Product life cycle – what is worth bearing in mind?

Products, like living beings, have a limited life. Timing will vary depending on their type and specifics, but this does not change the fact that companies need to plan for both product introduction and removal from the market. How does the product life cycle affect an organisation’s strategy? How to achieve benefits at each stage?

What is the product life cycle?

The product life cycle is a marketing concept that describes the evolution of a product or service in the market – from introduction, through growth and maturity, to disappearance. Each phase of the product life cycle is characterised by specific sales patterns and competitive behaviour. The length and dynamics of the phases depend on the type of product, the market and the company’s strategy. The product life cycle allows companies to understand changes in the market, forecast the future of the product and plan activities for both current and future products.

Most products go through a life cycle, but some may show a different pattern or long-term stability. They are usually related to basic human needs, such as food, drink or clothing, and do not change significantly over time. Examples of such products are salt, flour, sugar or cotton T-shirts. In their case, the life cycle may be much more extended or difficult to define.

However, it is worth noting that even such basic products may experience changes in consumer preferences, for example due to changes in dietary trends, technological advances or the introduction of new products. As a result, even they may be susceptible to changes in their life cycle, although this may be less pronounced than for other products.

The product life cycle can be important for e-commerce marketing and the operation of online shops. It allows you to better plan your promotional activities and, to some extent, influences the positioning of your online shops – even discontinued and unavailable products can support your website’s position in search results.

Why do products have a life cycle?

Products have a life cycle because the market, demand, competition and consumer preferences change. The life cycle of products reflects their evolution over time. As society evolves, consumer tastes, preferences and needs change. As a result, goods that were once popular may lose relevance when new trends or technologies emerge.

Technological advances are another matter – they can result in new and better products. It is also influenced by market competition. Companies compete with each other to gain an advantage in the market by introducing new products, differentiating their offerings or lowering prices.

It is also worth remembering that each market has a limited space. As it matures, saturation can occur, meaning that consumers already have enough options to choose from. When this happens, products may lose popularity and sales may decline. A limited source of raw materials or resources needed to produce certain products may also be a reason.

Product life phases

It is worth noting that the length and dynamics of each phase of the product life cycle can vary depending on the type of product, the market in which it is located and the company’s strategy.

Market launch

The product enters the market and sales begin to slowly increase. During this period, the company incurs high marketing and promotional costs as it tries to build brand awareness and convince customers to try the new product.It includes the following elements:

• research and development,
• market testing,
• production,
• launch.

During the introduction phase, the most common strategies used are skimming (cream picking) or penetration. Both have a fast and a slow version, which differ in advertising effort – they are large in the fast version and small in the slow version. The strategies themselves differ in their approach to price – cream gathering involves setting a high price for the product, while penetration is low. In this case, for example, a fast cream-gathering strategy will mean a high product price and a large advertising spend, while a slow penetration strategy will mean a low product price and a small marketing budget.

During the entry phase, intensive promotional activities are generally undertaken to raise consumer awareness and generate demand. This may include advertising, public relations, free samples or point-of-sale promotions. A frequent channel for the promotion of new products is social media, where, with the help of organic posts and paid activities (e.g. Facebook Ads), it is possible to reach a large audience in a short period of time with information about the product.

In addition to this, when launching a product on the market, your company must ensure an appropriate distribution network in the form of various distribution channels or cooperation with sales partners. This is to facilitate access to the product. In the initial stages of its life cycle, it is also worth betting on customer service to keep them satisfied and loyal.

Sales growth

The growth phase is the stage in a product’s life cycle when it is gaining popularity and sales are increasing rapidly. During this period, you may notice increased competition. This necessitates product refinement and more marketing expenditure to maintain an edge in the market.

At this stage, companies often expand their product offerings, introducing new variants or extensions. They also adapt marketing strategies to reach a wider audience, both through traditional media and digital. Often, to maintain interest in a product during the sales growth stage, companies invest in influencer marketing activities.

As sales increase, your company may also increase production to meet growing demand. Growth may also prompt you to expand your distribution network. During this phase, it is important to monitor the competition and react quickly to changing market conditions. Companies need to be flexible and modify their strategies to maintain growth rates and achieve a competitive advantage.

Maturity

In the maturity phase, product sales stabilise and the market has been saturated. During this phase, competition is most intense and profits may begin to decline. Companies often look for ways to differentiate their product, reduce production costs or make improvements to maintain their position in the market.

At this stage, the focus can be on differentiating the product to make it stand out from the competition. To do this, improvements can be made, additional services can be offered or the marketing strategy can be adapted. Product maturity is also the time when many companies aim to reduce production costs. This allows prices to be lowered, thereby attracting new customers.

As sales slow down, efforts can be focused on maintaining the loyalty of existing customers. To achieve this, it is necessary to maintain high-quality customer service, introduce loyalty programmes or offer discounts to regular customers. Marketing communication can also change, focusing on showing the added value of the product.

Falling

The final stage of the product life cycle – sales start to decline and the company has to decide to withdraw the product from the market or try to renew it. Due to changes in consumer preferences, the emergence of new technologies or increased competition, demand and sales decline. From this, profits can decrease significantly, leading to questioning its viability.

As the product loses its relevance to the company, investment in development, marketing or support may be gradually reduced. Ultimately, this may lead to a decision to withdraw the product from the market. Sometimes, attempts are also made to renew the product by innovating, changing the image or adapting to new market needs.

Product life-cycle strategy versus marketing strategy

When developing a product life cycle strategy (CVP), it is important to consider the different areas of marketing that are key to the success of the product in each phase. Here are some of the activities that are undertaken when working on a marketing strategy for a specific product:

• Market segmentation and positioning – identifying target customer groups and developing a strategy to position the product in the market to stand out from the competition.
• Market research – monitoring changes in customer preferences, competitor analysis and identifying opportunities and threats in the market.
• Product strategy – developing product features, variants, improvements and planning the introduction of new versions or extensions of the offering.
• Pricing strategy – setting an appropriate price for the product depending on the CVP phase, production costs, customer value and competitive strategy.
• Distribution strategy – selecting distribution channels and working with channel partners to ensure product availability to customers.
• Marketing communications – developing promotional, advertising and outreach strategies that reflect the value of the product and increase brand awareness.
• Customer service and relationships – building long-lasting relationships with customers through quality customer service, loyalty programmes and prompt and effective communication.
• Performance analysis and optimisation – monitoring the results of marketing activities and making adjustments to the strategy to achieve better results.

It is important to adapt the strategy to the different phases of the product life cycle to optimise the effectiveness of marketing activities and maximise the benefits of product evolution. A thoughtful approach can influence the success of a product in each phase of its life cycle.

The product life cycle – what else is important?

As a product moves through the various phases of its life cycle, it is important to monitor changes in the market, as well as customer behaviour, competition and other factors influencing demand. Based on the information gathered, a company should be able to adapt its marketing strategy and activities to increase the chances of product success.

In addition to adapting the marketing strategy to each phase of the life cycle, it is also useful to analyse the impact of marketing activities on financial performance. This includes analysing the return on investment () and evaluating the effectiveness of individual marketing activities. Based on these analyses, the company can make adjustments to its strategy to maximise the value of its marketing activities.

Collaboration between the company’s various departments, such as sales, marketing, market research and innovation, is key to developing an effective product lifecycle strategy. Marketing activities should be based on a solid understanding of customer needs, market dynamics and innovations that can influence future product development and are critical to success in each phase of the product life cycle.