Product Life Cycle: Everything You Need to Know

Understanding the product life cycle is essential for building a successful item. It traces a product's journey from development to market displacement by superior alternatives. Tailoring strategies to fit your product's life cycle ensures alignment with market needs and maximizes success.

Arounda worked with digital products at various stages of their life cycle, covering both design and redesign cases — Myso, Shuffle, and Player’s Health are some of them. Today, we will discuss the product life cycle definition, its importance, main stages, and examples. 

What Is the Product Life Cycle?

The Product Life Cycle (PLC) is like a roadmap for marketers, helping them understand how a product evolves over time in the market. It encompasses various dynamics, such as consumer behavior, market trends, competition, and technological advancements, all influencing a product's performance over time.

The PLC has five phases: development, introduction, growth, maturity, and decline. Understanding where a product stands within this cycle empowers businesses to make informed choices about marketing strategies, pricing, and resource allocation.

Importance of the Product Life Cycle

Product life cycle management can be a business game-changer. Here's why it's so crucial:

• By recognizing which stage of the PLC a product is in, businesses make informed decisions about its future — investing in marketing, planning for a product's decline, etc.
• The PLC encourages businesses to establish organized processes. With clear procedures and workflows, companies operate more efficiently.
• Different stages of the PLC require different marketing approaches. For example, in the introduction phase, businesses focus on creating awareness, while in the maturity phase, they emphasize product differentiation.
• By adapting strategies to prolong the growth and maturity phases, businesses maximize the longevity of their products in the market.
• Awareness of the PLC enables companies to anticipate and respond to competitive threats, maintaining their position as market leaders or challengers.

Key Product Life Cycle Stages

The Product Life Cycle (PLC) consists of several vital stages a product typically goes through during its existence in the market.

1. Development

The development stage of the product life cycle is like the backstage preparation before a big show:

• First, companies invest significant time and resources in researching market needs, consumer preferences, and technological possibilities. They also seek funding from investors to fuel the development process.
• Once the initial concept is fleshed out, it's time to build prototypes. Companies gather feedback from testers to analyze how well the product solves a problem or fulfills a desire, considering functionality, usability, and overall value proposition.
• While testing prototypes, companies strategize their product launch — pricing, distribution channels, and promotional tactics. This stage involves carefully considering competitive positioning and differentiation strategies to stand out.
• Before full-scale production and widespread launch, companies may release the product in a limited market or region. This allows them to gauge initial market acceptance, gather real-world user feedback, and identify unforeseen issues.

The development stage often requires substantial financial investment without immediate returns. Companies bear the costs of research, development, prototyping, and user testing, knowing that profitability will come later once the product is successfully launched.

2. Introduction

This is the moment of truth when the product officially debuts:

• Marketing efforts focus on the broad dissemination of information using advertising, social media, and public relations. The aim is to inform potential customers about the product's existence, key features, and benefits.
• Also, marketers carefully identify and target groups of people who are likely to be interested in the new product. They research consumer needs, preferences, and behaviors to tailor marketing messages and effectively reach the right audience.
• Sales during the introduction stage are typically modest, as consumer awareness and interest are still growing. Demand may start slowly but gradually pick up as more people become familiar with the product and its value proposition.

Success in the implementation phase lays a solid foundation for future growth and product success. A positive initial experience and strong brand impressions can pave the way for increased demand, market penetration, and profitability at later stages of the product life cycle.

Products currently in the introduction stage often promise to revolutionize industries and reshape our lives and work. Examples include generative AI or self-driving cars.

3. Growth

The growth stage is the excitement phase when the product gains popularity and starts to thrive in the market. 

• At this stage, the product has successfully attracted the attention and interest of consumers, who now know about it and actively buy it. Demand for the product increases, resulting in increased sales and profits.
• As sales grow, businesses reap the benefits of economies of scale. Unit costs tend to decrease as production efficiency improves, supplier relationships strengthen, and distribution networks become more efficient.
• Competing companies may take note of your achievements and try to imitate or surpass your offering. At this stage, the main task is to outpace competitors.
• While existing customers form the basis of growth, attracting new customers remains important. Companies invest in focused marketing efforts, innovative product features, and exceptional customer service.

Businesses are working to differentiate themselves from competitors and develop customer loyalty. Consistent branding, positive customer experience, and effective communication form a favorable brand image.

Products currently in this stage include smartwatches, electric cars, and Peloton trainers. These products have created a buzz among consumers and are in increasing demand because they follow new trends and meet consumers' needs.

4. Maturity

The maturity stage represents a period of stability and refinement, where companies leverage their accumulated experience and resources:

• In the maturity stage, rapid sales growth declines as the product fills the market. Companies often lower prices to adjust their pricing strategies to stay competitive amid growing competition.
• Companies optimize production processes, conclude profitable contracts with suppliers, and optimize distribution networks. By cutting costs and increasing operational efficiency, businesses maintain profitability even as sales growth stabilizes.
• Marketing campaigns evolve from raising awareness to emphasizing product differentiation. Companies can improve product features by redesign, offer value-added services, or differentiate through branding.

Despite leveling off sales growth, the maturity stage is often the most profitable phase of a product's life cycle. As manufacturing processes become more efficient and economies of scale emerge, product costs decrease, and sales remain relatively stable.

Matured products include smartphones, Amazon as a platform, and video game consoles. These products have established themselves in the market, garnered a loyal customer base, and continue to generate steady sales and profits despite facing competition.

5. Decline

The decline stage represents a difficult period in the product life cycle:

• Product sales begin to decline as competition intensifies and consumer preferences shift toward new alternatives.
• Companies should make informed decisions reallocating resources to growth-oriented initiatives or divesting declining product lines to focus on more promising opportunities.
• Companies may discontinue a product altogether, especially if efforts to restore sales prove futile or the product no longer meets the company's strategic goals.
• Launching products into new markets can also attract untapped consumer segments or regions where the product may still be in a growth or maturity stage.

Decline often occurs when technological progress makes products obsolete or less relevant. Consumers gravitate toward more advanced options that offer advanced features, functionality, or convenience.

Products in decline often include outdated technologies or formats overtaken by new innovations, such as CDs and cassettes, landlines, and DVDs.

Summary

In this article, we delved into strategies for effectively managing each product life cycle phase, from launching innovative products to sustaining growth, navigating market saturation, and strategically handling product decline. By adopting a proactive approach, you can optimize your product strategies and drive sustained success.

As a UI/UX design agency, we create designs for new applications, as well as refresh existing ones. Do you deal with Web3, blockchain, SaaS, healthcare, e-commerce, or artificial intelligence/machine learning? We know what to offer your business. Contact Arounda for more details.