Remember when you learned about the different stages of a monarch butterfly in elementary school? You may have watched The Lion King and understood the “circle of life.” How about the old saying: Whatever goes up must come back down?
If you can understand these references, you already have a basic understanding of the product cycle.
The Oxford Dictionary defines a lifecycle as “the series changes in an organism’s life.” This definition can be applied to any cycle. There are phases in a life cycle, whether it is a fidget-spinner or a butterfly. These phases can be classified and described.
There is a lot of information about the life cycle of a product, but there’s surprisingly little about how to maximize it. The success of your e-commerce dropshipping business depends on finding or developing the perfect development and listing it at the right moment in your store.
The Four Phases
Any product will rise and fall over time. Four stages in its life cycle accompany the rise and fall of a product. Each product has a different amount of time at each location. The rise and drop may be rapid, like the fidget spinning, or slower.
A part of running a successful business is to be aware of trends and market your products and services accordingly. Trends are based on the four stages of the development and its popularity over time.
Imagine this stage like a newly laid egg. This is a new product. It’s not yet a hot item or popular product. A new product can fail in this phase before it becomes popular or mainstream.
The market is still tiny, and sales are low. However, there is a plan to change this. The competition is intense at this point.
Much money and time is spent on marketing the product and establishing its brand to demonstrate the quality to consumers.
A seller can sell an item at a higher cost to cover research and development costs and make a profit or at a lower price to increase sales.
It is essential to market the product to the right consumers, regardless of whether it has yet to become mainstream and prove its quality or utility. The product is sold to innovators and early users at this stage.
The new life has begun to take hold and grow. The product begins to gain traction and infiltrates the mainstream market. Sales start to increase and become more regular. As demand rises, you add more pressure to increase the distribution.
The product’s growth may accelerate during the growth phase of its life cycle because there is less pressure to market the product than in the beginning. It does not mean you should stop promoting your product or changing marketing strategies. Instead, switch to a new tactic.
It is important to keep marketing your products and services towards your target audience as the sales increase. This may lead to you becoming the leader of the industry. That’s what you want in an e-commerce business or drop shipping.
During this phase, the product is improved, reducing production costs. New versions and features are created.
Remember that your competitors will increase as you gain traction with the product. The cost of production will decrease, and competitors’ products may be priced lower than yours.
The promotion targets a broader audience, including early adopters and the early Majority. (We discuss these types of adopters in the article below).
Like any other life cycle, whether biological or otherwise, the rapid growth slows down at some point, and the maximum gain is reached. Imagine this as a stage where the plant is producing leading fruit. The development has reached its maximum.
The maturity phase occurs when sales peak and begin to plateau because the market has saturated.
During this phase, the competition is at its peak. You can expect your competitors to make improvements and changes to their product version and possibly offer it for a lower price.
With greater competition in this phase, you must pay special attention to pricing. You must now adjust your pricing, marketing, and promotion to suit the situation.
Price reductions may be necessary to maintain market share and remain competitive. Marketing and promotions should focus on how your product is better than the competition. Be sure not to go below the break-even point regarding pricing and promotions. You want to maximize profits without losing money.
Your harvest starts to diminish after collecting all the fruit possible. As the leaves begin to wither, the sales will also decrease.
The decline is the final stage in the life cycle of a product. Your sales will begin to decline as the market becomes saturated. It is usual for all products to go through this stage. Recognizing that a product has reached this stage could save you valuable resources.
Remember that just because a product is in decline doesn’t mean you have to remove it immediately. While some products remain in this stage for a considerable time, they are still profitable. Other products fall out of favor very quickly. You can still earn money in this phase.
You have a few options at this point. You can either try to revitalize the product with additional features, continue to offer the product at a reduced price to a niche loyal to it or discontinue and liquidate the inventory. Some companies bundle the declining item with other products to move it from the list during liquidation.
The marketing for the decline stage is usually aimed at the late Majority and lagged crowds.
Marketing at Different Stages
Customers adopt products in a specific way. This pattern includes five categories of adopters. Understanding this pattern may make targeting the right groups at different stages of the product’s life cycle easier.
The innovators are the first group to test a new product. They take risks and want to have the latest and best. They are attracted to the novelty of owning an item no one else does. When marketing a new product, you must target this group. This group represents 2.5 percent of all your customers.
Early Adopters represent the second phase of your customers, accounting for 13.5%. This group is essentially your influencers. This group is most likely to create product reviews, and, as innovators do, they tend to be more risk-taking and have more disposable income. They do more research and think about the product than innovators.
The early Majority is a group of consumers who follow the early adopters. This group represents 35 percent of the customer base. The early Majority is less risk-averse and more cautious in their purchases. It could be that they don’t have the same disposable income or are more cautious.
After the early Majority comes the Late Majority. This group is more skeptical and has lower social and financial status than previous adopters. These adopters also tend to rely on products that have been tried and true, so they don’t take many risks. Another 34 percent are your late adopters.