What is the product life cycle?
The product life cycle is the succession of stages that a product goes through during its existence, starting from development and ultimately ending in decline. Business owners and marketers use the product life cycle to make important decisions and strategies on advertising budgets, product prices, and packaging.
In the marketing industry, the typical depiction of the product life cycle only has four main stages — Introduction, Growth, Maturity, and Decline. At HubSpot, we agree that these are vital for a product, but the two stages “Development” and “Decline” aren’t nearly covered enough.
As marketers, it’s important to understand how your tactics and strategies change depending on the stage your product is in. Let’s break down each of the six stages of the product life cycle.
What are the stages of the product life cycle?
- Development
- Introduction
- Growth
- Maturity
- Saturation
- Decline
1. Development
The development stage of the product life cycle is the research phase before a product is introduced to the marketplace. This is when companies bring in investors, develop prototypes, test product effectiveness, and strategize their launch.
In this stage, companies typically spend a lot of money without bringing in any revenue because the product isn’t being sold yet.
This phase can last for a long time, depending on the complexity of the product, how new it is, and the competition. For a completely new product, the development stage is particularly difficult because the first pioneer of a product isn’t always as successful as later iterations.
Development Stage Marketing Strategy
While marketing typically begins in the introduction stage, you can begin to build “buzz” around your product by securing the endorsement of established voices in the industry.
You can also publish early (and favorable) consumer research or testimonials. Your marketing goal during this stage is to build upon your brand awareness and establish yourself as an innovative company.
2. Introduction
The introduction stage happens when a product is launched in the marketplace. This is when marketing teams begin building product awareness and targeting potential customers. Typically, when a product is introduced, sales are low and demand builds slowly.
In this phase, marketers focus on advertising and marketing campaigns. They also work on testing distribution channels and building product and brand awareness.
Introduction Stage Marketing Strategy
This is where the fun begins. Now that the product is launched, you can actually promote it using inbound marketing and content marketing.
Education is vital in this stage. If your marketing strategies are successful, the product goes into the next stage — growth.
3. Growth
During the growth stage, consumers have accepted the product in the market and customers are beginning to truly buy in. That means demand and profits are growing, hopefully at a steadily rapid pace.
The growth stage is when the market for the product is expanding and competition begins developing. Potential competitors will see your success and will want in.
Growth Stage Marketing Strategy
During this phase, marketing campaigns often shift from getting customers’ buy-in to establishing a brand presence so consumers choose them over developing competitors. Additionally, as companies grow, they’ll begin to open new distribution channels and add more features and support services. In your strategy, you’ll advertise these as well.
4. Maturity
The maturity stage is when the sales begin to level off from the rapid growth period. At this point, companies begin to reduce their prices so they can stay competitive amongst the growing competition.
This is the phase where a company begins to become more efficient and learns from the mistakes made in the introduction and growth stages. Marketing campaigns are typically focused on differentiation rather than awareness. This means that product features might be enhanced, prices might be lowered, and distribution becomes more intensive.
During the maturity stage, products begin to enter the most profitable stage. The cost of production declines while the sales are increasing.
Maturity Stage Marketing Strategy
When your product has become a mature offering, you may feel like you’re “sailing by” because sales are steady and the product has been established. But this is where it’s critical to establish yourself as a leader and differentiate your brand.
Continuously improve upon the product as adoption grows, and let consumers know in your marketing strategy that the product they love is better than it was before. This will protect you during the next stage — saturation.
5. Saturation
During the product saturation stage, competitors have begun to take a portion of the market and products will experience neither growth nor decline in sales.
Typically, this is the point when most consumers are using a product, but there are many competing companies. At this point, you want your product to become the brand preference so you don’t enter the decline stage.
Saturation Stage Marketing Strategy
When the market has become saturated, you’ll need to focus on differentiation in features, brand awareness, price, and customer service. Competition is highest at this stage, so it’s critical to leave no doubt regarding the superiority of your product.
If innovation at the product level isn’t possible (because the product only needs minor tweaks at this point), then invest in your customer service and use customer testimonials in your marketing.
6. Decline
Unfortunately, if your product doesn’t become the preferred brand in a marketplace, you’ll typically experience a decline. Sales will decrease during the heightened competition, which is hard to overcome.
Additionally, new trends emerge as time goes on, just like the CD example I mentioned earlier. If a company is at this stage, it’ll either discontinue its product, sell the company, or innovate and iterate on its product in some way.
Decline Stage Marketing Strategy
While companies would want to avoid the decline stage, sometimes there’s no helping it — especially if the entire market reached a decline. In your marketing strategy, you can emphasize the superiority of your solution to successfully get out of this stage.
To extend the product life cycle, successful companies can also implement new advertising strategies, reduce prices, add new features to increase their value proposition, explore new markets, or adjust brand packaging.
The best companies will usually have products at several points in the product life cycle at any given time. Some companies look to other countries to begin the cycle anew.
Importance of the Product Life Cycle
The product life cycle is important because it informs an organization’s management and decision-makers how well a product is performing and what strategic actions it will take to succeed. This helps companies allocate resources like staff, budgets, shows which products should be prioritized, and where the company should innovate next.
Other benefits of using the product life cycle include:
- Make better marketing investments and decisions
- Easier to make long-term plans
- Allows for better decision making with accurate information on performance
- Easier to streamline current processes within your company
Product Life Cycle Limitations
While using the PLC method certainly helps stakeholders plan, it does have limitations. The cycle breaks down performance over several stages, but unfortunately there is no way to tell how long each stage will last.
Complicating things further, not all products will move through these stages at the same pace. For example, a product may take longer to decline than others. Plus product managers run the risk of not dedicating enough effort and resources into a particular product if they think the product will decline, creating planned obsolescence — even if customers still use it.
Breaking Down the Product Life Cycle Theory
In the late ’60s, Harvard Business School professor Raymond Vernon developed this marketing theory in response to an economic model that failed to account for trends present in international trade — that’s why it was originally called the international product life cycle theory.
It stated that products developed in an international market had three phases:
- New product
- Maturing product
- Standardized product
Here’s a quick breakdown of his theory.
Vernon theorized a new product would perform best in its country of origin to keep manufacturing and production costs low. Once the product gained demand, companies could begin exporting to other countries and continue building local production plants in each new location.
Having these local plants would offer the flexibility to make changes to the product without incurring huge costs.
The standardized phase would involve an influx of competitors, which would lead the company to focus on driving down production and manufacturing costs to remain competitive. As the market becomes saturated and a new product gets introduced, the company loses its relevance in its home country and shifts gears to create something new, with the cycle beginning again.
Since then, the product life cycle theory has evolved to focus less on geography and more on marketing.
