Which stage of the product life cycle is characterized by increasing sales and profits?
Products have similar lives to living beings. They are born someday and they come to an end someday. Product life cycle is the set of stages a product goes through during its lifetime. The journey starts from the day it is just an idea to the day it is finally removed from the market. Show
Usually, there are 4 different stages in the Product life cycle. Introduction StageThis stage is where the idea becomes an actual product for sale in the market. A product is introduced to the market during the introduction stage. There are many features of this stage of product life cycle:
Marketing Mix in the Introductory StageProductIntroductory stage of the product life cycle involves establishing a brand and executing the positioning strategies. It also involves obtaining intellectual property protection like patents and trademarks. PricePrice mix is decided based on the product, the competition in the market, and the future revenue generation strategies.
PlaceThis depends on the size of the company. Usually, the distribution is kept selective and scattered, to learn about what market likes and what not. PromotionMore focus is on brand awareness. Free samples may be distributed. Investments are done on advertisements and digital marketing. Brands try to engage as many people as possible. The main focus is to create more and more demand through promotion. Growth StageA product finds its place in the market at the growth stage. This stage is characterized by increased sales and revenue. Profits also improve as the company gets a benefit of economies of scale with the rise in customer demand. Following features can be seen in the growth stage of product life cycle.
Marketing Mix in the Growth StageProductThe depth of product line may increase. That is, different variants of the same product may emerge during the growth stage. Product quality improves. Packing and new features are added. PriceDifferent pricing strategies executed during the introductory stage are revised.
PlaceDistribution becomes more intensive. More trade channels are added to increase supply in the market. The business now tries to tap more markets. PromotionThe introductory stage has already helped the business in creating a brand. The main focus of marketers during growth stage is to increase the brand equity. Maturity StageMaturity stage is when sales are at their peak and grow at a slower pace. Competitors’ product becomes more similar and it becomes hard to retain the market share during the maturity stage. Hence, the company starts more aggressive practices of lowering the price, sales promotion, adding more product lines, modifying existing product lines, opening up new distribution channels and rewarding the existing channels. The maturity stage of product life cycle has the following characteristics.
The maturity stage can turn out to be the introductory stage for various new product lines. Marketing Mix in the Maturity StageProductMaturity stage witnesses the most innovation. New features are added to the same product to differentiate it from the competition. New product lines may also emerge if the company sees the fall of the product in the near future. Product width increases in the maturity stage of the product life cycle. PriceThis stage involves lowering of the prices as competition increases and business aims to maintain its market share. PlaceMore distribution channels are looked at. Businesses start to pay more for more shelf space. It also starts to give more margins to the sellers to increase the sale. PromotionMore emphasis on building up of brand loyalty and brand preference. Focus shifts to sale promotion and direct selling. The business focuses more on capturing competitors’ market share. Decline stageA peak is always followed by a fall. Technological obsolescence, change in customer tastes, market demand saturation, or introduction of a new better substitute etc. can lead to the decline of the existing product. This stage is the beginning of the end of the product. Decline stage of product life cycle has following characteristics
Marketing mix in the Decline StageProductSome products in the product line may be discontinued, while others are altered. The company focuses on innovative strategies to stay in the market. PricePrices may be lowered to sell off the remaining inventory of the discontinued products. Other products may also see a fall in price as the company has to maintain competitive pricing. PlaceSelective distribution. Distribution is done only in places with sure shot demand. Trade channels may be reduced. PromotionThe main focus is on the brand image as new products are planned to be introduced. Promotion budget on existing products is reduced. More focus on public relations and publicity. Go On, Tell Us What You Think!Did we miss something? Come on! Tell us what you think of this article on Product Life Cycle in the comments section. A startup consultant, digital marketer, traveller, and philomath. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing. In what phase of the product life cycle do sales and profits peak?Under most life-cycle conditions, profits typically peak before sales do, with profits reaching their peak level during the early growth stages and sales reaching their peak in the maturity stages.
Which stage of industry life cycle is characterized by highest profits?Maturity Stage
At this stage, companies realize maximum revenue, profits, and cash flows because customer demand is fairly high and consistent.
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