There may be reasons you have entered the marketing field as an entrepreneur or a digital or content marketer with no prior institutional schooling in business management. It is what brings you here.
17% of startups fail because of bad product development. You may have a great product in the making, but if you don’t know how the life of any product traverses in any competitive market, you may face some bottlenecks in obtaining desired returns. Product life cycle stages are comprised of four chronological pedestals.
In 1966, Raymond Vernon theorized this concept for the first time. Today, it is widely accepted as the standard tool to estimate the growth and progress of new products. The four stages of product life cycle are:
Therefore, experienced marketing professionals and executives employ numerous variations of this model to make various decisions about their products, such as expanding to new markets, increasing or reducing MRP, increasing or reducing ad expenditure, or even small decisions like the packaging.
In this article, we will describe what these stages are. We will look at various geopolitical and economic factors that affect these stages of product life cycle and how. Let’s dive in.
What Are The Four Stages Of The Product Life Cycle
As a marketer, it is essential to know how a product’s life cycle works. The global markets have a life of their own and so do products. We will see later how you can use this concept to evaluate your own offline and online products and garner better results. First, any product is an idea inside the mind of an entrepreneur or a marketing executive. After a lot of effort, it is launched into markets. From there, a 4 stage journey begins:
It may look like a small step, but when you really think about introducing a product to any market, numerous factors and steps start coming to your mind. Right from brainstorming ideas to market entry, a lot of mental energy and physical effort are involved in successfully launching any product. Some key takeaway from the introduction include product development lifecycle stages, substantial advertisement expenditures to create awareness and first customers, launch events (alpha phases/beta phases and what not), free positionings, etc.
However, this phase can also be broken down further. Starting from a mere idea to the first unit sold, we have seven different stages:
Product Development Lifecycle Stages
#1 Generating and Brainstorming Ideas
This stage is quite fun and involves more mental than physical effort. You collaborate with your teammates and brainstorm various ideas about a central theme. The aim is to jot down all those ideas that seem interesting. During this stage, you can keep various marketing aspects in mind, including:
- Focusing on customer problems in your sector/niche
- Identify problems that you can solve
- All possible profitable solutions become viable ideas
#2 Screening Ideas and Finalizing the One!
After you have a set of final ideas, the next step involves evaluating them over various factors and choosing one that can bring maximum success to your enterprise.
This stage involves tricks like competitive analysis and SWOT analysis to estimate how this final idea could fare when finally launched. The first proof of concept is developed in this stage. Seasoned development and marketing teammates must come in at this stage and give their input. After final approvals, the shortlisted POC goes into the first round of development.
#3 Developing and Testing The First Proof of Concept
Now you need to develop a full-proof viable product. The concept needs to be developed and tested. This product life cycle stage involves processes like:
- Developing a potential customer profile
- Analyze benefits to the consumer against costs involved
- Spy on the competition and similar products along the lines of your idea. Ponder if you can do better and how!
- Define your product with precise features
- Establish the Unique Value Proposition between product and end-user
- Form sets of test audience based on potential profiles
- Deploy to test audiences and gain feedback
#4 Developing Market and Pricing Strategy: Potential Business Analysis
This stage requires a lot of business expertise and experience. A thorough statistical analysis will allow you as a marketer to launch a distinguished product to customers with maximum chances of success. Various processes in this stage include:
- Finalizing product design, pre-sales and after-sales service points, and branding strategy.
- Finalizing pricing range, discount options, and payment methods to improve customer accessibility. You could employ various pricing models like cost-based pricing, market-focused pricing, etc.
- Deciding on marketing and promotion channels, budgets, and ad implementation.
- Finalizing product placement as in what distribution channels to use and the geographical extent of introductory placements.
#5 Final Product Development
This stage embarks on the product’s first mass production possibilities. Prototypes are used to develop the MVP or minimum viable product. Feedback from test audiences is used in this stage to give the MVP final tweaks and keep the testing ongoing till maximum acceptance is established.
#6 Product Deployment
Now you have perfected your MVP. It’s time to begin testing in live environments. A limited number of areas are selected for the pre-rollout. Alpha deployment begins. It is the first time you generate feedback from unaware test audiences from potential markets. This feedback leads to more tweaks and then Beta tests.
After a couple of rounds of successful tweaks, the product is ready for mass deployment and the next stage: market entry.
#7 Market Entry
It is the final stage in introducing a product to consumer markets. All your stages have yielded good results, and now you tap your distribution channels on one hand and marketing channels on the other.
In a nutshell, this is the birth phase of your product into a new and unknown world, with a few certain attributes and some to be gained along its journey.
Your advertisements begin, and consumers begin to know your product. If everything goes right, a unique brand voice and image will start to form.
Successful introduction of any product leads to increased demand and popularity.
A perfect example of a successful product launch is none other than the launch of the first Apple iPhone by Steve Jobs. The product has become a global image of trust, brand value, and customer satisfaction, garnering billions in sales globally.
The right branding and storytelling attract new consumers and push outdated products out of the market. As the demand increases, the cost of production will decrease, and so will the cost of marketing, and repeat customers will create brand recall.
With increased popularity, your toddler product is no more a mere fresher. It will now move into the next phase.
A successful product will enjoy stable growth and profitability for a certain amount of time, and the graph will continue to go up. This phase is the growth phase. There is not much new that is done in this phase. However, standard business practices must be maintained to ensure balanced growth. These will include:
- Consistent but reduced ad expenditure due to rising demands
- Expansion leads to increased profitability by emulating developed strategies in similar markets
- As manufacturing increases, the cost of production will decrease, increasing profit margins
- The first round of competitors will show up but will take time to replicate your product at a lower cost successfully
- Consistent brand marketing and storytelling will establish permanent brand recall with customers.
How long the growth phase will last depends on various factors. These include the efficiency of your advertising, events that could change your brand’s image, and your thirst to keep working to stay ahead of your competition. If everything goes well, you will give a linear graph until you reach maximum profitability levels. These usher in the next stage in our 4 stages of product life cycle.
There will come a time in your successful product’s life when the linear growth you were enjoying starts to bulge parallelly as time progresses. It essentially means that:
- You will reach a minimum level of production cost as demand maximizes. However, further reduction will not be possible as your suppliers also need minimum margins.
- This will lead to profit reaching a certain level and then remaining at that level from then on.
- Peak consumer awareness will allow new competition to start rising slowly
- Furthermore, advertising will continue to increase to withstand increasing competition and may lead to the forthcoming stage, the most detrimental one in a product’s career. One that can also lead to its death!
Most successful products often stand the test of time and reinvent themselves when their maturity phase is about to expire. A great example is Maggi Noodles, which managed to grow in India and other countries and enjoy a majority market share despite tough and increasing competition from new brands in the last decade. Other examples include IBM, General Electric, and AMUL.
One more company that deserves mention here is Mitsubishi. Having its origins in the 1870s, the company has reinvented itself many times through 2 centuries. It has come far from being a ship manufacturer to local merchants to a global billion-dollar conveyance manufacturer.
However, many products and companies pay their dues and enter the next and final phase of any product life cycle.
Out of the 4 stages of any product cycle, this stage is most unwelcome by any marketer or businessman. There can be many reasons for the decline of your product:
- It may simply become out of date or out of fashion. Kodak cameras, Floppy Disks, DVDs, music players, radios, etc., all fall under this category.
- Too much market penetration by the competition: Newer technologies coupled with market forces may start offering to differentiate versions of your product, making aware customers more attracted. A great example, in this case, would be Orkut or myspace. These social media networks enjoyed massive popularity. However, Facebook’s features made their differentiation history!
- Loss of customer interest over time. This happened with bell-bottom pants.
- Damaged Brand Image: This happens dues to a sudden event that may or may not be in your control. For instance, WeWork had become a great example of the power of individual brand image right up until 2019. Adam Neuman made people believe coworking was the life to embrace.
From coworking, the brand went into expanding in the wellness and hospitality space. However, when the SEC audited their IPO filings, the revelations led to the founders’ resignations! Today, its image has been permanently tarnished.
In the event of product decline, the company leadership may take different recourses. Many times, reinventing the brand statement laced with adapting the product for newer demands may lead to a bounce back, and one may again enter the growth phase.
Other alternatives might include:
- Differentiating or variegating the product line like launching new flavors or new designs or redesigning the packaging.
- Trying new pricing strategies like deep discounting, cashback and offers, etc.
- Upgrading designs to cater to updated consumers
However, sometimes, no matter the recourse, the product whose time has come due will have to go. Another example here is Meru and Mega Cabs. They enjoyed almost no competition in the cab-hailing space in Indian metros for almost a decade. However, ride-hailing apps like Uber and Ola revolutionized the space in such a manner that these former players had no time to react.
In the end, the four stages of product lifecycle must be efficiently managed. The best marketers and managers are prepared for anything, even knowing when to throw in the towel and start afresh!
Factors Influencing The Four Stages of Product Life Cycle
While there are many internal factors that you can control 100%, external factors also influence the life of your product. Let us briefly explore them below:
#1 Barriers of Entry in your Choice of Market
- If your market is too saturated with competition, the spending to penetrate this market will be high.
- On the other hand, a new market with less competition and restrictions will be easier to penetrate.
#2 Technological Disruptions
- The advent of android went so viral that Nokia transformed into an outcast from a market leader.
- Kodak lived in denial and didn’t prepare for the digital era. It didn’t even try to adapt.
- Facebook killed all other social media when it was launched.
- Modern technology is making print media obsolete day by day.
#3 Market Acceptance
- A market with tastes similar to your product is more likely to give it speedier acceptance.
- However, if you launch a messaging app on a tribal island, it’s doomed to fail!!
#4 Other Eco-Political or GeopoliticalGeopolitical factors
- For instance, currently, thinking about launching a product in Russia or Ukraine would not be a profitable idea.
- A good economy far away from any looming recession will have good public spending and thus reduce introduction time and boost growth/maturity.
- However, a closed or recession-struck economy will require higher financial and marketing efforts to make any ground.
Advantages of Successfully Managing the 4 Stages of Product Life Cycle
Most successful products have extremely visionary marketing leadership backing them up. They will enjoy most of their life in the maturity stage. Whenever a crisis looms over, it will be predicted, worked on, and eradicated through design updates, brand re-invents, and technological differentiation. There are numerous examples of such successful brands and their prolonged maturity:
- Apple Computers, MacBooks, iPhones, and other accessories
- Mcdonald’s diversified franchise models and menus across the globe
- Coca-Cola’s more than century-old but always evolving youthful brand image
- Fords market presence in the United States (However, its decline and exit from the Indian market shows replicating strategies doesn’t always get the same results)
Therefore, experienced and efficient product life cycle management can allow the simplest of goods to become profitable for generations! It is because such management practices have the following advantages:
- Decisions are based on exhaustive information and historical data
- ROI is maximized in the introduction and growth stages, providing a cushion for later events
- An overall increase in company profitability
- Maintain connection with customers and make them long term
- Maintain strong and long-term brand image, evolving with the times
When managed inefficiently, problems start popping up. These may make the product not live up to its potential and lead to reduced shelf life, heavy losses, stuck inventories, and an early decline.
We hope you are familiar with the four stages of product lifecycle. Each product or service across any sector can be evaluated using these stages. You can pair this knowledge with business and data analytics to develop product projections with substantially higher success chances.
Even if your product is already in one of the stages, you can use this newfound information to tweak existing strategies and concepts and formulate journeys that don’t end in decline. All the best!