While there are many self-evident reasons why market research matters, they all tend to center around one hidden reason: your intuition is not always right. By recognizing these implicit biases, and regularly challenging your intuition, you open yourself up to new business opportunities, and insights about your market + customers that run counter to your gut.
Have you ever seen your parent's old VHS tapes or your brother's CD collection and wondered why they have it when everything is just one click away? Every such instance is an example of the product life cycle.
Every time a product enters the market, it has a lifecycle that carries it from young and useful to old and retired. Most products eventually go obsolete but no one wants that for their product. It's important to understand which stage your product is in for better marketing and strategizing.
In this article, we will discuss the product life cycle including its stages, how it works, and its examples. We will also see how it differs from the BCG matrix.
What is the Product Life Cycle?
The product life cycle (PLC) is the process through which a product is developed, goes into the market, and is ultimately removed. Generally, there are five stages in the product life cycle — development, introduction, growth, maturity, and decline.
The concept of the product life cycle was introduced in 1965 by a German economist — Theodore Levitt. He worked at the renowned Harvard Business School and published his product life cycle model in an article in the Harvard Business Review (1). He pointed out that while product life cycle is a widely-known concept, it was hardly used tactically. In his article — exploit the product life cycle, he said:
“The concept of the product life cycle is today at about the stage that the Copernican view of the universe was 300 years ago: a lot of people knew about it, but hardly anybody seemed to use it in any effective or productive way.”
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Product Lifecycle Stages
Stage 1: Development
The development phase of the product life cycle is where the product journey begins. Before the product even hits the market and generates revenue, companies spend a tremendous amount of money on market research and a product development strategy.
Product development starts with refining the concept, product testing, and designing a launch strategy. Product concept testing at this stage can help you know the consumer’s reaction to the product and gain first-hand feedback.
Companies bring in investors, develop prototypes, test the product's effectiveness, and strategize launch. The goal is to develop a prototype or a product sketch to show potential investors and customers.
The length of the development stage can vary depending on the complexity of the product. For a new product, this stage is usually longer as pioneering a product is more difficult than improving further iterations.
Stage 2: Introduction
The introduction stage of a product is when it’s first launched in a marketplace. It’s a critical time in the product life cycle but your product’s success is not entirely dependent on this.
During this stage, the marketing team is focused on creating awareness about the product to reach the target audience. Most companies spend a great amount of capital on product promotion. When you first launch a product, the stakes and costs are both high as you try to make your place in the market.
An example of product promotion before launch is Apple’s famous launch presentation, which has remained an essential part of its brand for over 20 years. The keynote announces and highlights the new features of their newly-released (or soon-to-be-released) products. After the initial launch, you can use inbound and content marketing to promote the product further.
The length of the introduction stage depends on various factors such as customer needs, product competition, product complexity, and the novelty of the product idea. Launching a new product is generally more difficult than innovating on an old product, which is why many new products fail at the introductory stage. Although, with a great idea and proper execution, you can confidently launch a new product.
Stage 3: Growth
The growth stage of a product starts when the product has made its place in the market and consumers have embraced it. Sales generally increase and the business starts generating revenue. The demand for the product and profit is growing at a steady pace and more and more competitors are entering the market.
Marketing at this stage is as critical as the introduction stage. However, it will be focused more on establishing a brand identity and increasing the product’s market share than trying to grab customer attention. The focus is on showing customers why they should choose your brand over the competitors.
The next important part of growth is expanding. That includes adding new features to your product/service, improving support, and opening new distribution channels. Since competitors will also be entering the market with a similar or improved product, you need to maintain quality while refining the product.
Stage 4: Maturity
The fourth stage of the product life cycle is maturity. It’s when the product is at its peak — the highest point during the PLC. Though you may not be growing rapidly, the production costs will probably decline and sales will stabilize.
During the maturity stage, market saturation may occur and you will run out of growth opportunities. Competitors may have taken a portion of the market and many consumers are using their product instead of yours. The challenge now is to maintain the product’s market position over time and take certain measures to avoid any significant setbacks.
Now that the product has matured, you may be tempted to sit back and relax, but money never sleeps, and neither should you. None of the famous brands got where they are by sitting back.
Take the example of Coca-Cola. Even though they don’t depend on marketing, they don’t leave the media. They know that brands aren’t forever and however popular you are among consumers, you’re always subject to behavioral changes in consumers and market instabilities.
Marketing efforts at this stage are focused mainly on highlighting product individuality instead of creating awareness. If you don’t keep up, you will probably enter the decline stage of the product life cycle.
Stage 5: Decline
When a mature product loses customer interest and its sales start drifting downward, it has entered the decline stage of the product life cycle. Not all products necessarily face a decline stage. Companies can stay afloat by having multiple products at various points of the product life cycle. Generally, product sales decrease in the face of rising competition and eventually lead to product decline.
The most common reasons for market decline include:
Too much competition can often drive a product to decline. The only way to avoid it is by standing out from the crowd and highlighting the individual features of your product. Not adapting to the time is how Facebook led to the downfall of MySpace in the social media market.
Outdated products are another reason for a market decline. If you have a product that is no longer marketable then let it go. It's common for even the most popular products to go into decline because there's a better option in the market. For example, the arrival of DVDs led to the decline of VHS tapes and streaming services did the same thing to DVDs.
Even if you're doing everything right, the loss of customer interest can lead the product to decline. An example of customers losing interest is when Heinz introduced the EZ Squirt colorful ketchup in 2000. Initially, it was a huge success but the product failed as the novelty wore off over time.
Damaged brand image can also lead to a market decline. Mcdonald’s faced this issue when a documentary by Morgan Spurlock — ‘Super Size Me’ showed how the fast food chain’s food affects the health of an average person.
Even though the market decline is often inevitable, there is still much you can do about it. For example, when you notice the decline, your marketing team can foster nostalgia around the product to highlight its superiority over the competitors. You can also discontinue the product, innovate the product, or sell the company that owns the product.
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Product Life Cycle Examples
Product Life Cycle of Coca-Cola
Coca-Cola requires no introduction. It's one of the most popular beverages in the world. Let's take a look at the product life cycle of Coca-Cola and how it went through various product life cycle stages.
Development: there's little known about how the company developed the mysterious formula.
Introduction: the first glass of Coca-Cola was sold by Dr. John Pamberton in 1886.
Growth: within 10 years of launch, Coca-Cola was consumed in all states of the U.S.
Maturity: it's hard to say when Coca-Cola became a mature product but we can safely say that it is considered a mature product up until now. The Coca-Cola Company continues to invest in marketing and launching new products.
Decline: Coca-cola's net operating revenue fluctuated towards a decrease in 2012 but a small decrease is expected in the maturity stage.
Product Life Cycle of The Typewriter
The typewriter was the grandfather of the keyboards still known for the mechanical sound that its keys used to make. Despite being a worthy successor to pen and paper, the typewriter was ultimately replaced by other technologies
Development: the idea of a typewriter has been around since 1575, centuries before the first commercial typewriter was introduced.
Introduction: the first commercial typewriter was introduced in the late 1800s.the late 1800s.
Growth: the typewriter quickly gained popularity and became indispensable everywhere from offices to private homes.
Maturity: for nearly 80 years, typewriters were the tool of choice for typing. After the invention of computers in the 1990s, typewriters faced fierce competition.
Decline: the typewriter couldn’t compete with the latest technology and eventually became obsolete.
Product Life Cycle of a Floppy Disk
Before the era of CDs and DVDs, floppy disks were used to store and share data between computers.
Development: the first floppy disk — an 8-inch flexible magnetic disk was developed by IBM in 1970. It was square-shaped and could store up to 2 MBs of data.
Introduction: introduced in 1971, the floppy disk was soon considered the only way to store or transfer data.
Growth: between 1980 to 1990, the floppy disk became indispensable among computer users.
Maturity: the floppy disk improved over time (holding up to 200 MB of data) and sold well in the markets during the 1990s. At the beginning of the 21st century, the invention of USB cables and external hard drives made it obsolete.
Decline: Hewlett-Packard stopped the production of floppy disks in 2009, leading to a major decline.
Product Life Cycle of Cable TV
If you’re a 90s kid (or older), then you probably remember the days of switching TV channels to find something to watch. While cable TV may seem like something archaic in front of Netflix and Hulu, there are still many who still use it.
Development: in the first half of the twentieth century, cable TV was developed by John Walson.
Introduction: the first commercial TV was introduced in 1950.
Growth: cable TV saw the first hints of success in 1962, and began gaining traction after a long freeze on its development due to regulatory restrictions. By 1980, over 15 million households had cable.
Maturity: nearly seven in tn households had cable as cable TV matured in the 1990s.
Decline: the development of on-demand services and high-definition TV (HDTV) led to the saturation of cable TV at the beginning of the 21st century. It faced a major decline after streaming services like Netflix and Hulu gained popularity.
Product Life Cycle of Electric Vehicles (EV)
Global warming and climate change are no longer the issues of tomorrow, and electric vehicles are one way to bring change. While EVs are generally expensive as compared to gasoline cars, they also leave a smaller carbon footprint. (3)
Development: it’s difficult to pinpoint the invention of electric cars to a specific inventor, but the first electric car was introduced in the 1800s.
Introduction: many inventors in different countries worked on electric cars, and the first EV was built in the second half of the 19th century.
Growth: Currently, EVs are in the growth stage as companies work towards pushing them into the marketplace while making continuous improvements.
Maturity and decline: EVs have not yet entered the maturity or decline stage.
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Product Life Cycle Vs. BCG Matrix
The product life cycle and BCG matrix are similar concepts but relate to different aspects of a product’s performance. (2)The BCG matrix dots down market share and market growth to see how a certain product impacts cash usage and generation. The product life cycle uses sales/revenues and profitability over time.
Named after the initials of the Boston Consulting Group, the BCG matrix AKA growth share matrix includes four stages — Question Mark, Star, Cash Cow, and Dog.
Question marks are products that do not have a market yet but have great growth potential. Stars are top products that generate substantial revenue. Cash cows are the future of stars, i.e. products that have matured and are entering the decline stage. Finally, dogs are the problem products that do not sell well (or generate revenue) and are unlikely to recover.
To put it simply, question marks and stars are products that have the potential to grow and demand marketing investment. Cash cows are close to going obsolete and you must not invest money in them. Dogs won’t recover even with substantial investment.
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How to Get Started with the Product Life Cycle?
Marketers use the product life cycle to customize their marketing efforts for each stage by conducting market research. Managers use the product life cycle to strategize decisions regarding price, packaging, design, market expansion, etc. If you want to use the product life cycle, start by conducting thorough market research and then move towards development.
To start your journey with the product life cycle, Starlight Analytics offers solutions such as product concept testing, price testing, and social listening. The tools help you refine your idea and understand the needs of your potential customer.
Need real-time feedback on your product or marketing idea? Concept testing helps you gauge customer acceptance + willingness to purchase your product before you go-to-market.
