The product life cycle is a metric used to describe the stages of a product’s life in the market. There are four major steps in the product life cycle – introduction, growth, maturity, and decline.
It is important to study the product life cycle to see how a product transitions through each of these phases. This article will explain product life cycle and how it relates to product pricing and marketing.
The Four Stages of Product Life Cycle
From the name, you pretty much have the idea that there will be multiple stages in the life cycle of a product. This section explains each of these stages and their importance to the overall marketability of the product. Let’s explain product life cycle and the stages.
1. Introduction Stage
The introduction stage is the first stage where excitement about a new product or service begins. Unless the producer is popular, growth is often slow at the beginning. The product may be first-rate and address many consumer needs, but the public is not familiar with it. Therefore, demand won’t be high. Producers often budget huge sums to promote the product to shake off this lethargy.
2. Growth Stage
When a product reaches the second stage, the producer’s marketing efforts begin to pay off, and the product becomes increasingly popular.
3. Maturity Stage
In the third stage, the product has matured. The sales patterns have become more stable. At the maturity stage, there’s also the potential to expand into new markets.
4. Decline Stage
Nothing good lasts forever, they say. Therefore, the decline stage is a natural part of the consumer’s life cycle. At this stage, the product has peaked.
To remain competitive, the price either remains the same or slightly declines. Usually, manufacturers try to make changes to the product and do some sort of rebranding.
These changes could be minor or significant. The alternative is to withdraw the product and move on to another product.
Pricing Strategies and Product Life Cycles
This section will explain product life cycle and pricing strategies that manufacturers use at each stage of the cycle. Manufacturers usually study the product’s stage in the product life cycle to determine the right pricing strategy. We will show you the most appropriate pricing strategy based on the greatest demand for the product.
At the initial stage, a manufacturer may choose to price the new product higher to signal an increase in value. Except they’re trying to market the product as a cheaper alternative to an existing product, manufacturers must avoid pricing the product lower.
At the growth stage, the manufacturer monitors the market to observe market trends and competitor actions. This stage is crucial as it helps to forecast future sales.
At the maturity stage of the product life cycle, the product has realized its full potential. The company may offer incentives like discounts or other offers to retain customers loyal to the brand.
The company needs to determine whether the decline is temporary or permanent. Once determined, they may decide to reduce the price and clear off old stock and move on. Alternatively, they may add new features or include the old product in a new product offering.
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