Product Life Cycle: 5 Stages Explained
The five stages of the product life cycle are development, introduction, growth, maturity and decline. Learn how to add this into your product launch strategy.
- The product life cycle is the progression of a product or service from ideation to completion.
- You can utilise a product life cycle to help you make informed decisions, increase company profitability and improve customer satisfaction.
- The five stages of the product life cycle are development, introduction, growth, maturity and decline.
Your marketing plan should include strategies to get the most out of each stage of your product life cycle. However, before you can start formulating strategies, you need a clear understanding of the product life cycle stages, how to determine what stage your product is in and how to use market research to inform your efforts throughout the life cycle.
What is a product life cycle?
There are five stages in a product life cycle: development, introduction, growth, maturity and decline.
The product life cycle is the time from the product concept through its eventual withdrawal from the market. The product life cycle is used for decision-making and strategy development throughout each stage.
The concept was developed by German economist Theodore Levitt, who published his Product Life Cycle model in the Harvard Business Review in 1965. We still use this model today.
Marketers utilise the product life cycle to customise messaging for each stage, using market research to guide their efforts. The maturity of a product within its life cycle allows marketing teams to determine which marketing efforts they should focus on and how they should promote a product. This results in a better strategy and enhanced product marketing efforts.
Managers use the product life cycle to make strategic decisions about pricing, expansion into new markets, packaging design and more. The product life cycle helps to align company strategy with a product’s current stage of development. Managers use this alignment to pinpoint new opportunities and improve the market performance of a product over its lifetime.
Related reading: Product marketing trends for 2024
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The 5 stages of the product life cycle
Market research plays an integral role in each stage of the product life cycle. Use the ultimate guide to market research, developed by SurveyMonkey, to help you understand how research is key to managing the life cycle of a product.
Every product spends a different amount of time in each stage, meaning there is no definitive timeline to reference. Each stage has its own costs, risks and opportunities and you’ll have to adapt your strategies depending on where you are in the life cycle.
1. Development
The first stage in the product life cycle is development. The development stage of the product life cycle is about refining your concept, testing your product and creating a launch strategy.
Concept testing with real potential users is an important part of the development step. With concept testing, you’ll know your target market’s reaction to your concept and be able to make changes according to their feedback before you’ve even started to create it.
During this initial stage, you’ll encounter a lot of costs without producing any income from this new product. You may either be funding this stage yourself or be seeking investors. Either way, the risk is high and outside funding is often limited.
Market development can encompass anything from a brief sketch to a prototype of your product. All you need is enough to show potential investors and customers. Validate your market potential early so you can start raising funds for the launch.
Here are three tips for improving the development stage of the product life cycle:
- Messaging and claims testing: Conduct A/B testing of different messages, use surveys to gather feedback about each potential option and test out distinct marketing channels.
- Ad testing: Concept-test each ad that you intend to launch across various demographics.
- Focus on high-quality research: Conduct thorough market research to understand what the market needs, wants and has a preference for.
Related reading: Why concept testing is important and 3 tips for performing it
2. Introduction
The introduction stage of the product life cycle is when you launch your product. Your marketing team will be focused on building product awareness and reaching your target market. Typically, all content marketing and inbound marketing are based on promoting the product.
Depending on the complexity of your product, the competition, how new and innovative it is, plus other factors, you may spend more time than you expected in this stage. The good news is that if your marketing is successful, you’ll move on to the next stage of growth.
Here are three tips for improving the introduction stage of the product life cycle:
- Focus on extensive marketing campaigns: Boost visibility as quickly as possible by investing in marketing campaigns across many channels.
- Engage your customers: Engage customers to build up supportive clients who will recommend your product to others.
- Adjust campaigns: Adjust your campaigns in line with data-driven insights.
3. Growth
The growth stage of the product life cycle is when your customers are familiar with your products and buy into your marketing. Demand and profits are growing and the competition is looking to interrupt your success.
Marketing in this stage moves from getting consumers’ attention to establishing a brand presence. Show them why they should choose you instead of the competition. As your company grows, you may add new features to your product, bolster your support services and open new distribution channels. All of these efforts will feature solidly in your marketing.
Here are three tips for improving the growth stage of the product life cycle:
- Use customer feedback: Gather and act upon customer feedback to refine your offerings and improve customer satisfaction.
- Scale up to meet demand: Accelerate your growth by scaling up marketing initiatives and reaching more customers.
- Adapt to competitors: Keep an eye on competitors with market research to identify new opportunities for growth.
4. Maturity
When sales start to level off from rapid growth, you’re entering the maturity stage. You may have to reduce prices to stay competitive.
Now, your marketing campaigns will focus on differentiation instead of awareness, pointing out your superior product features. During this stage, production costs will decline and sales will be steady. It’s tempting to sit back and enjoy the steady sales, but you must make ongoing improvements to your product and let consumers know that it’s continuing to get better.
At this point, market saturation can occur. Competitors have started to take a portion of the market. Although many consumers are using the product, there are too many competitors. To become the brand of choice, the only way out of this dilemma is to focus on your strengths: differentiation, features, brand awareness, price and customer service. If you don’t do this, you’ll decline.
Here are three tips for improving the maturity stage of the product life cycle:
- Cut costs: Reduce cost expenditure where possible to maintain, and even increase, your profitability.
- Continue with market research: Focus your market research efforts on identifying potential opportunities to break into new markets or renew customer interest in your products.
- Focus on customer relationships: Enhance customer relationships with a Voice of the Customer programme.
5. Decline
If your brand experiences fierce competition or loses market share, you may experience the decline stage of the product life cycle. Sales will typically decrease in the face of rising competition.
Market decline may be related to:
- Too much competition from products with similar features: If you can’t differentiate your product, then you won’t be able to stand out in the crowd. Think about how the arrival of Facebook as a social media app affected the downfall of Myspace.
- Outdated or replaced product: This may be the case if you have a product that has hit the limit of its ability and is just no longer marketable. For example, VHS tapes reached this point when DVDs came out, and DVDs are reaching this stage as more people choose streaming entertainment. Ultimately, it was a bad day for Blockbuster, which was the largest video shop in the UK.
- Loss of customer interest: In 2000, Heinz, the maker of food condiments and sauces, introduced EZ Squirt colourful ketchup. Initially, it was a huge success, but the novelty wore off and the product failed.
- Damaged brand image: McDonald’s fast-food restaurants took a blow to their ‘supersize’ menu in the wake of a documentary about how the chain’s food affects overall health.
When a company sees market decline, leadership may discontinue the product, sell the company or innovate the existing product. In the meantime, your marketing may try to foster nostalgia or the superiority of your product to extend the life cycle.
Here are five strategies that a company in decline could use to attempt to move out of this product life cycle stage:
- Extending the product line, as carbonated beverage brands Coca-Cola and Pepsi did by adding cherry, vanilla and other flavours.
- Repackaging the product, as was the case for Listerine, which was formerly a surgical antiseptic. Listerine was then repackaged and rebranded to become a mouthwash that combats bad breath.
- Trying new pricing strategies, as US company Dollar Shave Club did. The company uses subscription pricing as well as pricing based on the number of blades in each razor.
- Launching new versions of the product like Apple does; this maintains the hype with every new iPhone release.
- Moving into new product categories would mean moving back to the beginning of the product life cycle. Sometimes, that’s what it takes to survive. Nintendo is a great example of this. They went from making video arcade games to video game systems for personal use.
Related reading: Agile market research guide: How to improve your marketing strategy
Importance of a product life cycle
There are many benefits associated with product life cycle management. Your position in the cycle affects everything from marketing strategy to profitability.
Product life cycle management allows you to:
- Make informed decisions based on the life cycle stage: Each stage of the product life cycle has different ideal marketing strategies. A knowledge of each stage will contribute to the successful launch and sustainability of a product.
- Increase ROI on product launch: Companies can maximise profits upon launch by creating a strong market entry with product life cycle planning.
- Increase company profitability: Adapting to each stage of the product life cycle promotes interaction and helps to improve sales across the product’s lifetime.
- Proactively tweak your marketing messages: Adjusting marketing messages and strategies in line with the maturity of a product will help to sustain customer engagement with your product.
- Maintain and improve product appeal, reputation and customer loyalty: Product life cycle management allows marketing teams to evaluate product appeal and introduce variations or make alterations to keep interest high.
Effective product life cycle management helps pinpoint strategies to boost customer engagement with a product and then sustain it across the product’s entire lifetime.
Related reading: How to build a research programme to drive more effective marketing
Consequences of poor product life cycle management
Businesses that don’t adequately manage a product life cycle will encounter consequences.
Without the structure and direction that the product life cycle offers, companies may run into the following problems:
- Failure of the product to meet its potential: Mismanagement of the product life cycle could mean that a product does not reach its intended audience, thus reducing revenue.
- Reduced shelf life: Poor management of a product may cause a premature decline in consumer interest.
- Excess inventory: Without adapting to shifts in consumer behaviour alongside a product’s growing maturity, your business may overproduce and undersell a product.
- Loss of profits: Ineffective management will create additional marketing costs at each stage of a product’s life cycle, thus reducing profits.
Understanding and adapting to each new stage of the product life cycle will create successful products with the longevity to exist within a market for several years or more.
Factors influencing product life cycles
Internally, you can control your concept, positioning and marketing efforts. Nonetheless, external factors may influence your product’s life cycle despite your strategy.
Ease of entry
Are you entering a very competitive market? The competition can directly affect your product’s success. If entering a market is easy due to minimal competition, low costs, a small market size and few other barriers, the product’s life cycle might be short because many competitors can quickly enter and saturate the market. If these factors are higher, then your entry may be more difficult but your life cycle will probably be longer.
For example, if you were to launch a new product in a market that is relatively new, it may be easy to rapidly gain a sizable market share. However, every company that launches a similar product will benefit from this ease, rapidly diluting its total market share.
Compare this to an industry that is already hyper-competitive. Although it could take years to develop a product that enters into a market, establishing yourself with a unique value proposition may ensure that you have a longer product life cycle on the market.
Advancements in tech
If your product is in an industry that has fast tech advancement, such as mobile phones, tablets or computers, then your product’s life cycle could be short. In order to stay relevant for as long as possible, you need to understand how fast tech evolves, what changes your target market is looking for and when you need to make improvements to your product to remain competitive.
The Canadian smartphone manufacturer BlackBerry had nearly a 20% market share in 2009. Yet with the release of the iPhone and innovations from Apple and Samsung, their mobile phone quickly fell behind the times. Unable to keep up with the rapid evolution of mobile technology, BlackBerry left the mobile phone market and now specialises in security software.
Rate of market acceptance
The rate at which consumers accept your product is another factor that influences the life cycle. Look at the life cycles of similar products to estimate what your acceptance rate might be. Market research will help you predict how quickly your product will be adopted and accepted.
For example, the mobile phone market is one that reached acceptance and maturity rapidly. Due to this, mobile phone businesses have to innovate in order to constantly impress customers and maintain their market shares.
On the other hand, voice assistants experienced a slow rate of acceptance. With privacy concerns and the slow development of effective natural language processing, this industry took years to get off the ground. However, this gave products such as Alexa and Google Home years to establish themselves, increasing their longevity.
Economic forces
The state of the economy can have a direct impact on a product’s life cycle. Throughout history, recessions have affected consumer spending habits, from the total percentage of income spent to the products that are favoured or abandoned during these economic downturns.
Research by the Bank of America demonstrates that in the months leading up to a recession and during one, spending on furniture radically declines. For furniture companies, economic forces could be one of the most significant contributors to changes in their product life cycle.
A good economy can shorten the introduction stage and extend the growth stage due to increased spending. The effect of economic forces depends on your product, target market and industry.
Product life cycle examples
Although all products go through the life cycle, some have already gone through the entire cycle and fallen by the wayside. Here are a few examples of products that are either currently in their product life cycle or have been discontinued.
Typewriters
- Development: Christopher Latham Sholes of Milwaukee, Wisconsin (USA) patented the first typewriter in 1868. It had been in development for nearly 300 years as inventors tried to perfect a design.
- Introduction: By the late 1800s, the introduction stage of the life cycle began when commercial typewriters were made available to the public.
- Growth: Shortly thereafter, in the growth stage, typewriters were used in businesses, homes and offices.
- Maturity: Typewriters lingered in the maturity stage until the 1980s when emerging technologies pushed them to decline.
- Decline: The typewriter market declined. Typewriters were, for the most part, discontinued in favour of computers, tablets and smartphones. Most typewriters available today are novelty items and vintage collectibles.
VCRs
- Development: Believe it or not, VCRs were being developed in the 1950s as a method of watching VHS tapes of recorded TV. The first actual prototype was as big as a desk and cost nearly $50k (approx. £37,000) in 1950, which translates to over $500,000 (approx. £370,000) today. All that to record television shows to watch at a more convenient time.
- Introduction: In 1977, the first (small and affordable) VCR was introduced to the public for recording and playing back video on television screens.
- Growth: From the late 70s to the early 2000s, most homes had a VCR in them, along with a plethora of tapes. This was definitely a period of extreme growth.
- Maturity: As the VCR entered the maturity stage, companies were searching for ways to reduce the cost and add features.
- Decline: Technological advances led to the decline of the VCR, eventually giving way to the DVD and streaming services.
Electric vehicles
- Development: Electric vehicles were first developed in the early 1800s. They fell out of favour because charging was an issue for the average consumer. Fast-forward to the 2000s and vehicle manufacturers, most notably Tesla, shifted their focus to all-electric or hybrid technology.
- Introduction: They have been introduced to the market with a focus on innovation and eco-friendliness as their marketing messages.
- Growth: Electric vehicles are currently in the growth stage as companies continue to improve the design and features of their offerings. The growth stage is extended because ongoing market innovation leads to improvements and that, in turn, increase sales potential. For now, they are seeing continued growth and the maturity stage is nowhere in sight.
Artificial intelligence
- Development: AI was first conceptualised in the 1950s, but the cost was prohibitive for most companies. Development continued throughout the 1970s, with better, more affordable computers. One of the most notable proof of concept moments was in 1997 when world chess champion Gary Kasparov was defeated by IBM’s Deep Blue chess-playing computer program.
- Introduction: There are several types of AI products in the product life cycle. Because of the nature of AI and its wide array of uses, it’s impossible to classify it into one part of the life cycle: some products are in development; many are in the introduction stage; and products such as Amazon’s Alexa are going through the growth stage.
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