Whether you're browsing your parents' old VHS tapesor to buy a new smartphone, you're involved and going through different stages of the product lifecycle, or a PLC.
When a product enters the market, consumers often do not know that it has a life cycle, from new, useful products to the eventual exit from the market.
This process keeps happening.
From the introduction stage of the product to the decline and final retirement of the product.
But how does the product lifecycle actually work and how does it help the company to analyze it?
The product life cycle is the process in which the product enters the market from the first time to drop or disappear from the market.
There are four stages in the life cycle
Introduction, growth, maturity and decline.
Although some products may remain mature for a long time, all products will eventually exit the market gradually due to several factors such as saturation, increased competition, declining demand and declining sales.
In addition, the company uses PLC Analysis (
Life cycle of product)
Develop strategies to maintain the life of the product, or change the product according to market demand or develop technology.
In general, there are four stages in the product life cycle, from product development to value decline, and finally exit the market.
Once the product is developed, the first phase is its introduction phase.
At this stage, the product is on the market.
When a new product is released, it is usually a high
Risk Time in product life cycle-
Although it does not necessarily make the final success or break of the product.
Marketing and promotion are at a high level in the introduction phase
The company usually invests the most in promoting products and putting them in the hands of consumers.
This is perhaps the best display for Apple. AAPL -Get Report)
The famous startup demo highlights their new features (
Or about to be released)products.
It is at this stage that companies are first able to understand how consumers react to the product, if they like it, and how successful the product may be.
However, it is also often a heavy-
In the case of no guarantee that the product is paid for itself through sales, spend a period of time for the company.
The cost is usually very high and there is usually very little competition.
The main goal of the introduction phase is to establish demand for products and put them in the hands of consumers, hoping to profit from their growing popularity in the future.
By the stage of growth, consumers have begun to buy this product.
The product concept has been validated and is becoming more and more popular
Sales are also growing.
Other companies are beginning to realize the product and its space in the market, which is beginning to attract attention and more revenue.
If the competition for the product is particularly fierce, the company may still invest heavily in the advertising and promotion of the product to beat the competitors.
With the continuous growth of products, the market itself is also expanding.
Products in the growth phase are often adjusted to improve functionality and features.
With the expansion of the market, in order to make specific products competitive, more competition will often lower prices.
However, sales and revenues are usually increasing.
The marketing goal at this stage is to increase the market share of the product.
When the product matures, its sales tend to slow down or even stop --
This shows that the market is basically saturated.
Sales can even start to fall at this point.
Pricing at this stage may become competitive, indicating that prices start to fall and profit margins will fall as external pressures such as competition or falling demand affect.
At this point, marketing is to prevent competition, and companies usually develop new or changed products to reach different market segments.
Given the high saturation of the market, usually at the maturity stage of the product, less successful competitors will be excluded from competition --
Often referred to as "Shake-out point.
"At this stage, it is saturated and the sales volume is the largest.
Companies often start to innovate to maintain or increase market share, change or develop their products to meet new demographics or develop technologies.
Depending on the product, the maturity stage may last for a long or short period of time.
For some brands, like coca, the mature stage is very long. Cola (KO -Get Report).
Although companies usually keep their products in maturity for as long as possible, the decline in each product is inevitable.
In the decline phase, due to the decrease in demand for products, the sales of products decreased significantly, and consumer behavior changed.
The company's products have lost more and more market share and competition has intensified.
The marketing in the down stage is usually very small, or for customers who are already loyal, the price will be reduced.
In the end, the product will exit the market unless it is able to redesign itself to remain relevant or in-demand.
For example, products such as typewriters, telegrams, and fire guns are in recession (
In fact, almost or completely out of the market).
The life cycle of any product always goes from its introduction to the inevitable decline, but what does this cycle actually look like and what are the examples?
A classic example of the product life cycle range is a typewriter.
When it was first introduced in the late 19 th century, typewriters became more and more popular as a technology to improve the convenience and efficiency of writing.
However, new electronic technologies such as computers, laptops and even smartphones have quickly replaced typewriters.
Led to a decline in their income and demand.
Surpassed by Microsoft and other companies (MSFT -Get Report)
, The typewriter can be considered at the very end of the descent stagewith minimal (if existent)
Sales and demand fell sharply.
The modern world is now typing almost exclusively on desktop computers, laptops or smartphones.
This in turn goes through the growth or maturity of the product lifecycle.
Many of us may be looking at or using VCRs (
Video recorder for any generation Z reader)
But you may have a hard time finding one at anyone's house these days.
With the rise of streaming services such as Netflix (NFLX -Get Report)and Amazon (AMZN -Get Report)(
Not to mention the episode stage of the dvd)
VCRs have been effectively eliminated and are in a recession phase.
VCRs used to be a breakthrough technology, and now the demand is very low (if any)
They will certainly not bring the sales they have done.
The rise of electric vehicles is more of a growth stage of the product life cycle.
Companies like TeslaTSLA -Get Report)
It has been taking advantage of growing products over the years, although the recent challenges may herald a change in a particular company.
While electric vehicles are not necessarily new, the innovations of companies like Tesla in recent years have been adapting to new changes in the electric vehicle market, marking the growth stage of electric vehicles. While AI (
Artificial Intelligence)
Has been developing (And application)
Over the years, it has been constantly breaking the boundaries and developing new products in the stage of PLC introduction.
Dozens of new products including AI
Injected robots or self-driving vehicles are very important in development (Or introduction)
As their products are still being tested and adopted by consumers in the market.
Doing PLC analysis can help companies determine whether their products are effectively serving their target market and when they need to shift their attention.
By studying the relationship between their products and the whole market, competitors, sales and expenses, companies can better decide how to turn and develop their products in the market to achieve longevity.
Checking the life cycle of their products, especially focusing on where their products are in the cycle, can help companies determine if they need to develop new products to continue selling
Especially when most of their products are in the mature or declining stages of the product life cycle.
For companies whose products are in the introduction stage, there are several pricing models that can start generating sales.
Either the price skimming, which sets the price of the product at the initial high point and decreases to the "skimming" group as the market expands, or the price penetration, this sets the initial price lower in order to penetrate the market more quickly and eventually increase the market after demand has grown.
When companies don't understand the introduction phase of the product lifecycle, they often get into trouble --
Especially when the customer is not responding well to the original product (
Either because of pricing or because of the intrinsic value and usefulness of the product).
In addition to packaging, it is important to check product advertising and packaging.
Does the product meet the needs of the target market?
If sales are out of date, many companies will consider moving marketing strategies to new demographics to help introduce products into potentially new revenue streams.
Doing PLC analysis can help companies understand when they need to re-invent a product or move it in a new direction.
For example, the online streaming service network flies through the DVD-
Mainly for online streaming services-
Great success has been achieved.
By studying the location of their products in the product life cycle, companies can continue to innovate with new technologies, diversify their products, keep up with competition, and have the potential to extend the life of their products in the market.