Product Life Cycle Definition
Product life cycle measures the total lifespan of a product. It begins when a product is first conceived in the development stage and continues through when it first goes to market. Finally, it ends when the product is removed from the market. Product life cycles are broken down into five distinct phases: development, introduction, growth, maturity, and decline. Determining where the product is in its life cycle is important because each stage has its own unique marketing strategy, including different advertising tactics, discount options, and engagement techniques.
A Little More on What is Product Life Cycle
The introduction phase of a product life cycle is where the product is researched and developed. This is the stage where vendors determine if the product is practical and potentially profitable. If the product passes scrutiny, it will enter into production and eventually end up in the market, marking the start of its growth phase. Then, the product will grow until its popularity peaks and it becomes a widely-available mature product. From there, demand for the product begins to wind down and eventually makes the product less desirable, marking the beginning of the decline stage. This progression, from development to decline, encompasses the entire product life span
A product may start the development stage with little marketplace competition. However, competitors will eventually begin to try and replicate the product’s success for themselves. The competitors will grow in number as your product grows in popularity and more businesses pile into the space to get a piece of the pie. As a result, your product may lose market share as competitor products begin to eat into your sales.
Where a product is in its life cycle also affects the way businesses advertise. If a product is brand new, customers need to be educated on what value it can offer, while a product that is further along in its life cycle needs to focus more on differentiating itself from its competitors.
To give you an example of products and their location in their life cycle, consider this. As of 2019, cloud-based gaming systems- like Google’s Stadia – are in the introduction stage, VR systems are in their growth phase, iPhones are in the maturity stage, and DVDs are in the decline stage.
Businesses can gain valuable strategic insights by considering the product life cycle
The major stages of a product life cycle are as follows:
- Research & Development: Starts when a product is first conceived and continues until launch.
- Introduction: The phase where a product is officially introduced into the marketplace.
- Growth: The stage where a product’s sales are increasing at its fastest rate.
- Maturity: Marks the period where product sales growth rates are beginning to slow.
- Decline: The phase of the cycle where sales growth begins to decline.
You can determine where a product is in its life cycle by simply analyzing and comparing sales rates.
It’s in a business’s best interest to extend a product’s growth and maturity phases by as much time as possible. In addition to extended growth & maturity, the decline phase is delayed for as long as possible. To extend the product life cycle, businesses utilize many different strategies, including:
- Advertising: Find a new audience or re-engage with an existing one.
- Price Reduction: Sellers lower prices to attract make the product more attractive.
- Adding Value: Augment the existing product with new features or improve specs.
- Target New Markets: Bring the product into geographical markets or re-release products in way more target to different demographics.
- New Packaging / Branding: Make changes to the product’s packaging or branding.
References for Product Life Cycle
Academic Research on Product Life Cycle
• Entry, exit, growth, and innovation over the product life cycle, Klepper, S. (1996). The American economic review, 562-583. This study measures the effects on product innovation by the number and size of the firms researching the product. The study found that, over time, the process of innovation can be stalled by employing to many resources.
• Stage of the product life cycle, business strategy, and business performance, Anderson, C. R., & Zeithaml, C. P. (1984). Academy of Management journal, 27(1), 5-24. In this study, the author examines variable differences in different stages of the product life cycle. The study found support for the use of PLC as a factor in determining product strategies.
• The product life cycle: analysis and applications issues, Day, G. S. (1981).The Journal of Marketing, 60-67. This study examines the controversy of the managerial usefulness of the concept of the product life cycle. It puts various arguments, both against and for the use of PLC, into perspective so the reader can examine the entire argument relating to the value of PLC more thoroughly.
• Product life cycle cost analysis: state of the art review, Asiedu, Y., & Gu, P. (1998). International journal of production research, 36(4), 883-908. Life cycle engineering has become a commonly accepted practice for optimizing product development and marketing. Life cycle cost (LCC) analysis helps businesses make the most out of their available resources by utilizing them in the most effective way. This study analyzes the pros and cons of LCC analysis and other tools designed to help developers use cost information to help them develop cost-efficient products.
• Product life cycle research: A literature review, Rink, D. R., & Swan, J. E. (1979). Journal of business Research, 7(3), 219-242. This paper has three distinct purposes: review the overall impact of the product life cycle (PLC) on product research & development; identify shortcomings in PLC theory that may need to be further studied and refined; and provide a framework for future studies into the topic.
• Validity of the product life cycle, Polli, R., & Cook, V. (1969). The Journal of Business, 42(4), 385-400. This report examines the product life cycle and studies its effectiveness in predicting real-world costs.
• Evolutionary processes in competitive markets: beyond the product life cycle, Lambkin, M., & Day, G. S. (1989). The Journal of Marketing, 4-20. This paper proposes that the product life cycle doesn’t account for competitive processes that are important factors in market evolution. It demonstrates how population ecology theory can be used in conjunction with PLC concepts to help address these differences and, thus, compensate for the shortcomings associated with product life cycle methodologies.
• A product life cycle for international trade?, Wells Jr, L. T. (1968). The Journal of Marketing, 1-6. This article claims that understanding of the international product life cycle can be used to create policies that will simultaneously increase exports and decrease the effectiveness of import competition.
• The impact of product life cycle on supply chain strategy, Aitken, J., Childerhouse, P., & Towill, D. (2003). International Journal of Production Economics, 85(2), 127-140. The paper emphasizes the importance of the product life cycle to supply chain design, and stresses that supply chains must be engineered with the product life cycle at its core. In an attempt to prove these concepts, the author uses a UK lighting company as a case study to provide supporting evidence to the article’s claims.
• Competing in product and service: a product life–cycle model, Cohen, M. A., & Whang, S. (1997). Management science, 43(4), 535-545. This paper lays out an alternative product life cycle model that examines the impact of strategic choices facing developers as the engineer bundling service plans with a product that will require repair and maintenance support after the sale to the consumer. The study supports the use of alternative product designs that account for the profitability and provision of both product sale and after-sales service.
• Growing, growing, gone: Cascades, diffusion, and turning points in the product life cycle, Golder, P. N., & Tellis, G. J. (2004). Marketing Science, 23(2), 207-218. Product life cycle research primarily focusses on diffusion concepts, but this particular report takes to analyze PLC concepts from a wider, more inclusive perspective by accounting for informational cascade. The study uses this information to develop and test new hypotheses on PLC theory.
• The product life cycle and time-varying advertising elasticities, Parsons, L. J. (1975). Journal of Marketing Research, 12(4), 476-480. This report uses a case study on the history of a household cleaner to model an advertising sales response that adapts to the product’s life cycle.
• The product life cycle: a tool for functional strategic alignment, Birou, L. M., Fawcett, S. E., & Magnan, G. M. (1998). International Journal of Purchasing and Materials Management, 34(1), 37-52. This study proposes an integrated strategic framework that uses the product life cycle as a “common strategic denominator”. The authors use a three-part study on production, purchasing, and logistics to determine the quantitative relationship between various functional strategies and the product life cycle.