When you’re working on developing a new product, it can be easy to get so focused on the product itself that you ignore some of the realities of selling and marketing your product. Bringing your product to life can be an exciting time, but you also need to look ahead and focus on how you’re going to get that product to market, as well as how to maximize your return on the product. That’s why we’re going to talk about product life cycle today.
The term product life cycle is used to describe what happens to a product from its design to eventual obsolescence. Here’s an explanation of the four stages of the product life cycle.
In the introduction stage, your business will try to raise as much awareness about the product as possible. This stage will be heavy on marketing and promotion, and branding and quality will be established during this stage. This is also when you decide on pricing. It could be priced high, in order to recoup the costs of production as quickly as possible, or it could be priced low, trying to build a strong market share quickly. Sales are generally low, and your business may be targeting so called “early adopters” of products.
In this stage, your marketing efforts will probably be aimed at expanding the market for the product, whether that is in geographic or demographic terms. Quality needs to be maintained and additional services may be added onto your product. Demand begins to accelerate and you will begin dealing with competition in the market as other businesses mimic your product or try to improve on it. The choice now increasingly becomes about brand, rather than the product itself. New distribution channels will open up as consumer acceptance accelerates.
In the maturity stage, the strong sales growth levels off, and your goal is now to defend your market share and maximize your profits. Your product will experience market saturation—where most of your sales prospects are already using the product. The price competition between companies will become more intense, and there is no more need for distribution channels to be filled. The marketing in this stage will be about differentiating your product from the competitors’. This stage can come and go quickly, or persist in a gradual decline for years.
In the decline stage, marketing support may be withdrawn, as demand and sales have fallen. The product’s residual reputation will drive a small market share during this stage. Some companies will stop production entirely, realizing that they can no longer make a profit, while some producers will be able to survive the decline that the product is going through.
Understanding your product’s life cycle is key to being able to maximize the profit you are able to make off of it. It can be easy to think that developing your product is all it takes, but if you don’t plan ahead carefully, you could end up losing out on quite a bit of money. If you have any questions about product design, development, or marketing, then contact the experts at Pivot.