The Impact of Product Life Cycle on Product Planning
Numerous companies have struggled due to their failure to recognize that their product markets undergo significant changes or can even vanish every five years. A notable example is Nokia, which was unable to adapt to the shifting landscape of the mobile phone market. As competitors introduced advanced smartphones, Nokia’s products gradually disappeared from the market.
Effective management of the product life cycle offers various advantages that significantly influence product planning. These benefits include:
- Accurate forecasting of production and marketing costs, along with strategies to reduce these expenses and minimize waste in raw materials.
- Streamlining efforts towards the primary goal of developing a desirable, competitive, and profitable product over the long term.
- Continuous enhancement of product quality to align with customer preferences.
- Implementing efficient strategies to extend the product’s market presence by establishing more effective distribution channels.
- Estimating projected profits and forecasting sales opportunities at each stage of the product life cycle.
Stages of the Product Life Cycle
A product typically progresses through five fundamental stages in its lifecycle. It is crucial for organizations to adhere to their marketing plan during each of these stages. A thorough understanding of the product life cycle and its implications on product planning is essential for any producing entity. The stages can be summarized as follows:
Development Stage
This stage involves the creation of a new product or the enhancement of an existing one, relying on continuous evaluation and customer feedback regarding previous products, regardless of whether the feedback is positive or negative.
Subsequently, the company analyzes this data and examines competing products and the overall market to draw conclusions that will inform product development.
Introduction Stage
The introduction phase is critical for the product’s success and holds significant importance. Launching a product into the market is a complex process that can greatly influence marketing strategies and the product’s growth trajectory. This phase often incurs substantial costs for promotion and marketing to reach the widest possible audience.
Growth Stage
During the growth stage, indicators of success become evident. The focus shifts to increasing market share, achieving high sales volumes, and maximizing profits while securing a competitive position in the market.
Decline and Saturation Stage
At this point, demand for the product begins to diminish, leading to a gradual decline in profits and sales. The product faces intense competition and market challenges. Marketers must recognize the impending risks and develop strategic responses before it’s too late.
Decline and Withdrawal Stage
In the final stage, the product experiences a downturn, marked by declining sales and shrinking profits.