The Product Life Cycle describes the stages of a product from launch to being discontinued. It is a strategy tool that helps companies plan for new product development and refine existing products.
The new product development stage occurs before the product's life-cycle begins, consisting of market research leading up to product launch. Hence this stage can include:
The four stages are shown in the table below, although decline can be avoided by reinventing elements of the product. It is also recognized that some products never move beyond the introduction phase whilst others move through the life cycle much faster than others.
Our marketing model resources are designed to help marketers, managers, and business owners plan, manage, and optimize their marketing activities to improve performance and achieve their goals.
Product marketing managers must introduce their new product while it's relatively unknown and production is small. The price is often higher as distribution is limited and promotion is personalized.
At this point, it is worth returning to the infamous statistic that 95% of new products fail. So planning is key. We recommend planning your new product launch using the RACE planning framework.
Our marketing solutions for Business Members helps define the types of communications, best practices and optimization techniques across the RACE planning framework that maximize your customers' and products' lifetime values.
Congratulations - popularity for your product is growing! As your market share increases, now is the time to focus your RACE objectives on market penetration and development - such as communicating product benefits and building the brand.
Since your product is being bought in greater numbers and, with volume, the price is declining and profits increase. When upscaling any business, bear in mind the practical implications for resource, sumarized by Lilach Bullock in her blog blog 4 essential elements of a scalable business:
Scale too quickly and you can suffer from not being prepared. Scale slowly or unevenly and you may get stuck with employees you hired that you don’t need anymore. Overall, you need to ensure that the rate of your growth doesn’t hurt you in the long run.
The product competes with alternatives and its pricing drops. Distribution becomes intense (it’s available everywhere) and promotion focuses on the differences to competitors’ products.
When managing differentiation strategy, DRIP is another marketing model featured in our essential marketing models guide. DRIP is an acronym for differentiate, reinforce, inform and persuade.
Reaching the end of its life, the product faces fewer competitors. The price may rise and distribution has become selective as some distributors have dropped the product. Promotion aims to remind customers of its existence.
You can read more about each stage of the Product Life Cycle in our free essential marketing models guide. 1,000s of Smart Insights members are utilising our free resources to improve their skills and knowledge of marketing strategy. Get started today.
When reviewing your business you need to understand which stage your products or services have reached across your portfolio of all products which can be assessed in terms of market share and growth using the BCG matrix model. Reviewing the product of portfolio enables marketers to plan for new products, reinvent existing products or discontinue products that are in serious decline.
You can also relate digital marketing products and services to the popular diffusion of innovation model hype cycles.
This example shows how the yoghurt product category has moved through the product life cycle by remixing elements of the marketing mix. Examples of stages and how PLC evolved are:
Introduction
Growth
Maturity
Decline
There are several strategies you can use to attempt to extend the life cycle of your product and stave off decline without radically changing your product.
The structure of your advertising and physical appearance of your product should always be considered. Who is it targeting? How do you refer to the product? Tweaking your messages and packaging and aiming them at different demographics can reinvigorate your product or brand. One of the best examples of this is Dollar Shave Club’s video ad that presented its grooming product delivery service in a new, humorous light. To date, the video has nearly 30 million views and sparked 12,000 orders in the two days following their video being posted.
You can also assess your product features and the price point they’re being offered at. You can then choose to either lower your price for the same product, in an attempt to prolong its appeal by increasing its sense of value, or you can add new features the product to re-energize its place in your industry. A common example of this is the many iterations of laptops you see released by a brand. Large changes are marked by new product names (e.g. Lenovo YOGA laptops) while spec upgrades are labelled ‘generations’. The more generations of a product, the cheaper older generations become as they are seen as ‘value’ options.
A tip is to review customer feedback continuously, to ensure your products don’t reach the end of their shelf life, carry out regular customer surveys. Get feedback and find out what works, what doesn’t and why.
To maximize your product’s longevity, you should always explore possibilities of launching your product in new markets or on new platforms. Netflix transformed itself from a DVD delivery service into one of the largest video streaming platforms in the world. Launching its streaming service in the US in 2007, it started to expand into other markets with Canada in 2010, then South American countries such as Brazil, Argentina, and Paraguay. Popularity continued to grow, and Netflix expanded into Europe in 2012. Today they boast 167 million subscribers.
As technology evolves, so do the platforms you have available for your products. If you find ways for your products to remain flexible in their distribution, you can prolong their life-cycle for years.
Nintendo has been at the forefront of extending the lifespan of their games by continuously utilizing the changing platforms and technology available to them. Several games originally launched in the 1980s and available on cartridges have been re-released multiple times to extend their lifespan:
If product sales are declining, you need to know why. Products move into decline due to improved offers from competitors, changes in behaviour or because there is no longer a need for the product.
For example, across Morocco, there are long-established ‘Ecrivains Publics’ or people who read your mail and write the responses. If the literacy levels in the country continue to improve (currently around 70%, from 60% ten years ago) this service will move into rapid decline. The Ecrivians will need to develop their value proposition, or expand their market.
Moreover, product marketing managers need to stay up to date with the latest sector innovations in order to evolve their product's lifecycle and avoid decline. Resources like our Marketing technology and media innovation guide, Financial services marketing trends guide, and others in our sector technology innovation toolkit will enable you to review developments in your sector and make insight-driven decisions. Find out more.
By Gabrielle Wright
Gabrielle Wright is the Smart Insights blog editor, managing the company's SEO and social media strategies. With specialisms in marketing for the pharmaceutical/healthcare industry, financial services, manufacturing, IT/high tech, brands and e-commerce, Gabrielle can generally be found in her home office in Sandiacre, with a cup of tea, reading and writing about marketing theory and its practical application in the global economy! You can connect with Gabrielle on LinkedIn.
This blog post has been tagged with:
Business GrowthDigital innovationLifecycle MarketingMarketing modelsProductTurbocharge your results with this toolkit containing 7 resources
The Marketing Campaign Planning toolkit contains:
Start your Digital Marketing Plan today with our Free membership.
Recommended Blog Posts
Use our simple, 15 section download to quickly create a marketing plan for your business Many marketing plan templates you will find online were created long ago for larger businesses and aren’t so relevant to small and startup business competing …..
A Marketing Plan is a bit like a job description for your company. Everyone should have one, but they’re often not fit for purpose, out of date and reviewed infrequently… Research has shown that businesses with plans succeed…
Using the RACE OSA process to structure a marketing plan A marketing plan is an essential tool to compete and grow your business since it gives focus to your marketing activities by setting realistic, achievable priorities within your budget. It …..
