How A Product Life-Cycle Influences Marketing Activities

Various stages through which a product passes during its lifetime are termed as product life-cycle. It includes introduction, growth, maturity, and decline. The time period involved varies from product to product, ranging from months to centuries. 

 

David Sklaver — Senior Marketing Manager

The following characteristics and strategies are associated with different stages.

Introduction

This is often considered to be the riskiest and the most critical stage of the product life-cycle.  There are numerous teething problems to be tacked which may lead to the collapse of a new product at an early stage. Tough competition, lack of relevant knowledge, experience, unfavorable government laws and unpredictable consumer behavior are a few issues that must be taken seriously by a company, especially at the introductory stage. Sales are low in relation to costs. Profit is usually non-existent and typically businesses pursue the objective of survival at this stage. It is important for a business to use aggressive advertising as the product is launched in order to ensure that primary demand is created. Informative advertising is an advertising technique in which all the salient features of a product are highlighted so that it can be introduced to the customers effectively, it is recommended at the introductory stage. This should be coupled with an appropriate pricing strategy so that a positive consumer response can be triggered. Skimming strategy is usually used for luxury items and penetration pricing strategy is used for fast moving consumer goods.

Growth

This stage is characterized by an increase in the market share due to a favorable response of the customers towards the product. Now the company is in a position to enjoy multiple benefits. Profits indicate an upward trend and product has managed to find a good-hold in the new market.

Maturity

Maturity indicates that the sales have leveled off and even though the company is generating a substantial amount of funds and profit through the sale of this product, there is no significant growth. There is an established brand loyalty.

Decline

Decline describes the alarming situation characterized by a reduction in sales, market share, and profit. Customers start switching to better substitutes available in the market. Low sales lead to a decrease in the production level.