Product Life Cycle
All products go through a certain evolution, from its original introduction, through a period of growth and adoption, then through a market maturity, and eventually decline. Marketers call this the product life cycle. It’s a critical concept for any business owner to know and truly understand.
By recognizing a product goes through a life cycle process, we can determine the appropriate marketing strategy that best fits where the product is within its life cycle. For instance, let’s evaluate a hot new product. Take smartphones, for instance. The smartphone family, from Androids to the ever-popular iPhone, is a very new, cutting edge product family. People are willing to pay exorbitant prices for this gadget, upwards of $300 or more. This is an extremely high price point, enough to buy a cheap laptop, a lot of clothes, or even several months’ worth of groceries.

Marketers understand why smartphones are so expensive and that’s why they priced it at this price. If we look at the product life cycle, the smartphones is in the early stages. At this point, people purchasing are innovators and early adopters, a consumer group known to not be price sensitive and very willing to pay a premium for a new, hot product.
On the other hand, as a product matures and eventually declines in consumption of usage, its price will steadily fall. In fact, as a product travels down its product lifecycle stages, we can infer a lot about its financial performance: e.g. market penetration, sales, profits, and cash flow. Look at high definition flat screen TVs as a great example. A decade ago when they were first being launched, they would all cost over $1,000 each. These days, you can get a very large and nice flat screen TV for less than half of that amount. CRT TVs are even cheaper, a mere $100 or less.
True product life cycle analysis follows a 5-phase approach. In the first phase, we define the industry and scope of analysis. This sets the boundaries and parameters for our analysis. As we traverse each phase of the product life cycle framework, we eventually reach the final steps of developing strategic recommendations and action steps. This is driven by the current life cycle stage that the product is in. More information on this topic can be found through the link at the start of the article.
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