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Summary
The video "Business School 101" provides an insightful exploration of the concept of the product life cycle (PLC), which refers to the duration from a product's introduction to its removal from the market. This concept is crucial for business professionals as it guides decisions related to advertising, pricing, market expansion, and product redesign. The video outlines the four key stages of the PLC, offers real-world examples, and discusses strategies to prolong the mature stage of a product.
The Four Stages Of The Product Life Cycle
Image: Below is an image of the Product Life Cycle chart shown in the video.
Stage 1: Introduction
The introduction stage is characterized by the launch of a new product and the development of marketing strategies to create consumer awareness. Sales are typically slow as demand must be generated. The duration of this stage can vary based on the product's complexity, innovation, customer needs, and market competition. Unfortunately, many products do not succeed at this stage, resulting in failure to progress to the next phase.
Stage 2: Growth
If a product successfully navigates through the introduction stage, it enters the growth phase, marked by increasing demand and production. Sales experience a significant uptick, and the product's availability expands. During this phase, competitors may emerge with similar or improved products, making branding crucial to maintain market position. Factors such as pricing and product availability become critical to sustaining sales amid rising competition.
Stage 3: Maturity
Upon reaching maturity, a product's sales growth begins to plateau, indicating a saturated market. The product is established, and production and marketing costs decline. At this point, most potential consumers have purchased the product, and competition is fierce. Effective branding, pricing strategies, and product differentiation become essential for retaining market share. Retailers transition from promoting the product to merely stocking it, reflecting the product's established nature.
Stage 4: Decline
The decline stage occurs as competition intensifies, and innovations or alternative products emerge that can replace the existing product. This may lead many companies to explore new ventures as the product becomes less profitable. Some companies may continue to offer the product, albeit on a smaller scale, leading to reduced prices and profit margins. Consumer preferences also shift towards newer alternatives, further accelerating the decline.
The introduction stage is characterized by the launch of a new product and the development of marketing strategies to create consumer awareness. Sales are typically slow as demand must be generated. The duration of this stage can vary based on the product's complexity, innovation, customer needs, and market competition. Unfortunately, many products do not succeed at this stage, resulting in failure to progress to the next phase.
Stage 2: Growth
If a product successfully navigates through the introduction stage, it enters the growth phase, marked by increasing demand and production. Sales experience a significant uptick, and the product's availability expands. During this phase, competitors may emerge with similar or improved products, making branding crucial to maintain market position. Factors such as pricing and product availability become critical to sustaining sales amid rising competition.
Stage 3: Maturity
Upon reaching maturity, a product's sales growth begins to plateau, indicating a saturated market. The product is established, and production and marketing costs decline. At this point, most potential consumers have purchased the product, and competition is fierce. Effective branding, pricing strategies, and product differentiation become essential for retaining market share. Retailers transition from promoting the product to merely stocking it, reflecting the product's established nature.
Stage 4: Decline
The decline stage occurs as competition intensifies, and innovations or alternative products emerge that can replace the existing product. This may lead many companies to explore new ventures as the product becomes less profitable. Some companies may continue to offer the product, albeit on a smaller scale, leading to reduced prices and profit margins. Consumer preferences also shift towards newer alternatives, further accelerating the decline.
Examples of the Product Life Cycle
The video illustrates the PLC using well-known product examples:
Typewriters: Once highly popular, typewriters quickly moved through growth to maturity but have now declined due to the rise of personal computers and mobile devices.
Video Cassette Recorders (VCRs): Initially groundbreaking, VCRs experienced significant growth and market saturation but became obsolete with the advent of DVDs and streaming services, placing them in the decline stage.
Electric Vehicles (EVs): Currently in the growth phase, EVs benefit from continuous innovation and increasing consumer interest, positioning them for future success.
Artificial Intelligence (AI) Products: Many AI products are still in the introduction stage, with ongoing developments, such as autonomous vehicles, yet to see widespread adoption.
Typewriters: Once highly popular, typewriters quickly moved through growth to maturity but have now declined due to the rise of personal computers and mobile devices.
Video Cassette Recorders (VCRs): Initially groundbreaking, VCRs experienced significant growth and market saturation but became obsolete with the advent of DVDs and streaming services, placing them in the decline stage.
Electric Vehicles (EVs): Currently in the growth phase, EVs benefit from continuous innovation and increasing consumer interest, positioning them for future success.
Artificial Intelligence (AI) Products: Many AI products are still in the introduction stage, with ongoing developments, such as autonomous vehicles, yet to see widespread adoption.
Strategies to Maintain the Mature Stage
To prolong the mature phase of a product, companies can employ several strategies:
In conclusion, understanding the product life cycle is essential for businesses to navigate the complexities of market dynamics and consumer behavior. By applying these concepts and strategies, companies can effectively manage their products throughout each stage of the life cycle, ensuring continued success and relevance in the market.
- Understand Industry Evolution: Staying informed about industry trends and changes helps businesses adapt and maximize profits.
- Track Consumer Changes: Recognizing evolving consumer needs and demographics enables companies to refine their approaches to maintain relevance.
- Use Innovative Technology: Incorporating new technology into products and marketing can enhance competitiveness and appeal.
- Consider Consumer Perceptions: Adapting branding and products to align with changing consumer interests, such as environmental concerns, can help sustain positive relationships with customers.
In conclusion, understanding the product life cycle is essential for businesses to navigate the complexities of market dynamics and consumer behavior. By applying these concepts and strategies, companies can effectively manage their products throughout each stage of the life cycle, ensuring continued success and relevance in the market.