The 5 stages of the product life cycle can be a bit enigmatic for most companies struggling for market share. And it can be even more confusing for manufacturers who don’t see how products behave within the market.
But as we’ve always said, the performance of one department directly impacts the performance of all other departments. This means that although the 5 stages of the product life cycle are a marketing discipline, they will have a direct impact on production, development, and manufacturing. In turn, several production strategies will maximize each stage of a product’s life cycle in the market.
To clear up any confusion on this topic, let's explore the 5 stages of the product life cycle.
Product Life Cycle and Why It Matters
First, what is a product’s lifecycle?
The life cycle of a product is measured from the moment it is introduced to consumers to the point in time that it is removed from the market.
For example, do you remember VCR players? After being introduced to the market in the US in 1977, they were a quickly growing platform that allowed people to easily watch movies at any time in the privacy of their homes. The platform experienced tremendous growth over the next few decades.
Despite incredible popularity and growth, by 2006, production companies stopped converting films to VHS when DVDs had established a firm hold over the market. Now, DVDs are also in decline as the market is converting to streaming services as the number one distribution method. While some may miss the nostalgic days of rewinding tapes in the VCR, it’s important to remember: Every product has a finite life cycle that will eventually decline.
Case in point: It is unlikely that the VCR player will ever make a comeback on the market.
For this reason, it is crucial that companies pay close attention to the life cycle of their products. Understanding where your product falls within the 5 stages enables you to launch the correct strategic actions and know where to focus your production efforts.
The Product Life Cycle: 5 Stages
Classically, product life cycles are broken down into 5 stages:
Let's review both the defining characteristics of each stage along with the appropriate strategies and goals to help you stay competitive in the market.
Product Life Cycle Stage #1: Development
Unsurprisingly the very beginning of a product’s life cycle is the development stage. Although Development technically occurs before the product goes to market, this stage is crucial from an engineering and manufacturing perspective.
In this stage, costs are high, revenue is low, and interaction with the market is almost non-existent. However, during this time you are simultaneously working on 3 key areas:
Fine-tuning the product: Here is where you’ll want to hone in on the finer details of your product. You can use concept testing and focus groups to predict how the product will be received by the market. Be sure to make any necessary changes to the product based on the feedback you receive.
Clarifying the investment plan: For many new products in the development stage, companies either fund the development themselves or seek funding from other investors. If using outside funding, you’ll need a firmly established minimum-viable product (MVP) and a clear production plan to prove it is a worthwhile venture.
Refining your production plan: Your production plan is just as important as the actual product. If you don’t have a clear production method, companies will be reluctant to invest. Think about how you’ll source the required materials, how the operation will be staffed, and how staff will be trained.
Pro Tip: Create clear and effective production methods with digital work instructions. Use pictures, videos, and annotations to accurately present and establish how a product will be made while collecting data during the process. Then, as your product evolves, improve and grow the instructions over time.
Product Life Cycle Stage #2: Introduction
After the product is developed, your product is ready for the market. As we saw in the Development stage, the Introduction stage is marked by high costs and low revenue. During this time, promotion and marketing will be at their highest to increase brand awareness and get the product to as many early consumers as possible.
While the promotional investment is high, it is also a good time to begin a continuous improvement plan for the product. How the market reacts to the product during its introduction is a good indicator of how you can add more value for current or future iterations.
It's never too soon to begin improvement, although it can be too late.
It is important to note that companies often see the Introduction stage as a “do-or-die” part of the product's life cycle. However, even if a product has a poor introduction to the market, it doesn’t mean it will be unsuccessful. It just means that you may have to stay in the Introduction phase a bit longer before the Growth stage can be experienced.
Product Life Cycle Stage #3: Growth
At this point, the market has embraced your product and revenue is increasing. These two factors make the Growth stage the most exciting part of the 5 stages of the product life cycle. However, there is still a lot of work ahead of you, especially since your success has drawn the attention of competitors.
If entering an already crowded market, competitors will react quickly to your new product. If you are the first to bring the product to the market, then it will take longer for competitors to follow. But make no mistake, competitors will come to steal from your growth in any market condition.
To maximize the Growth stage, there are two key strategies.
Establish why your product stands above your competitors: Factors such as quality, reliability, and cost play into why consumers should buy your product over a competitor’s. Here is where you can beef up your production plan by adopting smart manufacturing technologies that drive quality and reliability while mitigating the costs of non-value-added work and increasing ROI.
Continue Innovation: Adding new features and additional support services to your product are good ways to offer more value to the customer and increase market interest.
As the product experiences growth in the market, it should also experience evolution within the production environment through better practices and innovation.
Pro Tip: Rember that continuous improvement
needs to be a consistent goal. Make continuous improvement easy by using digital work instructions to effectively communicate and share the most up-to-date knowledge with your workforce at any time and any place.
Product Life Cycle Stage #4: Maturity
Once a product's growth begins to slow down, it is a good sign that the market is saturated and the product has reached Maturity. At this stage, demand decreases, sales slow down, and profit margins begin to shrink. For these reasons, many companies will reduce prices to stay competitive.
While lowering prices is a viable option, there are other effective ways for companies to maintain high revenue in Maturity
In many ways, the Maturity stage is like a game of “King of the Hill” where everyone is scrambling to stay near the top of the Product Life Cycle Curve and ensure they don’t fall to the bottom. There is no growth left to have, just competition to overcome.
Although the Maturity stage may seem like the precursor to the impending Decline stage, many companies have maintained maturity for years through careful observations of the market and their production environments. Maturity presents companies with a great opportunity to continue innovating by performing the following actions.
Maturity Opportunity #1. Modify the product
During product Maturity, new features and services can be used to increase desirability for the consumer. When sales begin to slow down, reach out to consumers and find ways to add more value to every dollar they spend. This strategy can be performed without ever lowering prices.
Think of laptop computers. The product is well into Maturity yet the prices only seem to be affected by the technical specs and inflation.
Now it should be noted, modification can be risky depending on your product line. In 1985 Coca-Cola announced a new recipe called “New Coke” based on the perceived changing palette of the contemporary consumer. Suffice it to say, the market did not approve as consumers demanded the company return to the classic Coca-Cola recipe. In the end, consumers won and we have classic Coca-Cola.
However, companies like Apple are consistently modifying their products to meet shifting market demand and new technological improvements. Modification can be risky but it can also create substantial new growth.
Maturity Opportunity #2. Develop a new product line
For companies with little room for product modification, there is the option of creating something new to re-invigorate sales.
For example, Pepsi, a long inhabitant of the Maturity stage, introduced Pepsi Blue in 2002. Although the product quickly declined and was discontinued only 2 years later in 2004, the company did experience double-digit growth while increasing brand awareness for an already well-known product.
Maturity Opportunity #3. Innovate production
It’s no secret that every point in the 5 stages of the product life cycle can be improved by better production practices and technologies. Continuously improving production saves companies both time and money. During the Maturity stage, smart manufacturing strategies and technologies can be the difference between staying at the top or progressing to the Decline stage.
Think of it this way: The more efficient your operation is, the longer your product will be able to last on the market. For the past two decades, companies have maximized their Maturity stage by progressively improving their operations with the above intelligent strategies.
Product Life Cycle Stage #5: Decline
The last stage of a product’s life cycle is Decline. This stage is marked by a steady shrinking of sales, increased competition, and obsolescence of the product in the current market. We can see these similar attributes in the real world as DVD players have been in decline next to modern streaming services.
Despite this being the last of the 5 stages of the product life cycle, there is still work to be done. If managed correctly, companies can either extend the Decline stage or make a comeback onto the market.
Remember Pepsi Blue? While the beverage is no longer available in North America, it is still available in other countries around the world. Though the product seemed to be dead after two years, it has been teetering in the Mature and Decline Stages for 20 years thanks to the international market.
One of the most notable comeback stories is Apple Inc. The company stayed alive in the Decline stage for twelve years before being taken over by Steve Jobs in 1997. Under Steve’s innovative leadership, Apple rose again to be a serious competitor of Microsoft.
There is no magic formula to get out of the decline phase, but there are strategies that can help companies experience a slow profitable product decline rather than a fast unprofitable one.
- Decreasing overall marketing
- Cutting production down to bare essentials
- Soley targeting locations where the product is still in demand.
These strategies enable companies to milk as much out of the product for as long as possible or potentially experience a new Growth/Maturity stage in the product’s life cycle.
The 5 Stages of the Product Life-Cycle: Which One Are You In?
At the end of the day understanding these 5 stages is incredibly important for the health and longevity of your product on the market. But how do you know which stage your product/company is in?
There are two things you must remember:
- Time is not a reliable indicator: Every company/product will experience the 5 stages of the product life cycle in different time frames. Products such as seasonal clothing will rapidly experience development and decline over a season. On the other hand, products like industrial equipment will go through each stage slowly over a matter of years
- The stages can be primarily dictated by sales and expenditures: If sales are low and the cost is high, you may be in the first 3 stages. If sales and costs are high, you might be in the growth phase. And if sales are low and costs are low, then you are most likely in the Maturity or Decline stage.
Beyond these two indicators, understanding each phase and their key markers is the number one method of determining where the product has been and where it will be.
A little knowledge goes a long way.
In each of the 5 stages of the product life cycle, using advanced production methods helps to sustain growth and profitability over time. VKS digital work instructions enable companies to standardize their best practices and share complex tribal knowledge with their workforce. Company leaders can rest assured that every worker performs the correct procedures every time.
Adding to this, digital work instructions gather data from every process, allowing you to have the most accurate knowledge at your fingertips and understand the best strategies to implement at any point within your product’s life cycle.