What is a Product Life Cycle and How to Manage it
Any product you sell in-store or online that lands up in the hands of consumers, has a product life cycle. Typically, this life cycle starts once a product has been introduced to the market, and it will continue to live on until it becomes obsolete. There are five key product life cycle stages, namely, development, introduction, growth, maturity, and decline, which will help you to understand the status of a product better. Each stage will require a new marketing approach.
How to manage product life cycle?
In fast-moving consumer markets, you need to stay ahead of the curve and watch your products closely. There will be many reasons you’ll need a solution to help manage your product life cycle. For example, to speed up time to market, reduce data silos attached to products, plan ahead using the correct resources, and much more. Without one, you’ll fall behind. The slower your products move and the more excess inventory you’re stuck with, the harder it will be to innovate and scale. By using advanced tools for inventory management and product life cycle management, you’re able to respond to challenges quickly and efficiently.
What are the 5 stages of the Product Life Cycle?
When you understand what stage your products are in, you’re able to make logical business decisions and plan properly. You can easily identify new revenue streams and adopt new processes to streamline tasks. Not to mention, a product life cycle strategy is crucial for demand forecasting. Here are the five stages of the product life cycle:
If we’re honest, many products never make it past the development stage, as it is very costly. This stage is before an item is introduced to the market, and it involves plenty of research.
Your teams will spend their time brainstorming, producing mockup designs, creating prototypes, and analyzing developed products as a test, but on a far smaller scale. During this stage, teams will test all effectiveness and feasibility of solutions. If it’s an existing product in the market, led by a host of competitors, you might get away with a more affordable development stage. However, if you’re looking to launch something entirely new, it will take more monetary investment and risk.
Now, you’ve developed a product you believe is a winner. You’ve done all the research and testing, and you’re ready to give it wings in the market. This is a crucial next step for the product life cycle.
You will need an elaborate product-market strategy to drive awareness.
Your teams will spend a large portion of their time developing marketing material that highlights the product features, benefits, competitor comparisons, social proof in small doses, and more. (Between the development and introduction stages, these are the most costly due to production.)
Replenishing stock is another concern. You cannot use the same strategy for every product. Often, you buy in bulk to avoid stockout or customer dissatisfaction, but these purchases can come back and haunt you. Not every high-end product has the same level of importance, and vice versa. Instead of having everything available, split your inventory to ensure diversity.
When you enter into the growth stage of your products, you’re confident in your product. You’ve seen how the market has taken to it, and you’re ready to expand into wider markets. By now, the chances are that you’ve got working capital available, from sales, to pour into marketing efforts.
This stage is integral in the product life cycle as it determines the outcome of the next stage (maturity). In between these two, you’re trying to scale as quickly as possible and not lose momentum. Be attentive to your competitors as they can easily jump in during this stage and steal market share. Balance your marketing with capacity and distribution to avoid disappointment. If you’re too aggressive and the market takes it, you can fall short and fail to meet demand entirely.
The mature stage of a product essentially comes down to it being widely available and used.
Consumers are aware of your brand, and they’ve invested in your product. By this stage, you might have plateaued in your sales over a long period of time, maintaining consistency but at a slow pace. If that’s the case, you need to do something different to avoid maturity leading to declines. For example, upsell by complementing mature sales with excess inventory in your warehouse. You will need a strong differentiation strategy to really stand out again and appeal to new or existing clients.
Decline happens if you have not done enough in your maturity stage, or unfortunately, sales simply decrease due to seasonality, economic conditions, saturation, etc. Without reinventing the wheel, teams will work tirelessly to improve existing products and breathe new life into them by trying new advertising, sales, and distribution avenues. You will do anything to avoid a product becoming obsolete or “dead stock.” You can merge life cycle stages to avoid decline.
Why Product Life Cycle needs to be accounted for in Inventory Management?
While each stage of the product life cycle gives you insights into how a product is performing (and how you should optimize inventory management), it also gives you information on the demand. While it is impossible to predict the outcome of a product life cycle, tracking this process does provide you with insightful patterns that will guide your forecasting.
How does product life cycle affect forecasting?
By managing your product life cycle, you will have historical data that will show you how a product performs and how long each stage took before leading to declining. Every stage will influence your demand; for example, your growth stage could have accelerated exponentially, boosting production efforts and sending you the right signals that a product is successful.
However, if you don’t act swiftly, demand might drop once a competitor gains more market share. (These are all factors that increase and decrease demand, affecting your forecasting.)
When you can see this information in a centralized location, you can make more responsible business decisions and plan in real-time to avoid overstock, understock, or missed opportunities.
How can Intuendi’s Software help Product Life Cycle Management?
Stock moves quickly, and it’s humanly impossible to keep track of everything happening behind your back. Fortunately, there’s intelligent software that can do the job for you while reducing manual tracking and data entry. Intuendi, for example, is one of those tools. This next-generation software is designed to optimize inventory management and improve demand forecasting.
Intuendi will seamlessly integrate with your existing ERP system, inventory, or product life cycle management tool. As your products make their way through the life cycle stages, Intuendi will track inventory and forecast demand to prevent any undesired costs. Take full control over your products, and save time and money with Intuendi. Contact us to discuss your needs.