Product Lifecycle and Market Segmentation Strategies
Product Lifecycle Stages
Like human beings, products have a lifecycle, a period in which they are introduced, grow, mature, and eventually decline. The duration of this lifecycle varies greatly depending on the product’s nature.
Introduction or Release Stage
This stage involves launching a new product, which can be entirely novel or an innovation based on existing products. As the product is largely unknown, sales are low and growth is slow.
Growth Stage
After the initial stage, the product gains recognition, leading to strong sales growth. Advertising shifts from informative to persuasive.
Maturity Stage
Sales growth begins to level off, remaining relatively constant. Advertising focuses on attracting new consumers and segmenting the market to reach them with sophisticated arguments.
Decline or Saturation Stage
Sales decline significantly. The company must decide whether to revitalize the product, find new uses, concentrate on a niche market, or withdraw it from the market. In the latter case, care should be taken to avoid harming the client or the company’s image, and to prevent opportunities for competitors.
Market Segmentation
Dividing the market according to customer needs creates homogeneous market segments. The selected group, based on shared characteristics, is also known as the target audience.
Segmentation Criteria
Defining the target audience involves applying three sets of criteria to group individuals based on demographic, economic, or psychological characteristics:
Demographic Criteria
Individuals are grouped by variables such as sex, age, education level, and household position.
Socioeconomic Criteria
Individuals are divided according to their consumer potential or social class.
Psychographic Criteria
This includes personality traits (e.g., introverted or extroverted), values, and lifestyle (e.g., progressive or yuppie).
Groups of individuals sharing similar criteria tend to exhibit similar behaviors, frequent similar places, and purchase the same products. Consumer behavior is complex and influenced by internal and external factors. The broader the market, the harder it is to reach all potential consumers effectively. Therefore, market segmentation improves efficiency.
Statistics are essential for market segmentation. They allow for the collection, sorting, and filtering of data to identify the desired target (e.g., a pharmaceutical company might seek details on men with high triglyceride levels).