Product Life Cycle (PLC)

Product Life Cycle (PLC)

What is the Product Life Cycle?

The product life cycle (PLC) is a five-stage model that describes the life of a product from its development and market introduction, to its eventual decline and exit from the marketplace. 

The product life cycle model is based on three assumptions about products:

 

  1. Limited Life Span – Every product that enters the marketplace will eventually decline and disappear. Thus, all products have a limited life span that can be described by the product life cycle model.
  2. Distinct Stages – Just like the life cycle of a person may be divided into childhood, adolescence, and adulthood, the life cycle of a product can also be divided into distinct stages.
  3. Unique Needs at Each Stage – Products have unique financial, marketing, and sales needs at every stage of the product life cycle.

 

Product marketing teams use the product life cycle as a framework that guides the process of developing a new product, bringing it to market, and maximizing its profitability over its whole life span.

Five Stages of the Product Life Cycle

The product life cycle is typically divided into five stages, although some sources exclude the Product Development stage and begin their analysis with the introduction of a product into the marketplace. For our purposes, we prefer a product life cycle model that includes all five stages:

 

  1. Product Development – In the product development stage, your product is still under construction and has not been made available to the general public. Sales and marketing are typically minimal or non-existent during this time.
  2. Product Introduction/Release – The product introduction/release stage begins on the day that your product becomes available in the marketplace. Awareness of your product is minimal, so sales volume will be slow and marketers must focus on creating demand and raising awareness of your product in the marketplace.
  3. Product Growth – A product enters the growth stage as you begin to acquire customers more rapidly and generate repeat business. The sharpest increases in public awareness and sales volume are achieved in the product growth stage.
  4. Product Maturity – A product enters the maturity stage when sales volume reaches a peak and the market for the product becomes saturated.
  5. Product Pivot/Decline – After market saturation, a product eventually enters a period of diminishing sales volume and profitability known as the product decline stage. 

Why is the Product Life Cycle Important?

The ultimate goal of any business entity is to maximize revenue potential, profits and shareholder value over its entire life span. 

B2B SaaS companies can support this objective by using the product life cycle model to optimize product/marketing investments and guide their marketing efforts in a way that maximizes overall profitability and value creation from the products and services they offer to customers.

Each distinct stage of the product life cycle can be characterized by a unique set of marketing needs and priorities. Understanding and successfully executing on marketing initiatives at every stage of the product life cycle is essential for realizing maximum profitability and value creation.

 

Marketing in Every Stage of the Product Life Cycle

Marketing in the Product Development Stage

In the product development stage, your product is not yet available to the general public. Sales volume is low or non-existent and product/brand awareness is also low. Marketing in the product development stage may consist of:

 

  • Holding conversations or focus groups with your company’s target audience to capture user needs and understand pain points that your product will address,
  • Proposing or showcasing new product features to prospective customers to gather their feedback,
  • Launching a presales program to generate early sales and raise funds to support your product development activities.

 

The product development phase is also a time for developing a marketing hypothesis based on the 4P’s of Marketing Mix.

 

Marketing in the Product Introduction/Release Stage

In the product introduction stage, your product has just become available to the public. Sales volume is low (but beginning to increase), and so is public awareness about your product. 

The most important objective for marketers in the product introduction stage is to create product awareness, ensuring that prospective customers searching for a solution have heard of the product you offer.

In the product introduction/release stage, marketing teams design and implement a go-to-market strategy that amplifies brand awareness and accelerates adoption of the product by its target customers. Sales-led, product-led, marketing-led, and customer-led growth strategies can all be effective, depending on the nature of the product and how marketing campaigns are executed.

 

Marketing in the Product Growth Stage

In the product growth stage, your product is no longer “new” to the marketplace. Now that your target customers have heard more about your product, the main focus of marketing is to differentiate your product from competitors, build a preference for your brand in the marketplace, and maximize your market share vs competitors.

Key areas of marketing focus in the product growth stage include:

  • Product Positioning – Messaging should focus on differentiating your product from the competition and explaining why prospective customers should purchase your solution instead of an alternative.
  • New Product Features – New marketing initiatives can be formed to launch new product features that increase the perceived value of your product in the marketplace. Tools like the JTBD framework can be used to identify which new features will add the most value for your customers.
  • Scaling Customer Success – Successfully navigating the product growth stage typically requires your organization to scale its sales, marketing, and customer success teams to service an exponentially higher volume of accounts than in previous stages.

 

Marketing in the Product Maturity Stage

In the product maturity stage, your product is peaking in both its popularity and profitability. The greatest indicator of product maturity is market saturation, identified when most of your customers are already using your product and most of your new customers are switching from competitors.

In the product maturity stage, companies often direct their attention to maximizing profits by fully optimizing the sales/distribution/service process. For marketing, the focus should be on extending the life of the product as much as possible by:

  • Identifying new demographics or audiences that might benefit from using the product, or
  • Identifying new potential uses for the product that unlock new audiences and new potential buyers.

Innovations like these can extend or prolong the maturity phase for a product, allowing your company to maximize overall profits before the product goes into a decline.

 

Marketing in the Product Decline Stage

The product decline stage is the final stage of the product life cycle, marked by the slowing of new product sales and a reduction in profits.

During the design phase, marketing teams reduce their spending on advertising and promotions (which are no longer highly effective) and instead focus on earning as much short-term profit as possible from customers. 

Investing heavily in marketing during the product decline stage is simply a waste of money. To convince yourself, think about whether a million-dollar marketing campaign could persuade you to start using Windows 3.1 for your business instead of a modern operating system, or to replace your new iPhone with a Nokia 3310. Absolutely not! These products have reached the end of the product life cycle, and they’re not coming back.

Maximizing Marketing Success with the Product Life Cycle Model

At Directive, we use our in-depth knowledge of the product life cycle model and corresponding marketing techniques to drive SQL and customer generation for our B2B SaaS clients.

From product introduction, through the product growth and maturity stages, we implement a customer-led growth strategy that leverages deep customer insights to optimize the purchasing experience, accelerating sales growth and profitability.

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