Every product or service has a lifecycle. Some lifecycles last decades, while others have a very short lifecycle, lasting weeks. Understanding the lifecycles of your products and services is vital to effectively growing your business.
Product lifecycles typically have four stages: Introduction, Growth, Maturity, and Decline.
The Introduction stage is probably the most important stage in the product lifecycle. In fact, most products that fail do so in the Introduction stage. This is the stage in which the product is initially marketed. A well-planned and effective marketing strategy is vital at this stage.
The Growth stage is where the product experiences substantial market penetration and growth. As products gain market share, companies will spend heavily on mass-market advertisements, such as television and radio.
As the advertisements and market share for the product grow, the product will be sold by many additional distributors. At this stage, the cost to produce the product decreases, and profit increases.
Typically, the most time a product spends in a single stage is the Maturity stage. During this stage, sales continue smaller growth, and then begin to stabilize.
As products stay in this stage, companies will focus their advertisements more on brand recognition instead of the merits of the product itself. Since there is no substantial growth for the product, companies will focus on maintaining market share and finding other products with growth potential.
Profits for the product in this stage are the highest, as the costs to produce are the lowest and there is a definite market. If you choose to purchase the product in the stage, make sure to do so in the early stages of the Maturity stage.
The Decline stage is the death or irrelevance of the product. This is when sales of the product drop significantly due to irrelevance, newer versions, or the fad ended.
When the product is in this stage, suppliers and distributors will offer sales and heavily discount the product in order to get rid of it. If you purchase the product in this stage, you will soon find that it not only takes up valuable retail space, but your inventory investment will be lost.
Note that not all products or services will experience the entirety of the product lifecycle; sometimes they will jump from Introduction to Maturity, or from Growth to Decline. This lifecycle has been found to be very typical of most products.
As you choose products and services for your business, make sure that you perform a Growth Analysis to ensure that they are either in the Growth or Maturity stages. By doing so, your business will maximize its profits, lower marketing and advertising costs, and be on the cutting edge of what your market wants.