Product Life Cycle 101: For Small Business
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.
