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Why is it important for Start-Ups to Understand where their product is in the product life cycle?


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It is critical for Start-Ups to understand at what stage their product is at when forming their product strategy.

The Product Life Cycle (PLC) is a model describing the stages a product goes through from its inception to its decline. The concept was first introduced by Harvard Business School professor Theodore Levitt in 1965.


The PLC is widely used in marketing and product management to help companies understand the life cycle of their products and make informed decisions about their product strategies.


The PLC consists of four main stages: introduction, growth, maturity, and decline.

  1. Introduction Stage: This is the stage where a new product is first introduced to the market. During this stage, the product is unique, and there is limited awareness and understanding among potential customers. The key characteristics of this stage include low sales, high development and marketing costs, and low profits. Companies should focus on building awareness and understanding of the product and testing the product to see if it is viable in the market.

  2. Growth Stage: This stage is characterised by rapid sales growth, increased marketing efforts, and increased profits. Companies should focus on building the product's market share, improving their production and distribution capabilities, and expanding their target market. The key characteristics of this stage include increased competition, growing demand for the product, and increased profitability.

  3. Maturity Stage: In this stage, sales growth begins to slow down, and the product may face increased competition. Profits may decline, and companies may focus on cost-cutting and product differentiation. The key characteristics of this stage include increased price competition, a saturation of the market, and declining sales.

  4. Decline Stage: This stage is characterised by declining sales and profits. Companies may discontinue the product or focus on maintaining it as a niche product. The key characteristics of this stage include reduced demand for the product, increased competition, and decreased profitability.

Final Thoughts

Start-Ups companies should be aware of the various stages of the PLC and adjust their strategies accordingly. For example, during the introduction stage, the company may focus on building awareness and understanding of the product and ensuring a solid product>market fit. Start-Ups may concentrate on building their market share during the growth stage, leveraging distribution to capitalise on the tangible product>market fit. Start-Ups may focus on product differentiation and cost-cutting in the maturity stage to extend a product's life. In the decline stage, the company should concentrate on discontinuing or maintaining the product as a niche product.


 

About the Author

Adam Ryan Start-Up Expert

Adam Ryan is a Professor of Practice (Adjunct Professor) at Monash University and is a principal at Watkins Bay. Adam has over twenty years of start-up experience in Australia and the USA. An expert in Company Structuring for Innovation, Strategy, Mergers & Acquisitions, and Capital for early and growth-stage businesses.





 

Contact Details


Australia +61 (0) 418 325 387

USA + 1 (858) 252-0954

Email adam@watkinsbay.com


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Written By

Adam Ryan

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