Product life cycle
Goods are considered to have a life cycle – a pattern of purchase that occurs throughout the life of the good or service.
When researching the market and creating a marketing plan it’s worth considering which part of the life cycle the product or service is in.
Below is a product life cycle. As you can see, it shows the sale of a product over a period of time. Where the product is in its life cycle affects the type of promotion and advertising that is likely to be successful.
Introduction
In the introduction phase the product is new to the market. During this period not many people will know about the product and promotion and advertising will focus on raising awareness. This is an expensive period for companies as not much money will come in from selling the good or product, but advertising and promotion have to be paid for.
During this period a company may also set a low price for the product in order to persuade people to buy it or give free samples to customers to try out the product. Income is therefore low (or negative) in this period.
Growth
In this period the sale of the product grows rapidly as people find out about it. People will also purchase again, and loyalty is built. People may start recommending the product to friends or peers. It begins to become a profitable in this period. It's an exciting time for businesses but competitors will start to notice successful new products.
Maturity
This is when the sale of a product stabilises as the number of new buyers slows down. Competitors may enter the market. Goods or services can be in this phase for a long time or for a short time depending on their characteristics. For example, sales of Diet Coke have been stable for many years since its launch in 1980. Everyone is aware of it and its market share has been stable at around 9% of the soft drink market. It has been in the maturity stage for about 35 years.
On the other hand, some goods have a short growth and maturity period. For example, do you remember Pokemon Go? The app was developed in 2016 but 2020/21 saw a big growth in its sales as people discovered it during the Covid-19 Pandemic. By now sales have dropped significantly.
Look at the graph below. For how many years was Pokémon Go in maturity?
Decline
Ultimately it's possible that demand for a product will start to decline, and that sales will start to fall. This can be due to a number of factors such as people's tastes changing, competitors entering the market, changes in legislation etc.
To avoid this, businesses create extension strategies. This can be done in a number of ways:
Introducing different flavours/features
This can be done by changing the recipe, introducing different flavours, offering a gluten-free or sugar-free or alcohol-free version for example.
How many versions of Coca Cola can you name?
Targeting a different target market
This can be done by developing the product to appeal to a different market, such as the Innocent Smoothies company developing their drinks for children.
Developing a new range of products
