What Is The Product Life Cycle Model?

No product lasts forever. Do you know where your small business product is in its product life cycle? Are you introducing tomorrow’s product, today?

The Product Life Cycle is a model that predicts the general trend that most successful products or services will follow during their lifetime. This lifecycle can be reviewed across an entire category, or in the context of an individual companies product. It is a strategy tool that helps companies plan for new product development and refine existing products

There are 4 stages to the lifecycle process shown in the table below. While decline can be avoided by reinventing elements of the product, it also recognizes that some products never move beyond the introduction phase whilst others move through the life cycle much faster than others.

Product (Service) Life Cycle

What do the PLC stages mean?

Stage 1: Introduction

Introducing a new product where it’s unknown and products are small. The price is often higher as distribution is limited, and promotion is personalized.

Stage 2: Growth

Here, the product is being bought and with volume, the price declines. Distribution increases and promotion focuses on product benefits

Stage 3: Maturity

Here, the product competes with alternatives and pricing drops. Distribution becomes intense (it’s available everywhere) and promotion focuses on the differences to competitors’ products.

Stage 4: Decline

The product is reaching the end of its life and faces fewer competitors. The price may rise and distribution has become selective as some distributors have dropped the product. Promotion aims to remind customers of its existence.

How can I use this model?

When reviewing your business you need to understand which stage your products or services have reached across your portfolio of all products which can be assessed in terms of market share and growth using the BCG Matrix model. Reviewing the product of portfolio enables marketers to plan for new products, reinvent existing products or discontinue products that are in serious decline.

Time in each stage

The goal for your small business is to move your product through the ‘Introduction’ stage and the ‘Growth’ stage as quickly as possible in order to benefit for as long as possible from the profits that are available in the ‘Maturity’ stage.  It is also important that when your product is clearly in the ‘Decline’ stage and cannot be revived that you discontinue it before it becomes loss making.

Multiple products

The ‘Product Life Cycle’ is most valuable when it is used to evaluate how well balanced the mix of your small business’s products are. For example if all of your products are in the ‘Decline’ stage of the life cycle then you are going to run out of income from sales but if all of your products are in the ‘Introduction’ stage you are probably going to be over extended and run out of cash.

Ideally you would have products at each stage of the life cycle so that as one moves from ‘Maturity’ and into ‘Decline’ another takes its place.

Quick Summary

Stage 1: Introduction

As a product is introduced there will usually be high costs in bringing it to market but low sales resulting in initial losses.

Stage 2: Growth

If the market decides it wants the product, sales increase; and unit costs decrease because of economies of scale. The product starts to become profitable at sales above the break-even point.

Stage 3: Maturity

Profits gradually increase as both demand peaks and costs continue to reduce because of efficiencies. Eventually competitors also enter the market with their own products in pursuit of these profits and this increased competition leads to a reduction in sales.

Stage 4: Decline

Sales and profits reduce significantly as the product comes to the end of its life and customers move to other products.

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Your Marketing Plan – What It Should Contain

Running a business without a marketing plan is a bit like driving a car with your eyes closed. Without a plan, you have no direction on how you are going to grow your business and no objectives or activities planned to trigger that growth. This is why companies, investors and leaders all place value in building a marketing plan. However, if you haven’t created a market plan before you may find the process overwhelming. I’ll be honest, if you complete this correctly, it will not be a quick project, you will definitely spend some time on this. A well-researched, strategic marketing plan may take several weeks to complete and will consist of hours of research. While you may continue to operate without a formal plan – it will end up costing you more time, money and resources in the long run.

Businesses with plans succeed, outperform competitors, and retain staff, more than those with no plan. Marketing takes time, money and preparation, but the benefits outweigh the work. A strong marketing plan will ensure you’re not only sticking to your schedule, but that you’re spending your marketing funds wisely and appropriately.

Your Marketing Plan Will Help You To:

  • Identify your competitive advantage and define your unique value proposition
  • Evaluate your mission and vision for relevancy
  • Focus on your strategic target marketsand their needs
  • Determine and focus on priorities
  • Acquire resources you need to implement your plans
  • Obtain the organization support at all levels
  • Set objectives and strategies for chosen segments
  • Define strategies, tactics and campaigns

I recommend following these 10 steps when creating your marketing plan and strategy that will helpg you achieve your goals for business growth.

  1. Begin With a Mission

Identify your mission as a company. A mission statement should guide the actions of the organization, spell out its overall goal, provide a path, and guide decision-making for your business.

  1. Develop Your Target Market and Segmentation Strategies
  • Who are your target markets?
  • What industries do they represent?
  • What is the size of the company (or market)?
  • Why do they need your services or product?
  • What is going to make this company buy your services or product?
  • What is the channel of distribution for this market?
  • Who makes the buying decisions?
  1. Define Personas & Content
  • Do you know your buyer?
  • Do you know the company they represent?
  • Do you understand their company’s business?
  • Do you know their needs and requirements?
  • Do you know where they buy?
  • Do you know who makes up their decision-making or buying team?
  • Do you know their decision-making and buying processes?
  • Do you know how to reach them with your marketing and sales messages?
  • What are the key decision factors that make them choose one vendor over another?
  • Is the decision made around price, service, support, quality, or other factors?
  • Where do these personas go to source credible content?
  • What messages will generate the right response and what information will be most effective?
  1. Complete a SWOT (Strengths, Weaknesses, Opportunities, Threats)
  • What advantages or strengths do you have?
  • What do you do better than anyone else?
  • What do people in your market see as your strength?
  • What could you do to improve?
  • What should you avoid?
  • What are other companies/people likely to see as your weakness?
  • What are good opportunities for you?
  • What could threaten your business?
  • Where is the industry going?
  • What are your objectives as it relates to this target market?
  1. Identify Your Key Influencers
  • Social networks to drive mass impressions
  • Journalists
  • Academics
  • Analysts
  • Professional advisors
  • Websites
  • Industry associations
  • Referral sources
  1. Conduct A Content Marketing Audit
  • Review your existing collateral, content and thought leadership pieces
  • Decide which can be leveraged in new marketing campaigns
  • Identify content gaps so you know where to focus development and resource time
  • Align your content to achieve a marketing objective as well as serve a purpose in the buying cycle (awareness, consideration and decision)
  1. Set Your Marketing Objectives
  • Intended goals and results of your marketing plan, tactics and campaigns
  • Set the metrics (both business and marketing) to track and report on
  • If you’re not use to defining your marketing objectives use the SMART methodology (Specific Measurable Actionable Realistic Time)
  • Marketing objectives are ideally tied to business value including leads, revenue, ROI (Return on Investment), etc.
  1. Plan The Marketing Strategy
  • A detailed blueprint on how to achieve the marketing objectives
  • Strategies list which steps to take, specific action necessary to achieve each step and the expected timeline by which to accomplish each stage
  • Strategies will focus on the 4Ps of marketing: Product (Service), Promotion, Price, Place (Distribution)
  1. Define Your Marketing Tactics, Goals and Mix
  • Advertising
  • Branding
  • Directories
  • Direct marketing
  • Digital marketing
  • Public relations
  • Sales
  • Business development
  • Networking and referrals
  • Events
  • Sponsorships
  • Content
  • Communication
  1. Allocate Your Budget
  • Connect your budget to business value
  • Your marketing objectives and target audiences should help you allocate your spend accordingly
  • Research and capture the price of different marketing tactics (some are more affordable than others – depending on your objectives)
  • Your budget should influence the amount of leads that enter your sales funnel and result in increased revenue (noting that increased spend could decrease profit in the short-term)
  • Leverage benchmarks/best practices on target leads to meet goals
  • Review spend and result on an on-going basis 

In summary, follow these best practices:

  • Focus on your priority target markets and personas
  • Leverage your strengths and not your weaknesses
  • Don’t worry about having an in-depth plan or too many strategies
  • Make sure your marketing plans and budget is practical and measurable
  • Assign specific responsibilities and tasks to skilled people on your team
  • Plan, track, measure, optimize and redeploy