Product Life Cycle 101: For Small Business

An understanding of the typical Product Life Cycle and the business life cycle is necessary for many businesses to have a general idea of as it may help to explain why overall sales have begun to do badly and what to do about it. Broadly, it may be divided into i) introduction, ii) growth, iii) maturity and iv) decline. Two substages may be considered since there often are broad categories of overlap between these stages, namely Accelerating and Mature Growth and Product Extension within Maturity.

Introduction Phase

The introduction phase is characterized by periods of relative uncertainty and slow growth. As a new entrant, the product begins to compete with existing and established products and gradually seeks to eat away some of its market shares for itself.

Accelerating Growth:

As can be seen, a successful product, once the hard work in putting it out there and successfully establishing a market for it is done, soon begins to enter the growth phase, allowing its producers to relax a little and reap rich dividends for their work. This phase is characterized by rapidly accelerating growth as product sales increase, new customers are found, existing customers make repeat purchases, etc.

Subphase -Mature Growth:

In this subphase, which is a precursor to strict maturity, we now have increasing but no longer accelerating growth. The product begins to stabilize in the market as it reaches somewhere near its saturation point, and competitors begin to take steps to limit its growth. This phase is followed by maturity.

Maturity:

By the time we arrive in maturity, the product has now almost begun to reach its peak and continues at that level for some time. In this product phase, businesses no longer seek aggressive expansion, but rather seek to consolidate the existing market share and industry position. The product is presumably well known, continues to have a solid phase, and remains profitable, without either accelerating or even increasing by much anymore. All this indicates the onset of the final stage, which typically declines. But decline can be postponed to an extent.

Subphase - Product Extension:

It can be offset by competent entrepreneurs, who with an understanding of the underlying factors, strive to extend product life to the maximum possible extent. They do this in various ways, perhaps through marketing schemes, customer retention programs and other extensive customer-oriented means and methods that seek to build loyalty toward this product so that its estimated market life can be continued.

Decline:

Finally and inevitably, especially in technology industries, it very often happens that a once-popular product no longer has a significant market. For example, floppy disks or tape recorders were very popular at one time to be more or less completely replaced not many years later. This often turns out to be true in most innovative industries, and competent entrepreneurs prepare in advance for such an eventuality by taking steps either to offset decline or prepare other measures in the meanwhile.

Conclusion:

It is important for any entrepreneurs to have a sufficient understanding of the product life cycle, so as among other things to ensure the company’s continuing profitability in a rapidly changing market. For example, it would be good to plan it so that out of the total portfolio of products the company is responsible for placing on the market, at least a few new products are introduced and in the growth phase while others are in the mature and decline phase, as successful companies do.

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Frequently Asked Questions

Common questions about Product Life Cycle Strategy for Small Business Success.

The product life cycle typically consists of four main phases: introduction, growth, maturity, and decline. Additionally, there are two sub-phases within the growth and maturity stages: accelerating growth and mature growth, as well as product extension within the maturity phase.

Businesses can take steps to offset or delay the decline phase by implementing various strategies, such as marketing campaigns, customer retention programs, and building customer loyalty towards the product. Additionally, it is advisable for businesses to introduce new products in the growth phase while managing mature and declining products in their portfolio.

The introduction phase is typically characterized by periods of relative uncertainty and slow growth, as the new product begins to compete with existing and established products in the market. During this phase, businesses work towards establishing a market for their product and gradually gaining market share.

During the growth phase, particularly the accelerating growth sub-phase, businesses experience rapidly increasing product sales, acquire new customers, and enjoy repeat purchases from existing customers. In contrast, the maturity phase sees a stabilization of growth, with the product reaching near saturation in the market, and competitors taking steps to limit its growth.

During the maturity phase, businesses typically focus on consolidating their existing market share and industry position, rather than seeking aggressive expansion. They may also consider implementing product extension strategies, such as marketing campaigns or customer loyalty programs, to prolong the product's life cycle.

Understanding the product life cycle is crucial for small businesses to ensure their continued profitability in a rapidly changing market. It allows them to plan their product portfolio effectively, introducing new products while managing mature and declining ones, and implementing strategies to extend the life of successful products.

The accelerating growth sub-phase is significant because it represents a period where a successful product experiences rapidly increasing sales and customer acquisition, allowing businesses to reap the rewards of their hard work in establishing the product in the market.

In the mature growth sub-phase, product growth is increasing but no longer accelerating, signaling a precursor to the maturity phase. Unlike the accelerating growth sub-phase, where growth is rapid, the mature growth sub-phase sees a stabilization of growth as the product approaches market saturation.

Marketing and customer retention strategies play a crucial role, particularly in the maturity phase, where businesses aim to extend the product's life cycle and delay the decline phase. These strategies help build customer loyalty, attract new customers, and maintain the product's market share.

To effectively manage their product portfolio across different life cycle stages, businesses should strive to have a balanced mix of products, with some in the growth phase, others in maturity, and some in decline. This diversified approach ensures a steady stream of revenue and profitability, as newer products replace those in the decline phase.