Products’ Life Cycle Concept
A products’ life cycle is a concept (or model) that describes the evolution of a product or service in the market dividing it into four steps, each one of which with specific characteristics and, for that, with different strategic guidelines:
- Introduction – Period right after the products’ release and that is characterized by a slow sales growth, few companies in competition and, generally, a high risk and low financial return for the companies. The strategic bet is the emphasis placement on innovation and quality.
- Growth – Period, which is characterized by an exponential search growth together with a tendency of massive spread of the product or service and, a substantial profitability improvement of the companies. It’s also a period characterized by a great competitive volatility with many companies entering and exiting the market. The strategic bet is the emphasis placement on quality, cost reduction, distribution channels and release of products’ new versions to conquer the market share.
- Maturity – In this period the rhythm of sales growth signals deceleration and are strongly intensified the competitive levels among the companies, visible in the frequent price wars and publicity. The main strategic bets are the release of new complementary products and services with the aim to be able to differentiate the offer and conquer the domination in certain market segments. Continues the bet on emphasis placement in low costs and, also now, in communication.
- Decay – In this period the search enters in skid, profits suffer a quick undercut and a high number of companies abandon the market. The strategic bet is now to maintain only the varieties of most competitive products and abandon the remaining.