Product Life Cycle and Pricing Strategy

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.

Photo by Campaign Creators on Unsplash

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.

Introduction Phase

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.

Growth Phase

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.

Maturity Phase

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.

Decline Phase

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.

Abir is a data analyst and researcher. Among her interests are artificial intelligence, machine learning, and natural language processing. As a humanitarian and educator, she actively supports women in tech and promotes diversity.

A Complete Guide to Product Development

Product development comprises several steps, from the initial idea to the final product. These steps can range from ideation to…

Product Design Ideas: An Effective Guide

Good product design is not just about creating eye-catching visuals. It should also serve the purpose of helping companies stand…

Process of Product Design: A Comprehensive Guide

Product design involves creating a functional and aesthetic product based on user requirements, market analysis, and overall business strategy. It…

An Effective Guide to Product Development Strategy

What is product development? The journey from the start to a finished product is never a straight line. The product…

5 Stages of Product Development Life Cycle

To clearly define the why, what, and when of product development, marketers came up with the idea of the product…

Idea Screening in New Product Development

Every new product, service, or solution starts with an idea generation or concept development followed by the idea screening process.…