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What Is A Product Life Cycle?
The Product Life-cycle (PLC) is a model that describes the phases through which a product goes based on the sales of a product over the years. This model is useful to assess the kind of marketing mix needed to allow a product to gain traction over time or to avoid market saturation.
Understanding which stages your product might be is critical to understand the kind of marketing mix to utilize to gain as quickly as possible traction and get to the growth stage.
Or if a product is already in the maturity stage, it helps marketers or managers to assess how to prolong the maturity phase and avoid market saturation.
Thus, with PLC managers and marketing strategist can make informed business decisions, by understanding which stage a product is going through. The primary phases of a product life cycle can be broken down in:
In this stage, a company will go through a period of high costs that will be needed to sustain the development and introduction of the product in the marketplace.
At this stage the sales volume is low, the investment costs are high, there is little or no competition, and demand has to be created by prompting customers to get the product.
Growth Stage
A growth stage is characterized by strong sales, reduced costs, but also growing competition. As the public becomes more aware of those existing solutions, more players come into the market.
Usually, to compete in this phase, companies lower up the price of the product or undertake aggressive growth strategies to gain as much market share as possible.
Maturity Stage
In the maturity stage, costs due to investment in the product are generally lower, due to high production volumes and sales volumes. In this stage, though sales volumes also peaked, at the point of market saturation.
When that happens, a price drop might occur due to competing products. Thus, also profits will be squeezed. At this stage what will allow a company to keep generating substantial revenue and retain market shares is branding and differentiation.
Decline Stage
In the decline stage, due to market saturation, sales volume will decline, the profitability keeps diminishing. It is critical that a company gains back its market share.
Product development, known as the new product development process comprises a set of steps that go from idea generation to post-launch review, which helps companies analyze the various aspects of launching new products and bringing them to market. It comprises idea generation, screening, testing; business case analysis, product development, test marketing, commercialization and post-launch review.
In his book, Crossing the Chasm, Geoffrey A. Moore shows a model that dissects and represents the stages of adoption of high-tech products. The model goes through five stages based on the psychographic features of customers at each stage: innovators, early adopters, early majority, late majority, and laggard.
A sales cycle is the process that your company takes to sell your services and products. In simple words, it’s a series of steps that your sales reps need to go through with prospects that lead up to a closed sale.
The sales funnel is a model used in marketing to represent an ideal, potential journey that potential customers go through before becoming actual customers. As a representation, it is also often an approximation, that helps marketing and sales teams structure their processes at scale, thus building repeatable sales and marketing tactics to convert customers.
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.
A go-to-market strategy represents how companies market their new products to reach target customers in a scalable and repeatable way. It starts with how new products/services get developed to how these organizations target potential customers (via sales and marketing models) to enable their value proposition to be delivered to create a competitive advantage.
An entry strategy is a way an organization can access a market based on its structure. The entry strategy will highly depend on the definition of potential customers in that market and whether those are ready to get value from your potential offering. It alls starts by developing your smallest viable market.
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