How to determine which product is best to offer to customers? The key to answering this question is understanding how the product behaves in the marketplace.
The concept of a product life cycle is a term that marketers use to describe all stages of a product in the market, from entry to market to exit from the market. It takes into account the product itself, its features, as well as the behavior of competitors and consumers.
The concept itself remains classic and does not become obsolete over the years. What is the reason for this? The main reason: the product life cycle is constantly shortening. Previously, a sewing machine was used for a long time, it was inherited, but now some products are replaced by others, and new models of the machine appear every year. Marketers are trying to understand why this is happening, and they are trying to determine how and with what to replace the product so that it becomes popular and in demand, given the situation that develops around the product.
This concept is also very helpful in planning. It is very important for a company to understand how much this or that product can be on store shelves, whether it is time to change the assortment, and what to change it for.
The concept identifies several phases of a product's life:
· Implementation.
· Stage of growth.
· Market maturity.
· Decline stage.
For marketers, planning is important for the volume of sales that changes, and the profit that the product brings. At the first stage, the profit can be negative: the company invests in order to create a product, bring it to the market, for advertising, and create a sales network. At first, all these costs are greater than the profit that the sale of the product brings. Later, when the break-even point is passed, the product will recoup the costs incurred by the company, then the company will start making a profit.
The product brings maximum profit at the stage of maturity: at this time the product is well known, it does not require additional advertising costs, and consumers are willing to buy it. The next stage is the recession stage. At some time, sales drop and another product becomes more attractive. It is important for a company to understand at what point a product should be removed from the market and replaced with another model, or another product.
An important characteristic of a product on the market is the behavior of competitors, as well as their number. A growing product has more competitors, at the recession stage there are fewer competitors, but the product loses to them.
Understanding the regularity of the product life cycle, you will be able to plan the work of your company more successfully, which means you will become more successful.
