What is the Product Life Cycle?
The product life cycle (PLC) is a model that any business can use that helps to represent a product's sales over time. Whilst the model is more generalised, the model can change depending on the product you supply. Depending on your marketing strategy and pricing tactics, this could alter it slightly, and time horizons vary very differently. Tech related products for example sell much faster and are out of date a lot quicker than industrial items.
Below is a diagram of the PLC (Source). There are four main stages of the PLC: introduction, growth, maturity, decline.
The introduction is when the product is first brought to the shelves. Choosing you pricing strategy here is essential so that you remain competitive. Tactics you might want to try are product bundle pricing or psychological pricing. The first is when multiple products are sold together at a cheaper rate than if they were sold separately. One example of this is when gaming consoles are paired off with games. Psychological pricing is when you set costs at the likes of £14.95 or £1.99 in the hope that customers purchase under the belief they are paying less than they actually are.
The introduction stage will introduce the innovators and early adopter types of buyer such as bloggers and influencers. By impressing this crowd, you are sure to increase the number of sales from the early majority purchasers. This is when you can identify your key market. Usually you have built a products around a key demographic, but there could be some real interest from one you hadn;t considered. It might not always happen but worth keeping your eyes open for.
Once you have gathered this marketing information, troubleshooted any errors, this is when you go big on promotion, be it through PPC, billboards, posters, direct mail or even promotional products. Use the right medium to capture your audience's attention. TV ads may be lost on the younger generation (who mostly use streaming services) but promotional products would work great in a B2B relationship. The goal with your promotions is to have a key message and memorability and some form of CTA be it a website, hashtag or store where your products might be available.
The second stage of the PLC brings in a higher level of sales. This is when your marketing efforts appear to be working, and the rate of your sales start to rocket. Hold off on the promotional offers immediately, but start reducing your price to keep the rate of sales up for as long as possible. Time to make sure you are marketing hard.
Troubleshooting will need to be quick and push those positive reviews back into your marketing promotions.
This is the point of the PLC where you will maximise your profits. The rate of sales will start to decrease now as the majority of your market will have bought it already if they were planning to. These are the late majority; they will likely be more price sensitive and they are probably paying attention to reviews and referrals from people they know. This is when public praising of your products/service is going to be key.
Since this is a time where we are going to maximise profits, we need to prolong this stage for as long as possible. There are a few things we can do to extend this as much as possible. If you are selling an app or selling a piece of software, updates are brilliant for recapturing your audience's retention. Ask your target market what updates they want and implement them.
Timing these updates is just as important though. By throwing all of these updates out within a day of each other, you are going to not only annoy your audience, but they might even just hold off buying the product knowing that there will be another update in a month. You need to wait for your product sales to dip just enough so that you still have an engaged audience, but not one that is losing interest in the product as the whole. There is no set answer for how long to wait, but gauge the interest of your audience and wait until the sales is definitely on a dip, and not a bad month.
The decline is the final stage when sales are decreasing no matter what you do. The important thing here is to realise when your sales are beyond help. You do not want to be wasting your marketing budget on items that are just not going to sell. Why waste promoting the iPhone 7 when the latest X or XS, or whichever model it is, is now out. This is important in the long run of course, but also seasonally. If you sell a certain product within the first three months of the year but get near zero for the rest of the year, be sure you aren't spending any marketing budget during the off-season on promoting that product. Pause the PPC campaign on that product (for example) and save it to promote it harder during the 3 months when those products are going to be sold - or promote other products!
The PLC does not apply to every product.
This is the unfortunate thing. The above chart is great for an educational purpose and sums up the 4 main stages perfectly, but it does not reflect real life. Every product is different. It will go through the same stages by all means, but at different rates. If you sell PS4 games, you will see the graph jumping up in bounds as patches are released and maybe again if it wins awards. Seasonal organisations will see sales rise and fall dramatically and clothing brands might see a boost in sales thirty years into the future as styles become retro. The main rule is that if your sales graph does not look exactly like this, do not worry. Just know the basics. Listen and understand to try and discover where you are in the product life cycle. By understanding where you are, you can then use your marketing budget and efforts more effectively to benefit the whole organisation.
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