What is the product life cycle? Strategies for each stage

Your product has a much better chance of breaking out if you understand its life cycle. For any business that wants to grow sustainably, it pays to know when a product is rising and when it is fading. What is the product life cycle and which marketing strategy fits each stage? We answer both MONA Media in the article below.

What is the product life cycle?

The product life cycle (Product Life Cycle) is also called the product lifespan. It covers everything a product goes through, from launch to of work – growth, – saturation – and decline.

It also shows how a product and its customers interact at different points after launch (sales volume, reach, level of competition and so on).

Because of the useful information that the product life cycle provides, many businesses now study and forecast their products' life cycles so they can make the marketing strategy right decisions.

How the product life cycle works

Before a product goes on the market, it goes through careful design, research and development. Only when it looks profitable and fits the needs of the target customers does a business start producing and promoting it. That is the moment the product's life cycle officially begins.

The stages of the life cycle shape how a product is marketed to consumers. A successful launch raises demand and popularity, and pushes older products off the market.

Why the product life cycle matters

Managing the product life cycle brings several important benefits:

• Better decisions for sales and marketing plans at each stage of the life cycle.
• Better return on investment (ROI) once the product is on the market.
• Marketing messages adjusted to stay connected with the target audience.
• More appeal and stronger customer loyalty.
• The highest possible profit for the business.

A business that does not manage the product life cycle well will run into problems such as:

• Products that do not match real market demand.
• Excess inventory.
• Higher costs for researching and producing new products.
• Lost revenue and profit.

The 4 stages of the product life cycle

From the consumer's point of view, there are usually 3 stages that are easy to recognize: Launch – Everywhere (you see the product in every home and every shop, and so on) – Gone (rarely seen, or gone completely)

However, For business owners, the product life cycle is divided into 4 stages. How long each stage lasts is not fixed; it depends on the nature of the product.

Stage 1: Product launch

Product launch is when a business finishes the last details of the product and puts it on the market. At this stage most customers do not know the product yet.

So in this stage the business needs to promote the product actively, sharing information and images on social media, mass media, KOLs and other channels, to build brand awareness among the target customers.

Note that the product moves to stage 2 quickly if stage 1 ends early. How early depends heavily on the promotion strategy.

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Stage 2: Market coverage and growth

Once stage 1 is behind it, the product's life cycle moves into the coverage and growth stage of the market.

In stage 2, the business can see clear growth in revenue. The more customers who got to know the product in stage 1, the more successful stage 2 will be.

The business can consider cutting advertising spend to focus on sales strategy such as expanding the market, scaling up production and finding distributors for the product.

Stage 3: Market peak and saturation

At this stage we no longer see the strong growth of the previous one. At certain moments you may even notice a clear slowdown, and the numbers can start to fall.

The reason for this saturation stage is that customers already know the product very well, the target audience has been fully tapped, and new customers are hard to attract.

This means competition between products on the market is rising. Sellers who hope to keep results steady have to spend a lot. Otherwise the product moves quickly into decline.

Stage 4: Market decline

No product can avoid the decline stage. This is probably the moment when businesses are most likely to be caught off guard.

Example: Your product piles up in large quantities of stock, the expiry date is close and you need to cut losses fast. Worse, it can lead to losses and a crisis at any moment if your business does not find a new strategy for the product.

It is not hard to see why. The market keeps changing, and every hour many new products appear. Consumers have far more choices, and your product no longer draws the attention it did at the start.

This is an extremely hard stage. Business owners need vision and the ability to get ahead of trends if they want to give the product a new life cycle.

What a business should do at each stage of the product life cycle

Introduction stage

When a new product launches, sales are usually low and growth is slow because the product is still new and being tested. The business therefore needs to put its resources into marketing strategy and into getting customers to try the product.

The key goal of the introduction stage is wide recognition and encouraging consumers to try the product. Marketing should target customers who like new experiences and are likely to buy the newest products.

Two strategies work at this stage:

• Price skimming: Set a high price at first and lower it over time.
• Penetration pricing: Set a low price to enter the market quickly and win market share, then raise the price as the market grows.

Growth stage

If the product develops well and meets market demand, it enters the growth stage of its life cycle. Sales usually rise sharply here, a sign that consumer demand is climbing. Competition is fierce at this stage, though, because rivals may launch similar products with improvements. The business should consider cutting advertising spend to focus on sales strategy: production, expanding the sales market and finding distributors.

Saturation stage

The product has secured its position on the market, so production and marketing costs come down. The market is saturated, retailers no longer promote the product and only take orders. To hold on to market share, the product needs a reasonable price and something that sets it apart from competitors. The strategy includes strengthening brand identity and customer loyalty, highlighting what makes the product different, and running more promotions and after-sales programs to stimulate demand.

Decline stage

In the decline stage, indicators such as revenue, profit, new customers and the return rate of existing customers fall sharply, because substitute products meet customer needs better.

Businesses can apply the following strategies for this stage of the life cycle:

• Cut marketing costs and get the most out of the product's remaining life.
• Narrow down and drop distribution channels to reduce upkeep costs.
• Run several big clearance sales and recalls.
• Research and plan the launch of a new product.

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How to extend a product's life cycle

Pay attention to advertising and packaging

Always review how your ads are built and how your product looks, by:

• Identifying the target customers.
• Fine-tuning the message and packaging, and aiming them at different customer groups, to raise sales and refresh the product's image.
• A product or brand can be revived by changing its message and packaging and by aiming at different customer groups.

Although costly, campaigns on television, social media and the internet, and other advertising tools that reach customers, can introduce your product to potential customers new audiences and remind existing customers why they like it.

Price and specifications

To raise the value of your product, you can review the features and price of the current version. Then you can lower the price or add new features to make it more attractive. To keep the product from feeling dated, run customer surveys regularly to hear feedback and improve the product in the direction customers want.

New markets and platforms

For a product to last longer, you need to find new markets or new platforms. For example, Netflix moved from a DVD rental service to become one of the largest streaming platforms in the world. As technology develops, distribution platforms change too. If your product can adapt to these shifts, you can extend its life by many years.

Quality

To meet customers' needs and expectations, we can improve product quality in many ways. One of them is to make the product stand out through new technology, design, features or added value.

We can study and adopt the latest technologies so our products get better and meet increasingly varied customer needs. We can also add new features or improve existing ones to make the product more appealing.

Marketing strategy for each stage of the product life cycle

To stay in control of revenue, sales and production, business owners need a marketing strategy that fits each stage. Here are strategies you can consider.

Stage 1: Choose a suitable strategy

Choose 1 of the 4 strategies below, depending on the product and what you are able to carry out.

• Set a high price and run promotion, with a strategy and product message that match the price, to convince the target customers to trust the product.
• Set a high price and run regular advertising, PR and viral brand activity to reach customers.
• Set a low price and run lively marketing activity to push the product into the market.
• Set a low price and spend little on marketing Marketing, so the product slowly enters the market on its own.

Stage 2: Set the strongest business strategy

At this stage, businesses need to focus on coming up with a business strategy that drives revenue while keeping operations running as well as possible.

• Expand the sales area to sell more of the product.
• Keep looking for ways to improve quality.
• Find more quality channels that can distribute and sell the product.
• Researching competitors so you can benchmark and adjust the product's price when needed.
• Focus on building trust, reputation and brand image.

Stage 3: Change the strategy

Of the 4 stages in the product life cycle, the third is where a business has to make changes and breakthroughs to keep the product effective.

• Keep strengthening the brand
• Change the marketing strategy: this helps customers see how your brand's product differs from similar products from other brands on the market.
• Run more promotions to stimulate demand and step up customer care.
• Change the product's design or quality, and so on.

Stage 4: The end of a product life cycle

In this final stage, indicators such as new customers, revenue and the return rate of existing customers fall sharply. The business then needs to take its products off the market.

• If you can, keep improving the product, or you can leave it as it is. Either way, you need to balance things so that leftover stock is as small as possible once you decide to withdraw from the market.
• Run promotions, recalls and clearance sales to sell off all remaining products.
• Narrow down and gradually drop distribution channels to keep upkeep costs as low as possible.
• Come up with ideas and a detailed plan for the next product.

Things to know when applying the Product Life Cycle

Change when needed, don't be stubborn

To extend a product's life and avoid decline, we need to keep up with the latest changes in the market and survey customers and competitors. This information helps us adjust the product, price, distribution and advertising to each stage and meet customer needs as well as possible. We also need to keep researching and developing the product to stay competitive.

Invest time in analyzing the product life cycle

This is one of the key points that helps a business understand how its product develops on the market. The analysis shows customer behavior and needs, so the business can make decisions and strategies that fit each stage of the product on the market. By applying product life cycle analysis, a business can optimize profit and compete better.

A business can also forecast market trends and demand. From there it can adjust the product, price, distribution and advertising to each stage of the product.

Businesses have a big influence on the product life cycle

The business decides when a product is launched, improved or replaced by a new one. It also decides the marketing strategy for the product, including price, distribution and advertising. The business also invests in research and development to make the product different and new.

Product life cycle examples

Nokia

The Nokia 1100 was a simple, durable mobile phone made by Nokia from 2003 to 2009. Its life cycle had 4 main stages:

• Introduction (2003): The Nokia 1100 launched in 2003 with a low price, easy use and long battery life to serve the markets of developing countries. Sales were slow in this stage.
• Growth (2004-2005): The Nokia 1100 became well known and trusted, and turned into one of the best-selling phones in the world, with more than 200 million units sold. Nokia also added a few features, such as a flashlight, a loudspeaker and ringtones.
• Saturation (2006-2007): The Nokia 1100 was no longer the only choice for users and faced fierce competition from other makers such as Motorola, Samsung and LG. Sales declined gradually.
• Decline (2008-2009): The Nokia 1100 could not meet the needs and wishes of modern users and was seen as outdated. Sales dropped sharply, and Nokia stopped making the 1100 in 2009 to focus on its smartphones.

Coca Cola

Coca-Cola is a carbonated soft drink brand famous around the world. Its life cycle has 4 main stages:

• and campaigns: Coca-Cola launched in 1886 in the United States, then expanded to other countries and invested in brand promotion, building a distribution system and creating demand for the product. Sales were low in this stage.
• Growth: Coca-Cola grew strongly from the 1900s and became one of the leading soft drink brands in the world, with more than 3,300 different products. Coca-Cola also added variations such as carbonated and non-carbonated, with and without caffeine, with and without vitamins, and so on.
• Saturation: Coca-Cola began to saturate in the 2000s, when the soft drink market had newer, more modern and more varied products. Sales declined gradually and profit fell too.
• Decline: In recent years Coca-Cola has entered a decline stage as the soft drink market moves toward health and natural trends. Coca-Cola had to cut prices, offer discounts and adjust its marketing strategy to create new products that fit current trends, such as Coca-Cola Zero Sugar, Coca-Cola Life and Coca-Cola Plus Coffee.

Vinamilk

Vinamilk is a well-known dairy brand in Vietnam. An example of the Vinamilk product life cycle can be divided into 4 main stages:

• and campaigns: Vinamilk launched in 1976 under the name State Dairy Company, facing many difficulties with raw materials, equipment and infrastructure, and competition from imported products. Sales were modest because consumer tastes were still limited.
• Growth: Vinamilk became one of the leading dairy brands in Vietnam, with product lines such as fresh milk, yogurt, powdered milk and condensed milk, with better prices, quality, design and identity than competing products.
• Saturation: Vinamilk faced fierce competition from other brands such as TH True Milk, Nutifood and Dutch Lady. Sales declined gradually and profit fell too.
• Decline: Vinamilk cut prices and offered discounts to attract customers and keep sales up, as many consumers switched to non-dairy milk, nut milk and plant-based milk to avoid the downsides of hormones, antibiotics and preservatives.

Frequently asked questions about the product life cycle

1. What are the benefits of understanding the product life cycle?

• Better decisions for sales and marketing plans at each stage of the product.
• Better net profit per dollar invested (ROI) once the product is launched.
• Marketing messages adjusted to stay connected with the target audience.
• Applying the product life cycle brings profit faster, creates a competitive advantage and supports sustainable growth.

2. Which factors affect a product's life cycle?

Many factors affect the product life cycle. Here are some common ones:

• Technical factors: features, quality, design, warranty and repair of the product.
• Market factors: customer demand, preferences and buying behavior.
• Competitive factors: the number and quality of similar products on the market.
• Legal factors: laws on consumer protection, environmental protection, intellectual property protection and so on.

3. Does every product on the market go through a life cycle?

Not every product goes through all 4 stages. Some products can extend their life through improvement, innovation or a change of marketing strategy. Others can be pulled from the market right after launch because they fail to meet customer needs or cannot compete with other products.

That is why a business needs to understand the product life cycle, so it can make sound business decisions and get the most profit.

From this article we can see that the product life cycle the product life cycle is the lifespan of a product, from launch – growth – saturation – decline. We hope the information above MONA Media from MONA helps you understand the stages of the product life cycle and choose the marketing strategy that suits you best.