Each new product entering the consumer market is destined to go through four periods. The stages of the product life cycle are called as follows: introduction, growth, maturity and decline. No matter how high-quality a new product may be, after a certain period of time it will be replaced by an improved model from the market.
The product life cycle begins with entering the market - the implementation phase. The most critical period for new items. The task of marketers is to prepare the market. Widespread advertising is used: promotions, distribution of samples, television commercials, street banners, etc. That is, everything is being done so that the entry of goods into the market is accompanied by high demand. Moreover, the manufacturer often incurs significant losses. But it is they who help to convey information about the brand to the consumer, to arouse his desire to try out the new product. The company is prepared for the losses of the first year, as it knows that they are the so-called springboard for high profits in the future. If the manufacturer wants to conquer the market with a high quality product, then an excellent step to attract attention is the distribution of free samples. Consumers will immediately be able to appreciate the new product and in the future, when choosing a store, they will be ready to purchase the product they like. At this stage, two types of pricing can be used: low cost or high.
For most of the products, manufacturers initially set a low cost to attract customers. As a result, if consumers like the product, they are ready to buy it at a great price in the future. Manufacturers immediately set a high cost on products of the "luxury" series. Such a marketing strategy is called “skimming”. Rich people are willing to pay a high price for really high quality. Gradually, the cost will decrease, but this move will be made by the supplier to conquer a larger market.
We continue to consider the product life cycle. The second stage is growth. At this stage, producer profit continues to increase, but at a faster pace. This is due to the fact that those people who have already bought the goods begin to purchase it again. But the company does not stop there and continues to make high advertising costs, gaining even more consumer attention. And the novelty is being bought by an increasing number of people, as it becomes more famous. Here, not only advertising plays a role, but also the recommendations of consumers who have tested the product. Therefore, the manufacturer receives more and more net profit.
What other product life cycle processes are taking place? It is at this stage that competitors often enter into an active struggle. And the company has to invent more and more new methods of retaining consumers. Alternatively, you can lower prices slightly, expand the product range (for example, anti-dandruff shampoo, for men, for fair hair, etc.), create creative advertising, etc.
The product life cycle necessarily includes the maturity stage. On it, the manufacturer receives profit through repeated purchases of goods by consumers. The covered market segment practically does not change. The product has taken a stable position in the market; it is well known to the general public. The attacks of competitors have little influence on the organization’s policy. But the profits of the manufacturer no longer increase, and sometimes begin to fall. He can still use various innovative actions, for example, to find a new application for a product. Advertising no longer has a big effect on the consumer, as the customer base has developed. A firm may be forced to increase costs by the appearance of a strong competitor in the market. In this case, the manufacturer transfers high funds for advertising and is looking for new ways to enhance consumer demand.
The product life cycle ends in recession. At this stage, it is important to decide whether to continue stimulating demand or to discontinue a product. In case of high costs, the company removes the goods from the market. But if the manufacturer sees that the profit from sales is still quite high, then he continues to maintain demand by inventing more and more marketing moves.