What is a Product Lifecycle

The product lifecycle is a concept that aids organisations in navigating the journey a product takes. It describes the stages a product goes through from its introduction to the market until its eventual decline and removal from market. 
There are four key stages in the product lifecycle: Introduction, Growth, Maturity and Decline. It is important that businesses can identify and understand each stage that their product goes through to adapt seamlessly to changes in demand, competition, and profitability. 

Introduction stage

The introduction stage is where a product is born. It's the phase in which a new product is introduced to the market for the first time. In this stage, there are a few key characteristics such as low sales, high marketing costs, and limited competition. This is caused by businesses aims to create more awareness and interest in a new product whilst it’s still evolving and changing with the influence of customer feedback.

Growth Stage

Once a product starts to pick up in orders and attention, it enters the growth stage. In the growth stage, the product’s sales begin to increase rapidly as more customers adopt the product. As a result, marketing costs decrease relative to revenue, and the product becomes profitable. At this stage competitors may enter the market in response to the product's success.

Maturity Stage

The maturity stage is characterised by a stabilisation of sales and market saturation where products are most profitable. Sales growth levels off as the market becomes saturated with the product and reaches its highest level of customer reach. Competition intensifies, leading to price wars and increased marketing efforts where profits may either peak or start to decline due to competitive pressures.

Decline Stage

The decline stage marks the start of the product's decline in the market. As customer preferences shift towards newer, more developed products, this impacts the rate of sales and can stunt the growth of awareness. At this stage profits decrease, and companies may consider discontinuing the product or repositioning it in the market. Marketing efforts become reduced, and resources may be allocated to other products or ventures. 

Best Practices/Tips to Extend Product Lifecycles

Using Cross-Selling and Upselling

Cross-selling and upselling are effective strategies that can extend the product lifecycle and maximise revenue for a company. These techniques involve selling additional products or services to existing customers, and they are particularly effective during the maturity stage of the product lifecycle. These strategies not only increase immediate revenue but also contribute to the long-term success of products. By nurturing existing customer relationships, optimising resources, and staying attuned to customer needs, companies can extend the product lifecycle and maintain profitability even in highly competitive markets.

The Magic Matrix

The Magic matrix can be used to help businesses target customers more strategically based on their purchase history. Similar to the point above, the Magic Matrix helps identify products companies haven't purchased yet. By identifying these gaps businesses can strategically cross-sell and upsell products with targeted marketing campaigns. Businesses can maximise revenue from their existing customer base and keep products relevant for a longer time. 

Advertise to New Channels

By incorporating multi-channel selling businesses can use fresh advertising channels that come with varied demographics and customer segments. When a company expands to these channels, they reach a broader audience that may not have been exposed to the products previously. This can help you tap into new markets and customer segments, increasing the product's reach and potential customer base which helps elongate the growth stage. Advertising in new channels can breathe new life into a product and businesses can revitalise interest in their products and maintain their relevance over time. If you want to learn more about this, read our blog about Multi-Channel Sales here. 

Product Modifications

Changing a product by introducing new features, updating packaging, or making other improvements can be a highly effective strategy for extending its lifecycle. These changes can help maintain or increase customer interest, competition, and relevance in the market. Customer wants and needs change over time, so adding new features or functionality to products can align them more closely with current market demands, ensuring they continue to meet customers' needs and expectations in a competitive market. By staying responsive to market changes, customer feedback, and evolving trends, businesses can keep their products fresh, competitive, and relevant over an extended period, maximising their value and profitability.

Reducing Product Price

Reducing the product price can be a strategic move to extend the product lifecycle under certain circumstances. While lowering the price may initially lead to decreased profit margins, it can have several positive effects that contribute to prolonging the product's lifecycle. You will give existing customers more incentive to continue purchasing your products and encourage new customers to switch over from more expensive competitors. Lowering the price can help you penetrate new markets or customer segments that were previously hesitant to purchase the product due to its price, leading to market share growth.

Prospect CRM can help your business extend your product lifecycles by facilitating efficient customer relationship management and engagement. Start to boost your sales now with the #1 stock-aware CRM. Start a Prospect Free Trial today!