Latest Product Development Stages In 2021
The production development stages are explained in a precise manner.
- The main characteristic of this phase is the increase in sales. As the product becomes known, consumer interest increases and, at the same time, profits. To consolidate this growth, the company must increase production to meet demand. In this phase, also called take-off, a competing product may appear, so it is important to diversify the offer with variants and models that are complementary to the original. The promotion should be made more general.
- It is the stage in which the maximum production and sales are reached. Little by little these sales slow down, but the product is already consolidated in the market and the benefits are high. However, in some cases costs will have to be reduced to achieve the same benefits. Promotion should focus on keeping the market’s attention in order to achieve targeted sales. In this phase there are peaks of rises and falls in sales, due to the company’s attempts to preserve market share. This is the consequence of the fact that it is the stage in which more strategies are put in place so that the product remains alive in the mind of the consumer.
- It is the last phase of the life cycle because the product loses its attractiveness to buyers and sales plummet. It may be the case that the market is saturated. Other situations are related to profitability; If the company fails to reduce costs and profits decrease, there will come a time when it will no longer be profitable to produce it.
During the decline phase, pricing strategies can be used before abandoning the product. It is the moment of the offers and discounts. In this same sense, the advertising strategy should be oriented to communicate those opportunities to get the product at a lower price.
How The Life Cycle Is Managed
- Although these four stages occur in all products, it is important to remember that each one has a different life cycle. In some cases the life is very short, as it happens with some technological articles; in others, such as food and drink, they can stay alive for decades or even reappear after an absence.
- As mentioned at the beginning, mastering all these phases is key to applying marketing mix strategies . It should be remembered that the concept of marketing mix refers to a strategic analysis in which four basic variables are considered: product, price, distribution and promotion.
- Product: includes the core product (the product itself) and all the elements that accompany it, such as packaging, warranty or customer service.
- Price: analyzes the information about the sale price in the market and helps to establish it. This variable contains a very competitive factor because price determines, to a large extent, consumer behavior. It is a very important piece of information because it is the only variable that provides figures on income.
- Distribution: used to analyze each of the channels through which the product passes from its creation until it is delivered to the consumer. It includes storage, intermediaries and their influence on the market, points of sale, etc.
- Promotion: this variable addresses the company’s efforts to publicize the product among consumers to increase sales. It deals, therefore, with advertising, relations with the media, information on the location of the product, offers and everything that has to do with communication.
- By applying the marketing mix to manage each phase of the product life cycle, some general criteria could be established.
- For example, advertising in the introductory stage should be primarily informative, but in growth and maturity it should be directed toward persuasion. Finally, in the decline stage, you will have to be focused on keeping the memory.
- The price is higher as the introduction and growth phases unfold, but must remain competitive at maturity to retain market share achieved.
- With the distribution you could draw an inverted U-shaped line; it should be lower in the introduction phase and increase in growth and maturity. In the decline stage it would decline again.
- Regarding promotion, investment should be greater in the early stages and gradually decline in the stages of maturity and decline.
Strategies For Each Stage
- Each of the four stages of the life cycle has its own characteristics and these serve to identify which phase the product is in at any given time. They also serve to analyze how the product evolves in each of the phases; that is, if the objectives are being achieved, if it is competitive, if it has managed to gain market share or in what way it is ending its life cycle. In this last stage of decline there are three sub-phases, according to the decrease detected in sales.
- In the first (loss of up to 25%), the company lowers prices, reduces distribution and carries out promotional activities that try to counteract the aging of the product due to fashions or technological lag.
- In the second (loss of up to 50%), the previous prices are maintained and larger lots are negotiated with the distributors. The product must already be reformulated or start thinking about offering a substitute. Promotion is kept to a minimum and is based on consumer loyalty.
- In the third (loss greater than 50%), the company must already schedule the recall of the product. Prices are lowered even further and sales are supported by brand image and customer loyalty. It is time to decide if the withdrawal is final or if there is a possibility of innovating the product.
Extend The Life Cycle
- Because it is cheaper to keep a product on the market than to recall one and launch another, companies try to maximize their life cycle. To slow the decline are often used different strategies. These include the relaunch, update and extension of the maturity phase.
- Relaunch: it is about offering almost a different product with the name of the original. It does not always work because loyal consumers do not agree that the characteristics they appreciate of the first vary
- Update: It’s less risky because it’s more of a makeover. Some improvements are made to make the original product more attractive and not look out of date with the competition
- Extension of the maturity phase: the effort falls mainly on advertising. More frequent use is sought. In other cases, changes of habit are proposed so that consumption is expanded over time or to new segments of the population
- As you can see, in-depth knowledge of each phase is useful to make a product appear in its best light, gain market share and be profitable for longer. From the analysis of each stage, the most appropriate product strategies should emerge to optimize resources and achieve objectives until the end of the decline phase.
- However, you do not have to wait until that moment for a company to decide to launch a new product to replace the first one. A good indicator for the new launch is when the highest point on the sales curve of the previous one is reached. In this way, the benefits that the first product would be reporting would serve to put the second one on the market. Thus, the concatenation of launches would bring continuous business growth.