Every invention on the market, from iPads to Snuggies to cheese graters, undergoes a cycle of rise and fall as it is exposed to the market and customers react to the product’s value. A business will use different strategies in order to maximize a product’s potential as it is introduced, gains popularity, and fades over time; the life cycle dictates how best to approach the market following certain benchmarks. Planning with the Product Life Cycle requires marketing, manufacturing, and moving the product in different styles along each phase.
At the very beginning of a product’s life cycle, it will be introduced to the market at a high cost due to low competition, sluggish sales, and a minimum of demand. Except for the rare product that has exceptional hype, few products will provide any real revenue in the initial stages. It is necessary to market the product, with strategies including offering customers the chance to try it for free, comparisons to existing models, and even bundling it together with other products.
While it may take awhile, the life cycle eventually hits the growth stage in which customers begin to be aware of the product (and company) that is putting the item in the shelves. It may not yet be a household name but should see sales increase considerably; the cost may go down slightly to compensate. Other companies may attempt to introduce their own version to compete.
During the maturity stage, a company is experiencing peak profits from their marketing. Sales are high, the costs have fallen, and other companies have introduced their own brand to get an edge in on the success. Planning with the Product Life Style at this point is largely about riding the wave — investment costs are minimal though advertising is still high.
At the end is the saturation and decline, where the product may cost little to make but will end up sitting on the shelves except in certain situations (such as holiday spending or revived interest). Planning with the Product Life Cycle during the decline minimizes expenses for marketing and investments, given the lack of returns. The product may cease to become profitable and can be terminated.