Product and service lifecycle management
is described as the different actions required to maximise the profitability of
a product or service as the product or service progresses through its natural
life cycle. The market environment in which a product or service evolves
changes over time in how it is sold, and as it moves through its succession of
stages, it must be managed through each of the following four phases:
- Introduction.
- Growth.
- Maturity.
- Decline.
When introducing a new product or
service to the market, organisations need to undertake market research to
assist in making the decisions surrounding:
- Where will the product or service go in terms of
sales.
- Deciding which sales channel to use.
- What sector of society should the product or service
be aimed at.
- Who is going to buy it.
- How much is an organisation going to charge for it.
- Analysing who is going to want to
purchase the product or service.
During the growth stage, organisations
will need to ask questions to expand and examine new competitors, new potential
markets, and any changes in brand image that may be required once a product or
service reaches maturity. The momentum in product or service sales will either
climax or plateau.
To help propel the product or service to
further success, an organisation must focus its research efforts on competitive
intelligence. This will enable it to acquire some of its potential customer
base and increase sales later in the product or service lifecycle.
As a product or service begins to
decline from the height of its success, organisations need to assess how they
can pivot the product or service or business strategy to determine what changes
can positively impact sales by analysing customers' sensitivity to revitalise
the potential to revamp revenue.
Understanding the product or service
life cycle assists an Organisation and its Marketing Team in planning the
marketing strategy to address each stage fully:
- Development: During the development stage, the
product or service is an idea in the process of being developed and
manufactured, or not yet even for sale. The marketing mix at this stage is
still in the planning phase. An Organisation will be researching marketing
methods and planning which methods it will use in launching the product or
service. The marketing mix includes increasing potential customers'
awareness of the product or service through special promotions and
marketing campaigns.
- Introduction: As the product or service enters
the introduction stage of the product or service life cycle, it hits the
market, but because it is a new product or service, customers have yet to
be made aware of it. Sales of the product or service during the introduction
stage are generally low. Currently, marketing expenses are generally high
because they require much effort to bring awareness to the product or
service. The marketing mix during this stage focuses on strategies to
create a demand for the product or service to establish a market share.
- Growth: As the product or service enters
the growth stage of the product or service life cycle, customers become
more aware of it, and sales increase. During the growth stage, marketing
tactics require branding that differentiates the product or service from
other products or services. Marketing the product or service involves
showing customers how the product or service benefits the consumer over
the products or services sold by the competition and generally entails
building brand preference.
- Maturity: As the product or service gains
sales over its competition, it enters the maturity stage of the product or
service life cycle. During this stage, the marketing mix involves building
brand loyalty, mainly accomplished through incentives and special
promotions for customers who switch from a competitor's brand.
- Decline: Once a product or service market
is oversaturated, it enters the decline stage. This is the stage of the
product or service life cycle where the marketing mix and marketing
efforts decline.
Suppose the product or service has
generated customer loyalty. In that case, an Organisation can retain customers
during this stage but only attract new sales from new customers. For the
remaining marketing mix, the focus is generally on reinforcing the product or
service’s brand image to maintain a positive light in the eyes of loyal
customers.
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