The Product Life Cycle business framework can help to analyze maturity stages of products and industries. For any marketer, understanding your product life cycle offers invaluable strategic insight, from pricing to positioning.
The term was used for the first time by Theodore Levitt in 1965 in an Harvard Business Review article: “Exploit the Product Life Cycle.” Any company is constantly seeking ways to grow future cash flows by maximizing revenue from the sale of products and services. Cash Flow allows a company to maintain its viability, invest in new product development and improve its workforce. All this in an effort to acquire additional market share and become a leader in its respective industry. A constant and sustainable cash flow (revenue) stream from product sales is key to any long-term investment, and the best way to attain a stable revenue stream is to have one or more Cash Cows. Cash Cows are strong products that have achieved a large market share in mature markets.
The stages in the Product Life Cycle
- Introduction stage. The product is introduced in the market through a focused and intense marketing effort designed to establish a clear identity and promote maximum awareness. Many trial or impulse purchases will occur at this stage.
- Growth stage. Can be recognized by increasing sales and the emergence of competitors. At the vendor’s side, the Growth stage is also characterized by sustained marketing activities. Some customers make repeat purchases.
- Maturity stage. This phase can be recognized when competitors beginning to leave the market. Also, sales velocity is dramatically reduced, and sales volume reaches a steady level. At this point in time, typically loyal customers purchase the product.
- Decline stage. The lingering effects of competition, unfavorable economic conditions, new trends, etc, often explain the decline in sales.
You can learn more about Product Life Cycle analysis here.
Several variations of the Product Life Cycle business framework have been developed to handle the development of the product, market, and/ or industry. Although the models are similar, they differ as to the number and names of the stages. Here is a list of some major models:
Variations of the life cycle model
1973 (Fox) precommercialization – introduction – growth – maturity – decline
1974 (Wasson): market development – rapid growth – competitive turbulence – saturation/maturity – decline
1984 (Anderson & Zeithaml): introduction – growth – maturity – decline
1998 (Hill and Jones): embryonic – growth – shakeout – maturity – decline
Product Life Cycle can also be extended and applied to the BCG Growth-Share Matrix, yielding an analysis tool called the Strategic Positioning Matrix.
Product Lifecycle Management
Product Lifecycle Management (PLM) is the process of managing the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal. PLM integrates people, data, processes and business systems and provides a product information backbone for companies and their extended enterprise. PLM systems help organizations in coping with the increasing complexity and engineering challenges of developing new products for the global competitive markets.
Product Lifecycle Management (PLM) should be distinguished from Product Life Cycle Management (Marketing) (PLCM). PLM describes the engineering aspect of a product, from managing descriptions and properties of a product through its development and useful life; whereas, PLCM refers to the commercial management of life of a product in the business market with respect to costs and sales measures.
Product Lifecycle Management can be considered one of the four cornerstones of a manufacturing corporation’s information technology structure. All companies need to manage communications and information with their customers (CRM-customer relationship management), their suppliers and fulfillment (SCM-supply chain management), their resources within the enterprise (ERP-enterprise resource planning) and their product planning and development (PLM). One form of PLM is called people-centric PLM. While traditional PLM tools have been deployed only on release or during the release phase, people-centric PLM targets the design phase.
Product Strategy Reference Documents
Rogers’ Five Factors
Pricing Strategy Implementation Toolkit
Psychology of Product Adoption