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What is the Product Life Cycle?A product life cycle includes stages the product experiences throughout its lifetime – from conception of the idea to the decline and abandonment of the product. Some products experience longer life cycles than others; however, all products go through the product life cycle stages. Product Life Cycle StagesWhat are the product life cycle stages? They are introduction, growth, maturity, and decline. Some may add other stages in between the four listed, including research and development, abandonment, and revitalization. IntroductionThe introduction stage is often preceded by a research and development stage. For the purposes of the product life cycle stages, we will start from when the product is first introduced to the marketplace. This stage is by far the most expensive stage in a product’s life cycle.
Sales are typically slow, so a company may be bleeding cash until the product hits the next stage. If you want to see if you have a pricing problem and learn how to fix it, then click the button to access our Pricing for Profit Inspection Guide. [button link=”https://strategiccfo.com/pricing-for-profit-inspection-guide” bg_color=”#eb6500″]Download The Pricing For Profit Inspection Guide[/button] GrowthThe next stage is the growth stage, where the company ramps up its sales and
profits. The company will now be able to take advantage of economies of scale, profit margins, and increased profitability.
Companies typically reinvest in this stage to grow the potential. MaturityIn the maturity stage of the
product life cycle, a company will start broadening the product’s audience, use, and availability. It is now able to maintain a consistent market share. A company will
also continue to increase its production and logistics as demand continues to grow. The product becomes more popular during this stage. As a result, a company needs to be more careful in what
marketing. DeclineDemand will eventually decline for a variety of reasons. Some of those reasons may include that there is a better product on the market or there is no need for that product anymore. This decline stage ends in total abandonment. A company usually has three options during this decline stage. Those include:
If the company decides to take option 3, then the entire product line is discontinued. Furthermore, they will liquidate any remaining inventory for that product. What Stage Your Product Is InSo, what stage is your product in? As a financial leader, it is important to know what stage your product is in because it impacts profitability and the company’s value. If you are in one
of the first 3 stages, then it’s time to check your pricing for your products. Are you pricing them to result in profit every single time? If you are not sure, then download the free Pricing for Profit Inspection Guide to learn how to price
profitably.  [box]Strategic CFO Lab Member Extra Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits. Click here to access your Execution Plan. Not a Lab Member? Click here to learn more about SCFO Labs[/box]
DefinitionThe maturity stage of the product life cycle comes after growth, in the concept of the product life cycle. The concept implies that a product, like a living being, progresses through various stages of life. These stages include development, active growth, maturity, and decline. Marketers can use the concept to define the life cycle stage of their product and apply the most efficient marketing strategies for the given stage. By the time a product has reached maturity it has established brand awareness, a chain of distributors, and stable sales. At the same time, competition will have entered the market. The challenges of the maturity stageKeeping sales volumes upDuring the growth stage, sales increased at a constant rate. But by maturity, the market is usually saturated, and the sales stabilize or plateau. They may even start to drop off. For the company keeping sales volumes up is the primary challenge driving all marketing decisions. Maintaining the market shareAs the competition is high, it has become harder to maintain market share. Many manufacturers offer the same product, often, at lower prices. This is when price wars usually begin. Retaining the profitThe product usually makes the most profit during the maturity stage. But it’s also the point at which the sales stop increasing. Marketing campaigns no longer result in any meaningful increase in revenue and they’re often just a waste of money. Marketing ImplicationsMarketing emphasisThe main goal is to prolong the maturity stage, successfully getting ahead of the competition and generating profits. At this stage, the manufacturer can benefit from high sales volumes and produce at lower costs due to economies of scale. During the growth stage, the business would have discovered more efficient, cost effective production methods, helping it to stay competitive and prolong the maturity stage. Through applying the right strategies, it’s possible to retain and even increase the market share during maturity. So which strategies are right? Let's look at Marketing Mix strategy during maturity stage in terms of 4p’s. Product strategyMost manufacturers add new features, at this stage, to diversify the product. They may make changes based on research in the existing audience or among non-users, to find out what would make the product more attractive for them. It’s still important to maintain consistent product quality and maintain the brand’s reputation. Pricing strategyThe prices should match or beat those of the competition. Usually, at the maturity stage, the prices are lower than they were in the previous life cycle. The means of competing on price should be built into the initial pricing strategy. Promotional strategyCampaigns should aim at expanding the customer base. Where a company expands to other countries, they should create localized content. At this stage promotions could target new segments, for example, younger customers or new geographic regions. Distribution strategyThe brand has to maintain distribution channels. Many companies choose to expand to new markets. They must then establish distribution channels in the new locations. While in the growth stage, the distributors would have advocated the company’s products, now they need only sell. The maturity stage is characterized by a peak in sales and a market that is almost saturated.Marketing strategies include diversifying the product, lowering prices, and communicating to a broader audience the benefits of the given brand. What is one aspect that often happens in the maturity stage of the product life cycle?Maturity Stage
Eventually, the market grows to capacity, and sales growth of the product declines. In this stage, price undercutting and increased promotional efforts are common as companies try to capture customers from competitors.
During which stage of the sales life cycle of a product do sales continue to increase?During the shake-out phase, sales continue to increase, but at a slower rate, usually due to either approaching market saturation or the entry of new competitors in the market. Sales peak during the shake-out phase. Although sales continue to increase, profit starts to decrease in the shake-out phase.
What are two key characteristics of the introduction stage of the product life cycle?Key characteristics of the introduction stage are that: start-up costs are high and profits are low. competitors. balances various engineering, manufacturing, marketing, and economic considerations.
What is the marketing objective of a product in stage 2 quizlet?The key marketing objective during this stage is to create consumer awareness and to stimulate trial (or the first purchase) of the new product.
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During the sales life cycle, which is an example of what happens during the maturity phase?
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