Just like a human every brand and product has also its lifetime in this world. Some brands are born for a very short time period and people may be customers or competitors rejected them and compelled them to die.
For instance, a social community website “ORKUT” that almost quit from the market due to its weak strategies and strong competitors like Facebook and Twitter.
But some brands live a long lasting life that never ends like Pepsi and Coke.
Product life cycle consists of different stages that a product or brand must occupy in its life.
There is a chance of missing one or more stage in product life cycle i.e. one product can be directly shifted from introduction stage to decline.
Market rejects these products and compels to die.
There are five stages in Product Life Cycle:
- Product Development or Research and Development StageIntroduction Stage
- Growth Stage
- Maturity Stage
- Decline Stage
All the stages are explained below:
Product Development or Research and Development Stage
This is the pre-lunched and very beginning stage of any product or brand. In this stage, a product is on the table of experiment and research.
Manufacturers, at this stage, try to make the product according to customers need. Initial work is done on this stage and research and development, that may any product need also done in this stage.
Very heavy cost occurs in this stage and manufacturer bear the only loss in this stage. This is not the actual loss but this is a pre-lunched expenditure.
But if a product fails in this stage then all the expenditure turned into a loss.
On the graph, Redline is showing sales made by that particular product or brand and in this stage sales line is on the X-axis and also parallel to X-axis it means in this stage product never make any sale as this is the pre-lunched stage of product life cycle.
The blue line which is representing profit is below the X-axis which means the product is not earning profit it is in the loss.
In this stage, company tries to hide all the information regarding the product from the market and its competitors because it is too dangerous for one company to spread product’s information before it launching.
No marketing and advertising expense made on this stage because of secrecy. All the cost spend on this stage is development and research cost.
Read Article: What is CRM? What are the types of CRM Systems?
Introduction Stage
This is the second stage of product life cycle. After the pre-launched step, product development, this is the after launching step.
In this step, company launch its product in the market and start selling it. Now the product is available in the market to all customers.
In this stage, a company tries to invest heavy budget on marketing and advertising on the product because this is the first step of product in the market and product needs advertisement and promotions.
In this stage company also bears more cost because of advertisement and marketing activities regarding the product.
Although product available in the market and also starts selling but revenue is not enough to cover all the expenditure so we can say that product starts covering it’s all expenditures and cost.
In the graph, the red line is just above the X-axis which means it just starts it selling and with the passage of time it will make more and more sale.
And the blue line representing profit is below the X-axis which means no profits earn in this stage and all the sales are now covering the previous cost.
Growth Stage
After the introduction of the product in the market, the company knows the response of customer toward its product.
If the company found customers are appreciating its product and purchasing more units then the product is shifting itself into next stage” Growth stage”.
Growth is the third stage of product life cycle. In this stage company also make the heavy investment in advertising and marketing of product because the competition is high and product needs some support from the company in term of advertising.
For becoming no 1 product in the market, manufacturer try to invest more money on the product but the product also returns to the company.
Now the product is filmier with the market and everyone knows about it. So the product is now earning the profit for its owner.
In the graph, the red line is now vertically going upward which means the product is now on the road. The product is generating more revenue and covering it all cast.
Blue line representing profit ratio earned by the brand is now getting above the X-axis and representing huge profit.
Now the product is in its profit phase. All the expenditure is covered and product is now bearing cost by itself.
With comparison to introducing stage, growth time period is a little bit short. If market accepts it then product will quickly pass into growth stage.
With proper backup and support in terms of advertisement, promotions, and marketing related activities, the product will quickly reach in next era.
Maturity Stage
After growth stage, next stage is maturity stage. The product is mature and very much familiar with market conditions and on top position.
In the maturity stage, product enjoys its high market share and cashing brand name.
In this stage low investment required for advertisement and promotions because everyone knows about product and ad displays just for exposure and support.
The advertisement made for sustaining positions not for make more sales.
Now the product is earning a high profit and on its peak time. Market conditions are mature. Competitors also know about product market share.
Graph showing red line parallel to X-axis but the distance from X-axis is very high. In this stage, the red line remains constant and no variations occur in the graph.
The blue line which is representing profit is same with sales line but distance with X-axis is low because profit cannot increase from sales. Profit line is on the peak and horizontal.
This is the last stage of gaining more market share. The product now cannot gain more market share each and every activity done just for sustaining market share.
Decline Stage
Everything in this world has to die. Here die means quitting from the market. The product, after long time enjoying profit and sales, goes down in the market.
There may be many reasons for it i.e. technology can be changed and new technology can make a good product as compare to previous so in this stage, customers change their preferences and shift to other product. Sales go down and profit also.
No need to invest more money on the product at this stage. You will definitely not waste your 10 dollars to save your one dollar.
Yes, manufacturers try to make other product more efficient and more attached with customers needs.
Redline, on the graph, is now going down which means losing it sales which represent losing market share.
And the same thing happened with the blue line.
Different stages of the product lifecycle represent different activate. it is not necessary that every product goes in the decline stage and then quit the market.
There are numerous products those are in the maturity stage and continue it i.e. Pepsi cola, Coke, Nestle brand and much more.
All stages have their own strategies and marketing Mix. with the help of above picture, you can easily understand what a product need in one stage.
Got any questions? Or maybe, have something to add? Please leave a comment below and tell us what you’re thinking. Cheers
