A typical product goes through many stages throughout its life cycle. Products that have been around for many years have experienced quite the roller coaster of growth and decline. The advice that we are offering to you today will help you understand where your product is in its life cycle as well as your competitors. Understanding this concept can place you at an advantage over your competition and will allow you to react to marketplace trends much sooner. Let's begin with a new product innovation.
Innovation / Market - the beginning stages of the product life cycle obviously involve some sort of innovation or new product launch. This product is new to the marketplace and is very appealing to consumers. Companies are able to charge a premium for this new innovation because other competitors have not yet had a chance to develop a similar product. This is a crucial stage in the product life cycle and may even determine the product's success or failure. Typically, production runs in this stage are very short as the product is not fully launched. Skilled labor is typically required and is often very expensive. Due to these conditions, this stage takes a considerable amount of capital to maintain.
Growth - As early adopters of your product begin to share their experiences with others through word of mouth, your product will then hit the growth stage. Now that it is proven that customers are taking to your product, competitors are now attempting to enter the market. Your company will still have an advantage as long as you are still innovating and begin to standardize your production. The competition will experience high labor costs with large production runs to keep up with demand, which ultimately places them at a disadvantage. If your company does not standardize and continues producing as if in the innovation stage, it is almost certain your competition will surpass you.
Maturity - Companies that have had products on the market for a very long time are typically in the maturity stage of the product life cycle (i.e. - Procter & Gamble's Ivory Soap). This stage is characterized by slowed growth as well as many competitors. Price is a very important issue in maturity because the product is basically a commodity with the amount of competitors involved in the marketplace. In order for your company to excel out of the maturity stage and beat out the competition, alternative uses (if any) should be marketed. A brand that began making baking soda successfully achieved this by changing their marketing strategy to an odor and moisture absorber instead of a cooking ingredient. Thinking of innovative ideas for your product and letting the public know may send your company back to a growth stage instead of a decline.
Decline - The final stage in the product life cycle is characterized by declining demand. Consumers are demanding more innovative products and are unwilling to purchase your product. In this stage, you will begin seeing competitors move out of this market and venture into new ones. Typically, production even shifts overseas to less developed countries which makes it virtually impossible to compete on price.
Your company's product should constantly be tracked in relation to this product life cycle. Always knowing where your products are in the cycle will help you anticipate and adapt to the ever changing marketplace. Where is your product now? Are you taking advantage of its stage in the cycle?
