Product and its life cycle. The concept of the product life cycle, the main stages and their characteristics. Types of life cycle

Stages life cycle goods

Having found their product on the market (needed primarily by the consumer), the manufacturer, marketer of the enterprise must determine how long the product will last on the market, i.e. be able to foresee and calculate its life cycle. Any product, like a living organism, is born, lives and dies.

The product life cycle was studied for the first time using the example of branded goods. The very concept of the life cycle was developed in the late 50s and early 60s during a period of stability, uniform economic growth and increasing demand for consumer goods. The life cycle reflects changes in growth, taste, style, and the influence of technological progress.

The cycle can be found not only in brands and products, but also in materials, shapes, colors, and technologies. The life cycle of a product does not always end when it disappears from the market.

Some products can begin a new cycle already during the saturation stage, prolonging their existence.

The life cycle of a product is the time from the initial appearance of a product on the market until its discontinuation in the same market.

The life cycle is described by changes in sales and profit indicators over time and consists of the following stages (their number varies from four to six among different authors).

1. Product development.

2. The introduction and testing stage is a period of slow sales growth as products enter the market. At this stage, the product only brings costs, and often losses. At this stage, investments in organizing production and developing the product (especially if it is new) are very large.

3. Stage of development (growth) - the stage of recognition of the product by the consumer. It is characterized by a significant increase in sales volume and an increase in its profits.

4. Maturity stage - a period of gradual slowdown in sales growth due to the fact that the product has already been accepted by the majority of potential buyers. At this phase, profit reaches its maximum and begins to decline due to additional expenses to maintain the competitiveness of goods for advertising and sales promotion.

5. Decline stage - period sharp decline sales volume and profit.

Usually the introduction stage is the shortest, and the decline stage is the longest. Determining the end of one phase and the beginning of another is not easy. Typically, the beginning of each new stage is considered to be the moment when the increase or decrease in sales volume becomes pronounced.

Most products go through the life cycle described, although its overall duration and the specifics and duration of each stage may vary. Some products are characterized by the absence of an introduction stage, for others the introduction stage moves into the maturity stage, or the decline stage can turn into a growth stage.

Each stage requires the selection of appropriate marketing tools: prices, forms of distribution and promotion. And the reaction to the various situations in which the passage of goods finds itself changes in accordance with their combinations. Typical situations in the product life cycle and the set of marketing activities usually applied in each case are shown in the table.

A product life cycle model allows you to explain the behavior of a product on the market depending on many variables and describe the future scenario of product development. In modern conditions, cycle modeling is the most important tool strategic planning.

Although the product life cycle model represents a simplified view of reality, it nevertheless gives the marketer the opportunity to track and firmly maintain the level of sales in the market.

Due to a scrupulous and careful analysis of the dynamics of the product life cycle, enterprise management can know what, when and how to change, namely:

What is happening with the market, what stage it may be in; whether it is threatened by technological or environmental factors;

What is happening in the market, what are the current trends, what competitors and consumers are doing;

What marketing techniques will bring success to the product.

As a strategic planning tool, the product life cycle concept allows you to better:

Understand the future of the enterprise;

Coordinate all efforts of all parts of the enterprise;

Clarify the objectives of the enterprise policy;

It's best to prepare for unexpected changes.

The life cycle model can also be useful in planning a production program but avoiding an unfavorable outdated structure.

Measuring the life cycle of products in terms of revenue depends on pricing policies. But applying the same curve after a price change can give an ambiguous picture, since it is not easy to track the relationship between revenue and the number of units sold, and it is also difficult to analyze sales based on revenue due to the lack of cost information. Determining a product's life cycle based solely on units sold complicates understanding of cost and profitability drivers. If we take the profitability of a product as a measure, it is also not enough to assess the acceptance of a product in the market.

All three analyzed measurement methods, despite their shortcomings, are interconnected and can be used to analyze the environment of an enterprise with factors of varying degrees of impact.

A common disadvantage of all three methods is the approximation of calculations of demand changes. Finding out with sufficient accuracy what stage of the life cycle a manufacturer is at is not easy. For example, for a marketer in an enterprise that has reached a certain level of sales, it can be difficult to predict whether this is a stage of maturity or whether sales will grow further. On the other hand, sales may fluctuate temporarily due to seasonal reasons or emergency external factors.)

Many enterprises do not limit their production to one product. It is advisable for these products to be at different stages of their life cycle. When one product is poorly traded and produces little or no profit, others can be traded better, generating income and helping the company prosper.

Each product lives on the market for a certain time. Sooner or later it is replaced by another, more perfect one. In this regard, the concept of product life cycle is introduced.

The life cycle of a product is the time from the initial appearance of a product on the market until the end of its sale in a given market. (This should not be confused with the production life cycle, which includes R&D, development in production, production itself, operation and discontinuation.) The life cycle is described by changes in sales and profit indicators over time and consists of the following stages: start of sales (market introduction) , growth, maturity (saturation) and decline.

Figure 1.3.1 - Product life cycle

The market introduction stage is characterized by a slight increase in sales volume and may be unprofitable due to large initial marketing costs, small volumes of product output and the lack of development of its production.

The sales growth stage is characterized by rapid growth in sales volume driven by consumer acceptance of the product, profitability increases, the relative share of marketing costs typically falls, and prices are constant or slightly falling.

At the maturity stage, sales growth slows down and even begins to fall, since the product has already been purchased by the majority of potential consumers, competition intensifies, marketing costs usually increase, prices may decrease, profits stabilize or decline. When upgrading the product and/or market segments, it is possible to extend this stage.

The recession manifests itself in a sharp decline in sales and profits. Product upgrades, price reductions, and increased marketing costs can only prolong this stage. It is necessary to note that the maximum profit, as a rule, in comparison with the maximum sales volume, shifts towards the initial stages of the life cycle. This is due to increased costs of maintaining sales at later stages of the product life cycle.

The concept of life cycle is applicable to a class of product (telephone), type of product (cordless telephone), to a specific brand of product (radio telephone of a specific company). Of greatest practical interest is the study of the life cycle of a specific brand of product. This concept is also applicable to such phenomena as style (clothing, furniture, art, etc.) and fashion. Different marketing strategies are used at different stages of the life cycle.

The shape of the life cycle curve tends to remain more or less the same for most products. This means that once a product appears on the market, if consumers like it, then its sales volume grows and then falls. However, the duration and intensity of the transition from one stage to another vary greatly depending on the specifics of the product and market. The transition from stage to stage occurs quite smoothly, so the marketing function must closely monitor changes in sales and profits in order to grasp the boundaries of the stages and make changes to the marketing program accordingly.

It is especially important to catch the stage of saturation, and even more so - recession, since keeping an exhausted product on the market is unprofitable, and in terms of prestige - simply harmful. Obviously, you also need to choose the right moment to enter the market with some new product.

If the demand for such a product is already falling, it is hardly worth starting commercial activities on the market. Obviously, when it is determined that a product is at the stage of maturity or saturation, then efforts must be made to develop a new product to replace the product that has exhausted itself.

Other options for life cycle curves are also possible (Fig. 9.4).

Despite the popularity of product life cycle theory, there is no evidence that most products go through a typical 4-phase cycle and have standard life cycle curves. There is also no evidence that the turning points of the various phases of the life cycle are to any degree predictable. In addition, depending on at what level of aggregation a product is considered, one can consider Various types life cycle curves.

Fig1.3.2

product policy product life cycle

The first thing to remember is that market research does not start with the product, but with the needs of consumers. For example, consumers have a need for transportation. Such needs may remain constant, grow from century to century, and may never reach a decline phase.

The need for transport is concretized into the demand for certain technological methods of satisfying it (from primitive Vehicle, from a horse-drawn carriage to a car and other modern vehicles).

The life cycle of technological methods, although shorter than the needs, can be extremely long.

Technological methods can be implemented using various specific technical and technological solutions. For example, cars can use steam, piston, turbine, and electric engines, which also have their own life cycle. Radio transmitting devices successively used vacuum tubes, semiconductors, and integrated circuits. Hidden under each such curve is a series of life cycle curves for individual technical and technological innovations. These life cycle curves can be very short and they certainly tend to shorten.

The nature of the life cycle curve is often the result of management actions and is not due to external causes. Many managers believe that every product inevitably follows its own life cycle curve. When sales volume stabilizes, instead of updating the technology and looking for new market opportunities, managers classify the product as a “cash cow” and begin to look for other business.

In addition, the core concept of marketing is to focus on consumer needs rather than focusing on selling products. The life cycle concept has a product rather than a marketing orientation. The product of a particular organization will “die” if needs change, if a competitor makes a better offer, if new technologies allow us to offer something new to consumers. Therefore, it is better to focus your efforts on identifying the causes of change rather than studying their consequences using a life cycle curve.

Identifying the causes of changes will allow us to anticipate future changes and develop a product policy that is maximally adapted to them.

When developing and implementing product policy, it is necessary to take into account that the same product in different markets may be at different stages of its life cycle.

In practice, most companies sell multiple products in different markets. In this case, the concept of “product portfolio” is used, which refers to the totality of products produced by the company. The product portfolio must be balanced and include products at different stages of the life cycle, which ensures the continuity of the organization's production and sales activities, constant profit generation, and reduces the risk of not receiving the expected amount of profit from the sale of products at the initial stages of the life cycle.

The life cycle of a product is the time a product exists on the market, that is, the time period from the beginning to the end of its release and sale in its original form.

Product life cycle

Introduction

In marketing, a PRODUCT is understood as a complex of tangible and intangible properties, including technical parameters, dimensions, weight, structure, color, packaging, price, prestige of the manufacturer and seller, and other properties that customers need to satisfy their needs and requirements. There are several product classifications:

1. As intended

stock exchange (energy, food, metals);

consumer demand (consumer goods);

industrial purposes (buildings, structures, equipment, tools).

2. By terms of use

short-term use (consumed immediately or a small number of times, for example, food, perfumes, cosmetics, small haberdashery);

durable (furniture, Appliances, cars, machines, etc.).

3. By nature of consumption and degree of processing

semi-finished products;

intermediate products (components);

finished goods.

4. By purpose and purpose

everyday needs (newspapers, cigarettes, groceries

selective demand (cars, video cameras, furs, etc.);

prestigious (Mercedes car, Parker pen, Roller watch);

luxury goods (crystal, carpets, jewelry, paintings).

5. According to the manufacturing method

standard (mass production, high degree unification);

unique.

6.According to purchasing habit

goods purchased frequently and without much thought (food, perfumes, detergents);

impulse purchase goods (sweets, flowers);

emergency goods (medicines, umbrellas, bags);

pre-selected goods (furniture, clothing, audio and video equipment);

goods of passive demand (insurance, textbooks, funeral supplies).

household (food, housing, services, recreation);

business (technical, intellectual, financial);

social (education, healthcare, security, development).

There are 3 product levels:

Product quality There are 4 groups of product qualities:

Physical (technical parameters, taste, weight, strength, shape, color, smell);

Aesthetic (style, class, beauty, grace);

Symbolic (status, prestige);

Additional (installation, commissioning, repair, right to exchange, liquidity).

In the process of developing a new product, a manufacturer needs to answer the following questions:

Who will be the main consumer of this product?

What is the capacity of this market?

Through what distribution channels will the product be sold?

Will seasonality affect sales?

Will it strengthen new product company reputation?

How will competitors react?

What will be the life cycle of this product (forecast)?

The process of consumer perception of a new product consists of 5 stages:

Awareness (general surface knowledge)

Interest (consumer search for additional information)

Evaluation (deciding whether to try a product or not)

Sample (minimum possible purchase volume)

Verdict (the final decision regarding further consumption of the product).

Product life cycle

The life cycle of a product is the time a product exists on the market, that is, the time period from the beginning to the end of its release and sale in its original form.

Product life cycle theory is a concept that describes product sales, profits and marketing strategy from the moment a product is developed until it is withdrawn from the market.

As a rule, the product life cycle includes 4 stages (stages):

Introduction (marketing)

Maturity

1. Development stage

Characteristics of the stage

The birth of an idea for a new product (service), marketing research(forecasting demand for a product), applied research (testing the concept of a new product for technical feasibility), design, market testing (test marketing). The company's goal is to test the concept of a new product for commercial feasibility.

Marketing tasks at the stage

Comprehensive marketing market research

Potential demand analysis

Sales volume planning

Assessment of the company's production and technological capabilities

Predicting consumer reaction to a product

Priority of marketing concept elements at the stage

Quality

Preferred types of consumers

The consumer capabilities are being determined using marketing research, the target market segment is being selected, segmented, and the base segment is being determined.

2. Implementation stage

2.1. Characteristics of the stage:

The stage is characterized by the arrival of the product on sale, the buyer becoming familiar with the product, and the buyer becoming accustomed to it. It is characterized by low sales volume and high costs, and little competition. A monopoly position of a product on the market is possible, but the product is not technically developed and technologically polished. The pricing policy is not stable and depends on the type of product. The skimming strategy and the gradual market introduction strategy can be used. In some cases, when introducing a new product to the market, it is possible to sell a new product at a price below its cost. The goal of the company is to create a market for a new product. 2.2. Marketing tasks at this stage:

maximum attraction of buyers' attention to the new product,

use of monopolistic advantage,

collecting information about customers' assessment of a new product.

At this stage, it is necessary to inform potential consumers about a new product unknown to them, encourage them to try the product, and ensure distribution of this product through a trade and intermediary network. 2.3. Priority of elements of the marketing concept at the stage: - 1) Advertising

2) Quality

2.4. Preferred types of consumers:

The main consumers are “innovators”. As a rule, these are young people who are the first to try a new product at risk, if not for their lives, then for their reputation (originals, dudes, dudes). They account for about 2-3% of final consumers.

3. Growth stage

3.1.Characteristics of the stage:

The stage is characterized by a significant increase in demand for a product and a corresponding increase in the production of this product. At this stage, there may be an excess of demand over supply, an increase in profits and stabilization of prices and advertising costs. The market is growing rapidly, however, there is an unstable and volatile nature of demand. Possible response from competitors. The company's goal is to develop the market, seize leading positions, and maximize sales growth. 3.2.Marketing tasks at the stage:

gaining market positions,

development of basic solutions,

strengthening customer loyalty through advertising,

increasing the duration of the sustainable growth stage.

To maximize the period of intensive sales growth and rapid market growth, the following approaches are usually used:

improve the quality of the new product by giving it additional properties,

penetrate new market segments,

use new distribution channels,

reduce prices in a timely manner to attract additional consumers.

3.3.Priority of elements of the marketing concept at the stage:

3) Quality

3.4. Preferred types of consumers:

The main consumers are “adepts” - trendsetters, opinion leaders in their social sphere. Their recognition makes the product famous and fashionable. They make up 10-15% of the number of end consumers. In addition, consumers include the "progressives" or "early majority" (eg, students) who provide mass sales during the growth stage. They make up from 25 to 35% of the number of end consumers

4. Maturity stage

4.1. Characteristics of the stage:

The stage is characterized by market stabilization. There is a slowdown in sales growth rates. Per capita consumption is falling. Groups of regular customers are being formed, flexible prices are being observed, and warranty and service are being expanded. The company's goal is to consolidate its gained market share. 4.2.Marketing tasks at the stage:

search for new markets,

optimization of distribution channels,

introduction of a set of measures to stimulate sales (discounts, competitions among consumers, sales on a premium basis),

improvement of sales and service conditions,

development of product modifications.

The following are used as marketing tools at this stage: Market modification is aimed at increasing the consumption of an existing product. It includes:

search for new users and new market segments,

finding ways to stimulate more intensive consumption of goods by existing customers,

it is possible to reposition a product so that it is attractive to a larger or faster growing market segment.

Product modification consists of modifying product characteristics such as quality level, properties or appearance in order to attract new users and intensify consumption. The following strategies are used:

A quality improvement strategy aims to improve the functional characteristics of a product, including durability, reliability, speed, and taste. This strategy is effective if

a) quality can be improved,

b) buyers believe the claim about quality improvement,

c) enough a large number of buyers want improved quality.

A feature enhancement strategy aims to give a product new properties that make it more versatile, safer, and more convenient.

the strategy of improving the external design is aimed at increasing the attractiveness of the product.

4.3.Priority of elements of the marketing concept at the stage:

4.4. Preferred types of consumers:

The main consumers are the “skeptics” or the “late majority”. They provide mass sales at the saturation stage (accounting for about 30-40% of the number of final consumers).

Decline stage

5.1.Characteristics of the stage:

The stage is characterized by a steady decline in demand, a shrinking market, and buyers lose interest in the product. There is excess production capacity, and substitute goods appear. There is a decrease in prices and a reduction in production of goods.

The company's goal is to regain lost positions in the market and restore sales.

5.2.Marketing tasks at the stage:

At this stage, the effectiveness of marketing activities sharply decreases, the expenditure of funds is not appropriate and does not provide a return. Possible reasons recession:

new advances in technology (obsolescence),

changing consumer tastes,

increased competition.

Exit routes:

price reduction,

giving the product market novelty,

searching for new areas of product use and new markets,

removal of old goods from production (an abrupt exit from the market is possible),

reduction of the marketing program,

transition to the release and promotion of a new promising product.

5.3. Priority of elements of the marketing concept at the stage:

4) Quality

5.4. Preferred types of consumers:

The main consumers are “conservatives” - staunch opponents of the new (accounting for 15 to 20% of the number of final consumers), as well as older people and people with low incomes.

Main characteristics of the product life cycle

Classification of types of product life cycle 1. Traditional life cycle

2. “Boom” is a very popular product, stable sales for a large number of years (for example, Coca-Cola)

3. “Passion” – quick rise, quick sales (fashionable seasonal goods).

4. “Long-term hobby” – quick rise, quick decline, but there is a stable residual sale

5. “Seasonal goods” – sales dynamics have a pronounced seasonal nature

7. “Product improvement” – periodic improvement of a product aimed at increasing its performance characteristics, which contributes to the resumption of a period of growth after some stabilization of sales.

8. “Failure” – lack of success in the market, the product is a loser

A marketer needs to choose the optimal moment to enter the market with a new product or to introduce an existing product to a new market. At the same time, one product can be in different markets at different stages of its life cycle. The duration of the stages may also vary in different markets. All this must be taken into account when compiling a company’s product portfolio. It is desirable for a company with a wide range to simultaneously have products that are in the stages of introduction, growth and maturity. In this case, income from the sale of goods at the maturity stage contributes to the effective introduction of new products, and goods at the growth stage can provide additional funds for updating, developing modifications, and introducing discounts on the price of goods at the maturity stage. It is necessary to formulate a product portfolio in such a way as to constantly introduce new products and at the same time maintain a balance of goods in stock. various stages life cycle.

Boston Consulting Group Matrix

This matrix is ​​an important tool for conducting assortment analysis, assessing the market prospects of goods, developing an effective sales policy, and forming an optimal product portfolio for the company.

“Stars” is the most promising, developing type of product, strives to increase its share in the company’s product portfolio, and is at the growth stage. The expansion of production of this product is due to profits from its sales. (Growth stage.)

"Cash cows" are goods at the maturity stage; sales growth is insignificant; the product has the maximum share in the company's product portfolio. It is the main source of income (of the company). Proceeds from the sale of this product can be used to finance the production and development of other products. (Maturity stage.)

“Problem children” (“Wild cats”, “Question marks”) are products that have a very low market share with a relatively high rate of sales growth. May be at the implementation stage or at the beginning of the growth stage, require material costs; It is difficult to determine their market prospects (they may become “stars” or “dogs”). Requires additional research and funding.

“Dogs” - unsuccessful products - have a relatively small market share (with a tendency to decline) and are characterized by a low rate of sales growth or lack of growth as such. Such a product has no prospects and must be withdrawn from the market. (The decline stage or type of life cycle is failure.)

With a successful life cycle, products turn from “problem children” into “stars”, and subsequently into “cash cows”. If unsuccessful, “difficult children” turn into “dogs”.

“stars” should be protected and developed;

"cash cows" require strict control of capital investments and the transfer of excess financial revenue to the control of senior management;

“difficult children” are subject to special study in order to establish their prospects for becoming “stars” and the financial, technological and time resources required for this;

It is necessary to get rid of “dogs” whenever possible, unless there are compelling reasons for keeping them in the company’s assortment.

When conducting research aimed at improving the efficiency of the product life cycle, it is necessary to clarify the following questions:

1. At the implementation stage:

How informed are buyers about the product?

What are the pros and cons of purchasing this product from the buyer's point of view?

What determines the further distribution of this product?

How to encourage consumers to make repeat purchases?

2. During the growth stage:

Where is the limit of market saturation?

What are the characteristics of product consumption (seasonality, cost)?

What factors promote and what hinder expansion?

What consumer groups can be further attracted?

3. At the maturity stage:

What is the percentage of customers who make repeat purchases?

How can you expand your product range?

What incentive system should be used (sales promotion methods)?

What is the competitiveness of the product?

What factors facilitate and what hinder the purchase of a product?

What modifications of the product are the most promising and can attract the buyer?

4. During the recession stage:

What types of consumers and when do they refuse to consume a product?

Where is the possible level of stabilization of demand for a product?

What are the incentives for additional purchases?

Are there opportunities to improve the product?

Current trends in changing product life cycles (innovative aspect)

Practice shows that changing the life cycles of goods is subject to the requirements of the following laws:

The law of increasing needs according to which each satisfied need forms the basis for the emergence of new, more high needs and at the same time creates the prerequisites for their satisfaction. Thus, the law of increasing needs leads to the need to develop goods with higher consumer properties (speed, comfort, safety, etc.). In addition, the sales volumes of these goods in physical and monetary terms are increasing.

Law of acceleration social development In accordance with this law, all processes occurring in society and leading to the final result tend to accelerate.

Sequence of product life cycles

Based on these laws, it follows that:

sales volumes and their maximums will be higher in physical and value terms for truly new products (genuine innovation);

the life cycles of goods and their individual stages (stages) will be steadily shortening, which necessitates more dynamic and capital-intensive efforts by the company when new products enter the market, stabilize production and remove obsolete products from production and sales.

These circumstances complicate the forecasting activities of marketing services. The continuous sequence of changes in the life cycles of goods determines a number of fundamentally important circumstances

Firstly, the development of new goods (new generations of goods) to replace old goods must take place in the depths of the still relative prosperity of old goods. Therefore, the development of new products for the future, to replace existing products, should have the nature of a law for any company

Secondly, the new product must not only have higher consumer properties, but also must be designed for a more mass buyer. To do this, it is necessary to think through issues related to the creation of product modifications intended for buyers with different incomes, needs, tastes, etc. In addition, you should make sure that the costs of the new product are not too high.

Bibliography

To prepare this work, materials were used from the site http://www.marketing.spb.ru/

The study of fluctuations in the volumes and duration of production of a particular product made it possible to establish that these indicators change cyclically over time, at regular and measurable intervals. In economic science, the phenomenon of periodic fluctuations in the volume and duration of production and sales of a product is called the economic life cycle of the product or, in short, the product life cycle.

Marketing is primarily interested in the life cycle of a product on the market. It is shorter in time than the economic cycle, which includes the phases of creating a product prototype, its experimental production and a short initial period of mass production, when the product has not yet “reached” the consumer.

The life cycle of a product is the period of existence of a product on the market, the period of time from the conception of the product to its removal from production and sale.

The concept of the product life cycle describes a product's sales, profits, competitors, and marketing strategy from the time a product enters the market until it is withdrawn from the market. It was first published by Theodore Levitt in 1965. The concept is based on the fact that any product is sooner or later forced out of the market by another, more advanced or cheaper product. There is no permanent product!

The concept of a product life cycle applies to both product classes (TVs) and subclasses (color TVs) and even to a certain model or brand (color TVs "Electronics"). (Although many economists talk primarily about the life cycle of only a product, almost denying the existence of a life cycle for classes and subclasses of goods.) A specific product model more clearly follows the traditional product life cycle.

The life cycle of a product can be presented as a certain sequence of stages of its existence on the market, which has a certain framework. The dynamics of the life of a product shows the sales volume at each specific time of existence of demand for it.

Phases of the product life cycle.

Product life cycles are very diverse, but it is almost always possible to identify the main phases. The classic product life cycle can be divided into five stages or phases:

Introduction or entry into the market. This is the phase when a new product appears on the market. Sometimes in the form of trial sales. It begins from the moment the product is distributed and goes on sale. At this stage, the product is still new. The technology has not yet been sufficiently mastered. The manufacturer has not decided on the choice production process. There are no product modifications. Product prices are usually slightly higher. The sales volume is very small and is growing slowly. Distribution networks are cautious about the product. The growth rate of sales is also low, trade is often unprofitable, and competition is limited. Competition in this phase can only come from substitute products. The goal of all marketing activities is to create a market for a new product. The company incurs high costs, since production costs are high in this phase, and sales promotion costs usually reach the highest level. Consumers here are innovators who are willing to take risks in testing a new product. There is a very high degree of uncertainty in this phase. Moreover: the more revolutionary the innovation, the higher the uncertainty. .

Growth phase. If the product is required in the market, then sales will begin to grow significantly. At this stage, the product is usually recognized by customers and the demand for it quickly increases. Market coverage is increasing. Information about the new product is transmitted to new customers. The number of product modifications is increasing. Competing companies pay attention to this product and offer their own similar ones. Profits are quite high since the market acquires a significant number of products and competition is very limited. Through intensive sales promotion activities, market capacity is significantly increased. Prices are slightly reduced as the manufacturer produces a large volume of products using proven technology. Marketing expenses are distributed over the increased volume of production. Consumers at this stage are people who recognize novelty. The number of repeat and multiple purchases is growing.

Maturity phase. Characterized by the fact that the majority of buyers have already purchased the product. Sales growth rates are falling. The product becomes traditional. A large number of modifications and new brands appear. The quality of goods and smooth production are increasing. Service is being improved. Maximum sales volume is achieved. The company's profit decreases. Profits are growing slowly. Stocks of goods appear in the warehouse, competition intensifies. Price competition. Sales at reduced prices. Weak competitors leave the market. Sales promotion activities reach maximum efficiency. Consumers here are slow adopters and conservatives. This stage is the longest in time.

Saturation phase. Sales growth stops. The price is greatly reduced. But, despite the price reduction and the use of other measures to influence buyers, sales growth stops. Market coverage is very high. Companies are looking to increase their sector in the market. The sales network is also no longer expanding. The technology is the same. At this stage, there is a high probability of repeated technological improvement of the product and technology. This stage is often combined with the maturity stage for the reason that there is no clear difference between them.

Recession. A recession is a period of sharp decline in sales and profits. Sales may drop to zero or remain at very low levels. The main reason: the emergence of a new, more advanced product or a change in consumer preferences. Many firms are leaving the market. Sales promotion spending is reduced or eliminated altogether. Consumers are losing interest in the product, and their number is decreasing. The bulk of consumers are conservatives with low solvency. At this stage, it is advisable to discontinue the product in order to avoid large financial losses.

The transition from stage to stage occurs without sudden jumps. The duration of the cycle and its individual phases depends on the product itself and specific market. The life cycle is also affected external factors, such as the economy as a whole, inflation rates, consumer lifestyle, etc.

The product life cycle is the basis of your strategy. What stages does it consist of and how do these stages affect your course of development? Make yourself comfortable, we're starting.

Not long ago there was an interesting training on product management. The lecturer talked about the product life cycle and its role in strategy formation. Looking back, I remember how I came across this topic several times. I understood its importance, but somehow I didn’t go deeper, but then I was immediately hooked. I’ll try to call the life cycle a tool and break down its use from different angles.

A product, project, service, whatever, everything has its own life cycle. In simple words, this is a period of life during which a certain entity (let’s call it that) goes through certain stages of development. The life cycle of a product is the time interval from its appearance on the market to its complete disappearance.

It is the boundaries of the market that serve as the reporting period for the product. Everything is simple and merciless: a product appeared, entered the market, began to be sold, and then disappeared after some time. Don’t be upset, let’s look in more detail at the stages that he goes through, and then we’ll understand how this knowledge will be useful to us.

The main stages of the life cycle are summarized in the figure below. As a rule, any product passes them all.

There are four main stages:

• Implementation
• Maturity

There are different formulations, but the meaning is the same. Depending on the stage at which the product is, different development strategies are built. The same goes for the audience, that is, your users or future clients.

At different stages of the life cycle they interact with the product different groups users. Let's look at each stage in more detail.

Implementation

The product life cycle begins when the product needs to be released/introduced to the market. This is one of the most interesting stages in terms of development. At this stage, the value of the main idea is checked, that is, whether people will even need what you offer.

The implementation stage is considered to be the most difficult from an economic point of view. Production costs here are the highest, plus an advertising budget is needed to “break through” to the market. But in fact, “the business may not work out.” The market will not accept what you offer and everything will “go down the drain.”

From a product development point of view, this is the golden time! Time (or minimum version of the product) and hypothesis testing. The time when you leave one most important value and let the market “try” it. Your task is to “feel” the interest of users and understand whether they need your product at all? There is no need to spend huge budgets on the production of that very “great” product, it’s enough to just do it.

Of course, for the creator (this could be a whole team) to receive an answer that no one needs the product, it’s like a “knife to the heart.” But the most important misconception is to believe to the last in the success of your brainchild. The sooner you receive feedback from the market, the cheaper the experience will be for you.

At the “implementation” stage, the product is given to small groups of users to “try.” Usually these are those who love something new, those who pre-order various things and are foaming at the mouth to get them first. These are innovators.

They will be your first friends. Those who will test your product and give feedback. Finding them can be difficult, but this is where you usually start. Try visiting thematic communities and forums, as well as crowdfunding platforms like boomstarter. Don't be afraid to communicate with them and exchange opinions. Perhaps these are your first clients!

• Don’t be afraid to abandon a project if it doesn’t “take off” on the market.
• It is better to release several quick pilots (test projects) than one long, full-fledged product that will not take off.
• Use innovators as part of your future team. Get involved and work with them on the product.
• Gather as much market feedback as possible and adjust your course.

If the “implementation” stage is successful, then you move on to the next step, this is the “growth” stage.

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Not So Fast: Moore's Chasm

Eh...if only it were that simple. Before you get to the “growth” stage, you need to cross the Moore's Gap (named after its author). It is in this abyss that most projects, products, startups and other market entities disappear. Remember the drawing with the audience that we looked at just above?

A Moorean chasm forms between the early adopters and the early majority. This gap arises due to significant differences between user groups: technology enthusiasts and pragmatists. In fact, the topic of overcoming the chasm is very broad and a separate material can be dedicated to it. To save time, I suggest focusing on key ideas that will help you navigate and gain knowledge in this area, if necessary.

Two key ideas Moore's chasms to learn:

• To bridge the chasm, you need to capture a niche market. That is, when you start introducing a product to the market, it has a small audience, a segment. Focus on it first, refine the product and scale to this “micro-market”. Become the king of this small kingdom, and then move on to the next step.
• Early adopters have lower product requirements than the early majority. For the former, service and price may not be as critical as for the latter. The problem arises when the product begins to gain traction with early adopters. The creators stop paying attention to the development of quality and service, because they think that other users need the same, but this is far from the case. The early majority is more demanding, and most importantly there are more of them than the early adopters. They are the ones who will bring you the main profit!

Height

The “growth” stage is characterized by a sharp rise in sales and demand for your product. The early adopters had already gotten a taste, and the early majority began to follow them. If you have crossed Moore's chasm, then most likely you have already begun to improve quality, service and think about new features to satisfy the most demanding client.

More and more of your product appears on the market, and with it, competition grows. You may lower your prices a little, but advertising costs will still remain high. At the growth stage, one of the main tasks is to tell about yourself as much as possible. more users and grab your “piece of the pie”.

The product life cycle is primarily focused on generating revenue. The “growth” stage is the most economically profitable time. Income is growing, and payback is just around the corner. As a rule, companies try to extend this period to the maximum, using advertising, additional services, etc..

• Don't forget the recommendations for overcoming the Moore's Gap that we discussed in the previous section.
• Improve product quality.
• Analyze your sales channels, perhaps there are other options for selling your “brainchild”.
• If advertising pays for itself, then do not stop investing. Be sure to consider the effectiveness of advertising channels!
• Start looking at new markets. These can be both related areas and fundamentally new directions. It's time to prepare the ground for the future (a little more about this below).

But sooner or later “growth” ends and we move to the stage of “maturity”.

Maturity

At this stage of the life cycle, your sales volumes are still growing and reaching their peak. You produce a quality product, but there are already many alternatives on the market. To compete and stay afloat, you have to create even greater additional value (additional services, special configurations, loyalty programs, etc.).

Price wars begin and each new improvement brings significant additional costs. The market for your product is saturated and profits will soon decline. Don't despair, it's a process natural evolution, which any project or idea goes through, but it can also be “hacked”!

How the “big” guys do it

So that you don’t get the impression that our product is approaching its logical end, I suggest you look at the experience of the “big” guys from global corporations who can move from the “maturity” stage to the “growth” stage and thereby remain at floating. Let's see how they do it.

And it looks exactly like in the picture above. When you're at the top of your game with your product, you start exploring options for new ideas. This is a constant search and testing of other products. You try different options, run them through innovators, take feedback, and correct them. You abandon unattractive projects and go on a search again.

Yes, your original product will most likely go into decline, but a new one, perhaps even better and more profitable, will take its place. Or maybe even several?

That's exactly what they do large corporations. The Procter & Gamble company (Tide, Gillete, Duracell, Pampers, Pringles and a bunch of other brands) produces up to 150 different projects a year. Of these, God forbid, 5-10 survive and are released into the mass market. But it is precisely these 5-10 that create new life cycles that bring profit to the giant and allow it to grow.

• Play to improve an existing product if it still makes economic sense, but start looking around.
• Look for new ideas and markets.
• Start testing and collecting information as early as possible.
• Get ready for a new life cycle.

Recession

What can I say, the “recession” is felt immediately. This is a decrease in profits and sales volumes. Some competitors are starting to leave the market. “Finita la comedia” - the comedy is over. New substitute products and technologies appear, and audience preferences change.

Some competitors may even be bought by large market players, and some will go bankrupt altogether. Everything is obvious and clear, the decline of your product is coming.

• Don't wait for the downturn. The expression “The captain is the last to leave the ship” is inappropriate here. There is no need to hold on to your “great” idea that was once successful. The sooner you realize this, the better it will be for everyone.
• Have you read the recommendations from the previous section? Then show me new idea and a new product!
• Get the most out of the product even at the “maturity” stage. If a negative economic trend appears, then try to sell your product or get rid of it as early as possible so that it does not drag you into a debt hole.

konkludo (“conclusion” in Esperanto)

Now you understand that the product life cycle is your strategy map. Look at what stage you are at. Build a strategy and take action. And most importantly, “prepare your sleigh in the summer,” don’t wait until “financial death with a scythe” comes and start creating new products and launching new life cycles as early as possible!

Once on the market, products go through a certain life cycle. It varies in duration for different products and can range from several days to ten or more years. The product life cycle was first described by Levit (an American marketer) in 1965. Let's consider this phenomenon in more detail.

General information

The stages of a product's life cycle influence the company's costs and profits when it is released. The price of products, the level of competition, consumer behavior and the differentiation of manufactured goods also depend on them. All stages of the product life cycle require the development of appropriate strategies and implementation tactics.

Development and research

These stages of the product life cycle are considered initial. As part of the research, consumer demand is studied. In particular, it is revealed:

1. The need for this product.
2. Buyer characteristics.
3. Specific sales market.

If the research results are economically favorable, the company begins to translate the idea into a project. For the company, these product life cycle processes act as only costs and probable future income. Using appropriate technologies, the company begins production of goods. Depending on its type, the life cycle of product production is formed. It also includes a number of necessary operations. These include, for example, processing of raw materials, assembly, packaging, and so on.

Launch to market

The manufactured goods begin to arrive for sale. For the company, this stage means maximum costs for creating products. New technologies may require further development, there may be few manufacturers on the market, and they are trying to produce only basic types of products. Various modifications of the product may be unclaimed. Consumers in such situations often choose whether to buy a product now or wait. At this stage the company must convince potential clients buy products. The most active consumers purchase products first. However, as a rule, there are not very many of them. In this regard, sales volume often increases extremely slowly. This, in turn, affects the company's profits. At this stage, the company does not receive much income. Moreover, the company's costs will reach high levels.

Height

If a new product satisfies the needs of potential buyers, then the sales volume becomes larger. Others are beginning to join active consumers who repurchase products. Through advertising, the company disseminates information about new products. The production of product modifications begins within the enterprise. This is facilitated by the emergence of similar products from competitors. At the same time, the cost of production may remain the same high or increase even more along with demand. The company begins to generate significant income. It increases and reaches its maximum towards the end of the stage.

Features of growth

It is beneficial for the company to extend this stage. This is achieved by directing all efforts to increase the period of growth in sales volume. To do this, an enterprise can improve the quality of products throughout the life cycle, develop new market sectors, identify untapped sales channels, and increase the intensity of advertising, thus continuing to convince consumers of the benefits of the product.

Maturity

During this stage, production is carried out in large batches with improved quality using proven technology. In this case, as a rule, there is a slower than with growth, but a stable increase in sales to the maximum level. Competition in the field of pricing policy and production of similar products is becoming more intense. Original developments from other companies are beginning to appear on the market. To maintain the product life cycle, the company needs to release improved versions of it. In most cases, this requires additional significant costs. This, in turn, affects profits. At the same time, demand becomes massive, people begin to purchase goods repeatedly and many times.

Recession

At a certain point, the product life cycle ends. This is an inevitable phenomenon. Many factors contribute to it. Products may end their life cycle due to the success of competitors, changes in consumer preferences or technology. As a result, there is a sharp reduction in profits, and the product may be sold at a loss. Typically the cost of production is low, but it may become higher towards the end of the stage. Competitors are starting to leave the market for this product. The remaining manufacturers are forced to reduce their assortment, narrow their scope of activity, and distribution channels are gradually depleted.

Creation of new products

Given the rapid change in tastes, the presence of competition, and technology, the company cannot focus its attention exclusively on existing products. Potential consumers are expecting improved products. Competing firms are doing everything possible to provide the market with new types of products. This suggests that each company must have its own program for developing product modifications. You can get new items in the following ways:

Some companies focus on creating new products. Other companies, on the contrary, support the life cycle of products that already exist on the market, to the detriment of the development of something else. These two extremes must be balanced.

Formation of an idea

Ensuring the product life cycle involves determining the optimal distribution channel. The company must formulate its goals. Why will it release new products? The goal may be to achieve high income, a dominant position within a particular market sector, or something else. To create new products, you can use various sources. One of them is the consumers themselves. Through surveys, analysis of complaints and requests, and group discussions, the needs of potential buyers are monitored. Thus, information support for the product life cycle is formed. Selection among the emerging ideas allows you to timely identify and eliminate unprofitable products.