Where the product life cycle is concerned, the Growth Stage represents the second of the stages in most any product and its life 7 figure cycle review. The truth is that for a great number of product manufacturers, this phase is the one that makes or breaks the position of the item concerning sales and market share, growing sales, and boosting profit margins to acceptable levels.
They attain this through continuously increasing consumer awareness and resulting demand via promotional, advertising, and marketing endeavors as they simultaneously decrease the costs of manufacturing the goods. Here we will consider the challenges and advantages of the all-important growth stage of a product.
Challenges to the Growth Stage of the Product
There are three primary obstacles to overcome in this important growth stage of any product. These are:
- Growing Competition – First movers will initially enjoy the rare experience of not having much (or even any) competition for their new product. As demand increases though, they will see a growing level of competition from rival manufacturers who seek to gain from the new and increasing market and good.
- Varying Approach in Marketing – Early marketing campaigns benefit dramatically from the excitement surrounding any new product launch. Yet with the evolution to growth phase, a product no longer enjoys the label of “new and exciting.” This means that a stronger marketing campaign will be the order of the day for the growth phase to reach its ultimate potential.
- Declining Prices – While in the introductory stage, firms are able to charge higher prices for their exciting new product, this ability declines as competitors flood the market with less expensive alternatives in the growth stage. This causes the first mover firms to reduce their prices in order to boost sales and defeat the competition.
Advantages In the Growth Stage of the Product
There are also three primary advantages to this stage in the product life cycle, as follows:
- Reduced Costs – By the time a company gets a product to the growth stage, most of the associated expenses of Introduction, like initial product development and advertising, have been overcome. As these costs decline steeply, and production ramps up to cover growing demand, the product makers also benefit from growing economies of scale. This allows them to lower costs substantially even as their efforts at route to market gain in traction and efficiency as well with a more established and successful product.
- Growing profits – Rising sales plus declining costs equals growing profits for the majority of manufacturers. This affects both the margins on each item they sell as well as the overall product profits.
- Rising Consumer Awareness – Throughout the Growth stage, a greater number of product buying consumers are gaining awareness of this new product. It allows for the overall market size to grow too. Higher demand for a particular new product combined with this leads to a dramatic boost in sales during this Growth phase.
Though it requires some forward thinking and patience, those firms who are willing to invest a portion of their growing product profits into additional marketing and positioning of the product for the future will benefit significantly over the longer term.