:
- Oldsmobile began producing cars in 1897 but the brand was killed off in 2004. Its gas-guzzling muscle-car image had lost its appeal, General Motors decided.
- Woolworth's had a store in just about every small town and city in America until it shuttered its stores in 1997. It was the era of Walmart and other big-box stores.
- Border's bookstore chain closed down in 2011. It couldn't survive the internet age.
To cite an established and still-thriving industry, television program distribution has related products in all stages of the product life cycle. As of 2019, flat-screen TVs are in the mature phase, programming-on-demand is in the growth stage, DVDs are in decline, and the video cassette is extinct.
The Disadvantages of Life Cycle Management
Back in 1965, Theodore Levitt, a marketing professor, wrote in the Harvard Business Review that the innovator is the one with the most to lose because so many truly new products fail at the first phase of their life cycle, the introductory stage. The failure comes only after the investment of substantial money and time into research, development, and production.
And that fact, he writes, prevents many companies from even trying anything really new. Instead, he says, they wait for someone else to succeed and then clone the success.
- The concept of product life cycle helps inform business decision-making, from pricing and promotion to expansion or cost-cutting.
- The product life cycle is defined by four stages: introduction, growth, maturity, and decline.