Product Life Cycle Stages Explained With Examples

These metrics are particularly crucial for subscription-based business models. Referrals can be a game-changer for driving your business growth. Analyze these metrics consistently and build on the tactics detailed above to secure the profits of referral marketing.

With that popularity comes tighter competition and a greater need for companies to stand out—even within the PLG world. PLG strategies such as ease of use, freemium or free trial, and self-service are becoming users’ expectations. Many companies enter different geographic markets or international markets as a strategy to get new users. A product that might be in the mature stage in one country might be in the introductory stage in another market.

McKinsey’s Three Horizons of Growth Can Help You to Innovate

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However, not all products go through all stages and the length of a stage varies. For example, some products never experience market share growth and are withdrawn from the market. Once a product is created and introduced in the marketplace, the offering must be managed effectively for the customer to receive value from it. Only if this is done will the product’s producer achieve its profit objectives and be able to sustain the offering in the marketplace.

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These businesses have a mindset of continuous improvement. To keep up with the competition, their appetite for growth has extended beyond their wild initial success. Following up, we’ll detail what it takes to be a growth PM, and the growth product management strategy they should follow. We’ll also help you get your first 1000 users, and teach you how to scale product growth sustainably with a full tech stack of growth management tools. Some companies modify the marketing strategy for one or more marketing variables of their products.

Meaning there is a decline in the hardcopy newspaper distribution due to the rapid adoption of internet technology. This is a great example of the product life cycle in action. CDs were in the decline stage while the iPod was in the growth stage – more. In a PLG world, word-of mouth-marketing is your best friend. Not only is it free, but it’s highly effective for customer acquisition. But that doesn’t mean that your org’s marketing function is left in the dust—it simply evolves.

Development and Introduction Stage

Natural Rate of Growth succeeds where traditional SaaS metrics fall short. It allows PLG companies to pinpoint the percentage of their recurring revenue that comes from organic channels and starts with the product. Investing in robust product data that allows teams to track, measure, and analyze user behavior.

Hence, the theory’s basic argument is that a product will eventually leave the market irrespective of how popular it is among consumers. Another example within the consumer electronics sector also shows the emergence and growth of new technologies, and what could be the beginning of the end for those that have been around for some time. When products reach mass production, manufacturing and production shift to other countries as well. Now that we’ve gone through stages and history, let’s review some real-life examples of them in action.

To get this done, product growth teams rely on a series of short-term experiments to incrementally improve and increase efficiencies throughout the funnel. Some companies have already defined the roles necessary for growth product management and how they function within the product team. Leading tech startups like Facebook, Uber, and Dropbox stress a growth mindset, and boast an infrastructure that prioritizes user data. They’ve successfully implemented their growth-oriented strategies with dedicated teams headed by a growth product manager . Technical products such as digital cameras, cell phones, and video games that appeal to young people often have limited life cycles.

It maps a product’s journey from its launch until its discontinuation. Now that you’re in the growth stage of your business, set things in motion with a business development plan. Now is when you need to meet the demands of increasing sales and customer numbers. Dividing your time between day-to-day jobs and big-picture growth can be a tough challenge.

Make sure you read until the end to take full advantage of it. It has far-reaching implications as every single product goes through the same four phases mentioned in this model. Learn how to grow a business, from planning to expansion. You can grow your business by selling more things to more people, or fewer things to fewer people. Understanding your business performance will help you grow. Are you ready to drop the hammer and take your business to the next level?

Examples of products in the decline stage

Companies can extend the product life cycle with new iterations and stay afloat as long as they have several products at various points of the product life cycle. Let’s follow the product life cycle of popular products that have since reached the decline stage. The standardized phase would involve an influx of competitors, which would lead the company to focus on driving down production and manufacturing costs to remain competitive. As the market becomes saturated and a new product gets introduced, the company loses its relevance in its home country and shifts gears to create something new, with the cycle beginning again. The product life cycle is important because it informs an organization’s management and decision-makers how well a product is performing and what strategic actions it will take to succeed. This helps companies allocate resources like staff, budgets, shows which products should be prioritized, and where the company should innovate next.

The sales increase rate is lower than that of the growth stage. As a result, companies may cut their prices and increase their marketing activities to compete with other players in the market. The first phase starts when a business introduces its product to consumers.

• Cell phones were very popular in Asia before they were introduced in the United States.
• To fully leverage off the gaining popularity of its complementary coffee and food menu, the company is working towards establishing partnerships and making food one of its major future growth drivers.
• Most startups are trying to get established in the market, work out supply chain wrinkles, and stay within their budget.

Because of the success of one or more companies, more competitors will enter the market with their own brands. Consequently, some competitors may try to lower prices to gain marketing share. A company sometimes increases its promotional spending on a product during its growth stage. However, instead of encouraging consumers to try the product, the promotions often focus on the specific benefits the product offers and its value relative to competitive offerings.

These can range from reducing the average Customer Acquisition Cost to growing revenue and profits in the long term. Involves using a low initial price to encourage many customers to try a product. The organization hopes to sell a high volume in order to generate substantial revenues. New varieties of cereals, fragrances of shampoo, scents of detergents, and snack foods are often introduced at low initial prices.

The two giants are looking at potentially expanding this partnership to have greater massachusetts state income tax presence at Macy’s stores. Consequently, the management believes that over the next five years, the company will be generating 25% of its revenue via food sales. By keeping your product’s life cycle in mind, you can invest in better marketing campaigns that result in a higher ROI.

Teavana, since its launch, has become one of the biggest growth drivers for the company. It has contributed one percentage point in comparable sales growth for seven consecutive quarters. Its successful launch has led to Starbucks rolling out Teavana in China and Europe. The company is betting on Teavana’s popularity in China, one of the largest tea consuming countries, to give the brand a boost. Further, it may positively impact the sales of premium Teavana brewed and iced teas in Starbucks’ stores, helping increase the average spend per customer on beverages. Not only is Starbucks concentrating on expanding its footprint, but also changing its store mix.

When I was 12 years old, I used to be confused about my cousin’s CD collection. Why have CDs when I could go on iTunes and listen to all my favorite songs? This is a perfect example of a product life cycle in action. Here to record my preconceptions, principles and experiences in all areas of life from markets to tai chi to biology. Keep a check on these numbers to fuel revenue-driven growth for your business.

But what does it mean, how does it work, and what value does it bring to your team and business? Find out in this guide to the increasingly vital role that growth plays in product management. Although it is much less expensive to standardize products and promotional strategies, cultural and environmental differences usually require some adaptation. Product colors and packages as well as product names must often be changed because of cultural and legal differences.

• In addition to providing blog articles and social media content that educate your audience and bring in leads, consider creating a learning hub for your product specifically, like Asana.
• This new era recognizes that users have embraced fully integrated workflows powered by automation to do their jobs.
• In the mature stage, sales level off and the market typically has many competitors.
• The growth stage of a product life cycle is when the introduced product begins to be successful and its sales increase significantly.
• As products begin to mature and companies want to avoid the decline stage, they’ll typically begin to explore new markets globally.

Companies hope by increasing their sales, they also improve their profits. Is characterized by increasing sales, more competitors, and higher profits. Unfortunately for the firm, the growth stage attracts competitors who enter the market very quickly. For example, when Diet Coke experienced great success, Pepsi soon entered with Diet Pepsi.