How to Use the Product Life Cycle to Expand Your Products’ Life

How to Use the Product Life Cycle to Expand Your Products Life

The product life cycle is a concept that can be applied to products and services to improve your innovation system.

This concept claims that there will always be the birth and death of a product or service. Between these two processes, a product goes through the remaining stages. However, nowadays, even the most innovative product rapidly gains competition.

📖 Key takeaways

  • Product life cycle is an important concept, especially for today’s global competition, where we are witnessing as much shorter life cycles of the products as possible. So, having a product life cycle strategy in place will impact your company’s future success.
  • The product life cycle will drive many activities inside your company, from market research and marketing strategy through manufacturing capabilities to launching and managing innovative products on the market.
  • Generally, you can use four different strategies to expand the product’s life cycle: introduce a new product before the last chance for replacement and market positioning strategies like reverse, breakaway, and stealth positioning strategy.

What is the Product’s Life Cycle?

product life cycle definition

Product life cycle stages involve observing product sales trends to identify a distinct pattern. Additionally, the stages of a product’s life cycle are similar to those observed in the life cycles of living organisms. This analogy with biological life cycles may help us understand why products behave in certain ways in different cycle stages.

So, this concept is based on the idea that products, like living organisms, go through birth, growth, maturity, and decline stages. 

The first researcher to define the product life cycle concept was Robert D. Buzzell in 1966 (“Competitive Behavior and Product Life Cycles.”), whose definition is still widely used in scientific circles today. He defines this concept as “a generalized model of the sales trend for classes or categories of products in a certain period of time and the related changes in competitive behavior.”

The product’s life cycle explains its journey from its introduction to the market until its elimination. When enough information about the product or a similar one and the target market is available, the life cycle can serve as a forecasting tool. In the current context, the product life cycle’s significance lies in its ability to serve as a constant reminder of the inevitability of change.

Product Life Cycle Stages

The most popular concept for the product lifecycle is one consisting of 4 stages: (1) introduction of the product, (2) growth, (3) maturity, and (4) decline. Each stage has specific characteristics and strategies that your business can utilize to maximize its product’s success.

product life cycle 4 stages

However, this concept is debatable since some stages are missing. Before the introduction stage, there should be a stage of product development. Also, after the maturity phase of the product life cycle, there is usually a long stage of stagnation. This is actually when the product is in its position during its lifecycle.

Finally, although the product’s decline might last long, it should be ended by the decision to stop producing it, which the last stage can represent: elimination.

The extended concept of product lifecycle consists of 7 stages:

  1. Development stage,
  2. Introduction, or product launch stage
  3. Growth stage,
  4. Maturity stage,
  5. Stagnation stage,
  6. Decline stage, and
  7. Elimination.
product life cycle

During these exponential times of change, the product life cycle continues to become shorter and shorter. Having innovative and creative people capable of rapidly developing new products, services, and processes becomes a primary imperative for success.

1. Product Development Stage in the Product Life Cycle

Companies must constantly introduce new products due to rapid technological development and stronger competition. As a result, new products fail shortly after launch, have a shorter lifespan, and are replaced by new products. This presents two main challenges: 

  • to speed up new product development (Time to Market) and do it within the budget 
  • to ensure a successful initial product launch.

However, it’s important to mention that you can not expect a perfect prediction that will be 100% true. To be honest, no market research technique can guarantee 100% accuracy in predicting how the target market will respond to a new product.

So, suppose you succeed in launching a not-so-perfect product based on conducted market research. In such a case, you can quickly and effectively respond to customer reactions and feedback, and you may outperform a “perfectionist” company that takes much longer to get to the market.

Look at these two case scenarios regarding the new product development stage in the product’s life cycle. As you can see, the product development time is t1 in the first case and takes much longer (t2) in the second case.

In the first case, we have a shorter time to market to make fewer losses. We will also quickly collect customer feedback and make necessary improvements before competitors launch their similar products. This can give you a significant advantage in terms of sales and market share.

So, instead of striving for perfection in one go, consider launching an initial version and getting feedback to continuously improve the product’s performance according to the target market’s needs.

Product life cycle examples - Time to Market

For example, do you remember the first iPad, released in 2010, which was a great success, with many people wanting to experience its convenience and functionality? However, the life cycle of the first generation is quite short because it was withdrawn with the release of the second generation a year later. More importantly, the second generation has become the model for the next generation regarding design and technology.

The development represents the end of dreaming, the end of entrepreneurial imagination for something that does not yet exist and will change the target market’s life, and, of course, a phase before the official launch of that product and/or service on the market.

However, in this case, the process of generating ideas must also be part of the development phase. Here are some questions you must respond to during this stage:

  1. What is the need for our products and/or services?
  2. How long will that need last?
  3. What would the demand for such products and/or services be?
  4. What technology is currently available?
  5. Does the idea have potential?
  6. Is the idea practical to implement?
  7. Will the target market accept it?
  8. Can it be produced with current capacities?
  9. What will be the rough ROI?

After responding to these questions, you can continue with concept development and testing. Then, you will continue with product development and testing. We are already at the stage where the prototype should be ready and tested. In this step, practically all technical aspects of the product and/or service are ready, and all aspects, like production and manufacturing costs, are checked during the production of the prototype.

Making noise will slowly introduce you and prepare you for the next phase, the launch of the new product. This means you must slowly release information about the new product to the market. The goal is to raise the interest of the target market.

The last step of this product life cycle stage is the production of the product.

2. Introduction or Product Launch Stage

A new product’s introduction or launch stage (sometimes called market introduction) is the most critical part of the product life cycle. The rest are important, but successfully launching a new product on the market is a solid foundation for success.

If the product can survive its infancy, it will have a reasonable life cycle and an acceptable return on investment. It is also important to mention that the more disruptive the new product is, the more significant the resistance will be and the longer it will take to accept it.

A large part of a successful launch is covered in the development phase by testing the new product with early adopters and getting the buzz about it.

Any manager’s goal when introducing a new product to the market is to succeed in making potential buyers desire to purchase it. However, the successful completion of the previous phase of the product’s life cycle is necessary, especially those steps that lead to preparing for starting this phase.

If we look at the sales quantity and the product’s profitability, we can see that sales growth at the introduction phase is slow, and costs are higher, so you will still lose money at this stage.

It is safe to say that this phase will immediately answer the question of whether that product will be successful.

3. Growth stage or Market Growth in the Product Life Cycle

When we come to the growth stage, it is a rapid growth period because sales and profitability start to grow rapidly. At this stage, the company starts to profit from the newly introduced product on the market.

The growth phase is a sign that the product is successfully living its childhood and has successfully completed the previous two stages. When the product survives the introduction phase, characterized by slow progress, it will enter a period of high market growth.

This stage is characterized by customers who have bought the new product, who expose it to be seen with it, or talk to everyone close to them.

In the growth stage, purchasing resistance is drastically reduced, resulting from all the company’s previous activities.

But it’s not time to relax yet. Rather, in business, we can never relax. The initial success will not go unnoticed by the competition. Soon, the competition will enter the market with similar or substitute products. So, you must constantly monitor the sales, prices, demand, and, of course, the possibility of delivery of the demanded quantity.

The growth stage is always interesting for competitors. It is a sign that a market has already been formed and that it will be possible to penetrate it. Therefore, you must start thinking about incremental improvements and new, improved versions of the product to maintain the initial sales growth and maintain the business’s profitability at a high level.

4. Maturity Stage

At the maturity stage, sales start to normalize because of market saturation, but still, this is the most profitable period of the product life cycle.

During this market saturation, the growth rate decreases, and sales stabilize at a certain level.

This phase of the product life cycle is the longest in duration.

When a product enters market maturity, it means that the market’s growth is already at a low level, but the product’s participation is huge, so the biggest cash flow for the business comes from that product. On the other hand, the profit margin is slowly but surely decreasing.

There are several reasons for the decline in profit margin, but the most logical and obvious are the following:

  • Increasing competition
  • Increasing research and development costs in response to increased competition
  • Reducing the profit margin to remain competitive
  • Increasing marketing costs because of increasing marketing efforts to reach other new markets
  • The product is no longer the new and last word of technology

As you can see, instead of reducing profit margin, you can work on improvements that will keep production costs low to stay competitive in the market.

At the end of this stage, we can start noting that sales slowly start to decline, which tells us it is time for the next stage of the product life cycle, the decline stage.

Every business tries to prolong this phase as much as possible, especially because the product is its biggest source of finance. After the initial increase in competition and reduction of the profit margin, the market is no longer interesting for new competitors.

5. Stagnation stage

Stagnation, as one of the product life cycle stages, is actually a continuation of the previous stage. This means there will be no more growth, and sales will be at a constant but still sufficient level because no big decline has started.

At this stage, the initial euphoria about the product has stabilized, and the most successful ones serve a large part of the market. The market is governed by the 80/20 rule or the Pareto principle—20% of companies satisfy 80% of the market, and 80% of specialized companies satisfy the remaining 20% of the market.

The main war here is to increase market share. Every business’s goal is to have as much share as possible because, in such a situation, the one with the biggest share will have the biggest profit.

Prices are relatively stable, and there have been no major fluctuations. Simply, companies are trying to get as much as possible from that product at the current price.

Competitiveness is not based on pricing strategies. New players do not try to compete on price because they know that price is the biggest weapon in the hands of the leading companies. That is why smaller companies will try to compete in a specialized market niche, meeting the specific needs of a small percentage of consumers.

Understanding how future customer needs will change is an important element of this phase, especially for engaging in future product development or starting a new product life cycle.

Stagnation can be the greatest reward for a business’s success, but it can also be one of the greatest punishments. It is characterized by enormous marketing efforts to maintain the position secured in the previous phase of the product life cycle. However, that product is in an industry or market with no growth opportunities. Therefore, all higher costs can affect the profitability of the product.

The product is in its most advanced phase in the stagnation phase. No further improvements are expected, which is normal when we know that demand and sales will soon begin to decline.

6. Decline Stage

At the decline stage, sales quantity declines rapidly, significantly impacting profitability. After some time, when the product is at this stage, the company will lose money, or this product will start to bring losses.

The product’s life cycle’s market decline stage represents the first sign that we should prepare for the elimination stage.

Why the decline now?

As time passes, customers’ interest in a product will change because of changes in needs, thinking, and the environment. All this affects the appearance of many market niches that will be led by small business entrepreneurs, who will slowly but surely start to split the market into smaller parts.

Managers resisting the status quo in the market and, for a long time without any major innovations, will bring completely new ideas that a certain group of buyers will slowly but surely accept.

Because of those new ideas through alternative ways to satisfy customers, sales will begin to decline, and a product will enter the decline phase of the product life cycle.

Characteristics of this phase are as follows:

  • Decrease in sales. The first characteristic is decreased sales of that product and/or service due to customer saturation and ideas for alternative ways to satisfy customers.
  • Large companies will be the last to feel the effect of reduced sales. Naturally, since they have a large market share, the reduction in sales will have less impact on the large companies.
  • Passive behavior is not allowed. Although, so far, the previous two phases were a period of conditionally speaking “relaxation,” this phase is a period when we have to wake up from sleep again and normally make decisions about the future.
  • Looking to the future is required. Where will the company move next regarding new product and/or service development? The decision must be made at this stage.

The future of the product will solely depend on the company’s decision. The market is already saying that it doesn’t like the product such as it is anymore! So, there are two alternatives:

  • resistance to changes, risking that the company no longer exists, and
  • considering the option of eliminating the products and starting a new cycle by developing a new product.

7. Elimination

Although this phase seems like the end of a success story and a simple termination of something that has existed so far, it should be approached with particular attention because too much debt can lead to big problems for the business.

Why is it important to make the right decision? The main reasons are the following:

  1. Impact on business finances. Investments in a nonprofitable product will redirect financial resources to developing new products or investments in those that are currently better or have more potential.
  2. Impact on marketing efforts. Too many products reallocate resources, especially for marketing campaigns for products that aren’t worth spending. The product’s time at this stage has passed, and spending more on marketing campaigns will not bring desired results. There is a need for a new marketing strategy, so resources must be directed to profitable products.
  3. Management influence. Instead of focusing the entire management team on new and existing profitable products, they will focus on solving problems with products already in this life cycle stage.

Product Life Cycle Management

Product life cycle management refers to managing the product to improve or increase its life cycle. Let’s look at some strategies you can use:

Last Chance for Replacement

So, at the point of the last chance for replacement, the company will need to start the new cycle with new product development or adjust to an existing product to increase the product life cycle’s lifespan. The decision will depend on the market research results.

Let’s see what we can do with this information.

At the decline stage, sales quantity declines rapidly, significantly impacting profitability. After some time, when the product is at this stage, the company will lose money. So, at the point of the last chance for replacement, the company will need to start the new cycle with new product development or adjust to an existing product to increase the product life cycle’s lifespan.

As we can see from the figure below, innovation is the process that will improve or increase the product life cycle’s lifespan.

product life cycle innovation

When we come to the point of the last chance for replacement, instead of total replacement of this specific product line, we can improve the products, add new features, new design elements, or add some new values to the customers. These are improvements or incremental innovations for existing products.

As you can see, at the stage of maturity, when sales and profit start to decline, with the improvements and some changes in marketing strategy, we will extend the time in which the product stays in the maturity phase. In this way, we are not allowing a transition into the next stage or decline stage.

Again, we can repeat the improvements, so we will work on expanding the product’s position inside the maturity phase.

Market Positioning Strategies

The companies must force consumers’ mental shifts at several points in the product life cycle.

  • The first point is the inside introduction stage, where you want to cross the gap between the introduction and growth stages to ensure steady market growth for the product.
  • The second point is when the product reaches the maturity stage or generates the highest income. Your job here is to extend the time that these existing products remain at this stage.

According to the HBR article, you can use three positioning strategies to force a customer’s mental shift.

market positioning strategies

Reverse positioning strategy

Reverse positioning requires removing some “great” product attributes that customers expect when they are at the maturity stage while adding new ones. This strategy assumes that although customers want something more, they still don’t want unlimited new features.

This unique blend of features will move the product to a new competitive position and move it from maturity into a growth stage on the product life cycle curve.

Reverse positioning strategy

For example, when your product reaches maturity, you must analyze it and the market deeply. When I talk about market analysis here, I need to mention that I think not only about your current market but also about other possible markets where you want to expand your product life cycle with this strategy.

Before you start with the implementation, ask yourself the following questions:

  • What are the most competitive product features on the market today? Can I remove some of them?
  • What features will other markets need, or what features will they need in the future? Can I add them to the current product?

Breakaway positioning strategy

Breakaway positioning strategy

Another positioning strategy here is called the breakaway positioning strategy. This strategy combines the current product with entirely different other products. While reverse position-ing allows expanding the time for a product’s survival on the market, it is still the same product. The products are not in the same category with a breakaway positioning strategy because they are mixed with a different one.

We don’t talk here only about the product itself, but also about the total offer that follows these products.

For example, we can take other products’ designs, some performance characteristics, business models, or, in most cases, other product features. You mix different values from other products inside your product. By mixing these variables, you can change how your current and future customers see your product and go back from maturity into the growth stage.

Before you start with the implementation of this strategy, ask yourself the following questions:

  • Are there other products on the market whose features can be incorporated into my product’s features? What value can these features, combined with mine, bring to another market?
  • Are there some other markets where my product’s features can be valuable for customers? What will they get with this mixture?

Stealth positioning strategy

Stealth positioning strategy

The third positioning strategy is stealth, which is used at the introduction stage of the product life cycle. With this strategy, you will offer your product to skeptical customers with the set of features they want without mentioning future ideas about the product’s development.

For example, with this strategy, you target one market segment but allow other future features related to a different market. Using this strategy, you can quickly get your products into the big market and gradually add features from other markets.

Before you start with the implementation of this strategy, ask yourself the following questions:

  • What product can I offer in enough big markets to quickly succeed?
  • Or, what future features will change the nature of the product and come from other industries and markets?

What We Can Learn From Product Life Cycle?

  • The product life cycle requires continuous innovation. Yes, this is the never-ending cycle that will require support from your innovation system.
  • Different product lines will have different product life cycles. If you have different lines of the same product, you can not accept that they will have the same product life cycle.
  • The difference in product life cycle inside one product line is based on the sales quantity.
  • The continuous decline in sales is a sign that there is a time for something new.