Product Life Cycle - Relevance

Article on PLC – relevance & scope

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Product Life Cycle – Relevance and Scope

Written by: Shilpa Kamath. A.

Lecturer, Management & Commerce, SMU DDE

The following Article presents information regarding –

The concept and meaning of a Product Life Cycle

Product’s life stages

Business and marketing strategies ideally required during the life cycle phases

Benefits and drawbacks of PLC study, Exceptions to PLC with suitable examples and

A Case in reference to Social Networking Sites

Marketing strategies usually revolves around the product and it should be that way because product

offerings determine a company‟s strength or weakness in the market. Even, other marketing mix elements

such as Price or Promotion are formulated around the product. We are all consumers and we need different

kinds of products for different purposes as well. In this article, we will seek answers for the following

product-oriented questions:

What is the time frame for a particular product in the market place?

Where do the products end up if they are not at all consumed?

How do new products originate and when they become old?

Will competition determine the life of a product?

What happens to the product if it is no longer used by consumers or not sold in the market?

All of the above questions can be framed in a simpler way and we can put it across as “What is the life-

cycle of a product and how to determine it?”

For any thing or any being there is a beginning and an end. Change is a constant force and everything

changes with time. Even for a given product, it has to go through the journey which in marketing terms is

called as Product Life Cycle or PLC. When we say a product has a life cycle, it means:

Products have limited life - each product goes through different life cycle stages at different times.

Products have different stages of rise and fall.

Products sell at different levels in different stages.

Products face different challenges, problems, opportunities, threats at different stages.

Products have to be managed appropriately through different strategies – marketing, financial,

production, purchasing & other business strategies at different stages.

Concept of PLC:

A product life cycle refers to the passage of time through which a new product has to travel right from

manufacturing till its decline in the market. The gaps in between these two points show how the product

lives in the market like for instance facing competition, dominating prices or resulting into sales. Generally,

a product goes through five life stages –

1. Research & Development stage

2. Introduction stage

3. Growth stage

4. Maturity stage

5. Saturation & Decline stage


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Measuring the product life stage:

The concept of the product life cycle has become central to market forecasting. The stages of the life cycle

form a framework that you can use to analyze the dynamics and the primary factors that can impact a

market segment and product sales.

The basic stages of the product life cycle can be expanded into a more-comprehensive model that better

explains the various parts of the life of a product in the market. Following will outline the various stages of

the expanded product life cycle concept.

Stages of the Expanded Product Life Cycle –

1. Research and development

2. Product introduction

3. Development of the market

4. Exploitation

5. Market maturation

6. Market saturation

7. Market decline

To calculate or measure at what stage of its life cycle a given market is, the following parameters need to

be measured and monitored for the given time frame say per annum/year:

Investment in R&D p.a.

Number of competitors in the market p.a.

Number of competitors that entered the market p.a.

Number of competitors that left the market p.a.

Pro

fits &

What’s

my PLC?

PLC GRAPH


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Market growth rate and sales growth p.a.

Market size or segments p.a.

Industry profitability p.a.

Investment in marketing (such as advertising, trade shows, direct sales forces) p.a.

The measurement of these parameters over time will help to determine what stage a given market is in.

Product Age measurability by identifying the features in different stages of the Product Life Cycle –

Life Stage No. of

Competitors

Market Growth

or potential

Profits or

revenue

Market Size

or no. of

customers

Investment

or Funding

required

R&D Unknown 0 0 0 Growing

Product Introduction Few Highest 0 Small High

Development Growing Fast High Low Small High

Exploitation Moderate

Growth Good Growing Modest High

Maturation Stable Low High Largest Stable

Saturation Stable None Lowering Stable Declining

Decline Reducing Negative High & Low Declining Stopped

Marketing Strategies usually adopted for a Product during the Life stages –

Life Stage Pricing Distribution Advertising Sales

promotion

Personal

selling

PR

activities

&

Publicity

Testing

promotion

effectiveness

R&D Cost involved Nil Nil Nil Nil Medium Nil

Product

Introduction

Depends on

product category –

premium/Skimming

pricing OR

Penetration/low

pricing

Medium Less Nil Medium Medium Test on target

market

Development Competitive pricing More Aggressive Medium Medium More Medium

Exploitation Competitive pricing More Aggressive More More More More

Maturation Reasonable pricing Medium Medium More Medium More More

Saturation Low pricing Depends on More Medium Less More Less


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demand (reminder

ads)

Decline Low pricing Less Medium Medium Less Less Nil

Is it essential to know about PLC?

It is important to analyse the product‟s performance in the market. For that, product‟s position, status, life

stage and the way it exists in the market is required. PLC stages not only determine the specific stages of a

product‟s market existence but also help the marketers to know about these aspects:

Expected returns or cash flows in a particular PLC stage

Investment required on strategy implementation during a PLC stage

Marketing strategies to establish brands and become market leader by making the product

prominent and gaining maximum market share

Remain competitive and making product offerings innovative

Balancing the available organisational resources with the demands or requirements in the particular

PLC stages

Apart from that, knowledge about PLC will also benefit marketing management in these ways:

As a marketing tool to analyse products

As a guide by providing relevant information for marketing research

As a map to know about a product‟s expected journey and deviations it takes in the market place

As a reference point to indicate how different products have different life cycle patterns

Limitations of PLC study:

Although knowing about PLC has its benefits, there are a few drawbacks as well that are given below:

It is difficult to predict or analyse the length or time frame of each stage in PLC. For example, a

marketer will be unable to estimate the maturity period for a product or even if it has entered the

maturity stage.

Constant change and with so many product choices in the market, PLC stages are shortening and

so, it may not be applicable to study PLC in anyways. For example, smaller companies may not

mind how short the product‟s PLC stages are because they maybe more interested in developing

niche markets or segments.

Companies cannot always go by the PLC stages as sometimes it becomes necessary to ignore the

PLC stage and carry out those marketing activities that are more important or suitable. For example,

if a company decides to expand its markets abroad, then the PLC stage of a product in domestic

markets may not even be considered or given importance when compared to lucrative foreign

markets.

Company‟s profitability and sales are not dependent on PLC alone. There are many other factors

that contribute to the success of the company and its performance such as workforce efficiency,

management leadership, consumer behaviour, competitive factors and other business aspects. PLC

may or may not be helpful to the company at a given time.


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Exceptions to PLC:

PLC stages are not a standard or a rule for a given product. PLC is a generally observed pattern for a

product which can have as many exceptions in the form of unpredictable or unexpected ways. Some

exceptions to the PLC are as follows:

a) There are different types of PLC as well which makes it difficult to trace the PLC stage for a specific

product.

Example 1 – Product category PLC: A particular product category or a product class say

wooden furniture may be replaced by rubber or plastic furniture. So, the entire wooden

furniture category will have a declining phase in PLC and not just a wooden table or chair.

But, there may still be demand for wooden chairs if not for other wooden stuff.

Example 2 – Product Vs. brand PLC: A particular product for instance toothpastes will

probably have similar PLC stage irrespective of brands. It doesn‟t matter if marketers

aggressively advertise or differentiate their brand, it may not help the product in its PLC

stage.

Example 3 – Brand PLC: Products say for instance “Ganga” a Soap brand (that featured

Hindi film actor Govinda in ads), belonging to Godrej consumer goods may go through a

PLC stage but the brand – “Godrej” may not follow the PLC successively. So, in this case,

brands have a consistent life and its PLC cannot be estimated.

(Source: www.godrej.com)

(Source:http://marketingpractice.blogspot.com/2006/11/ganga-soap-rip.html)

b) As there are different types of products and product categories, it is not always feasible or

acceptable that all products follow similar PLC stages. A product in a given product category may

show a separate pattern than some other product in the same category. Similarly, 2 different

products belonging to diverse categories may show like features in PLC stages.

Example 1: Dishwasher liquid and dishwater soap bar may have

different PLC stage even if their usage is for the similar purpose and the

same brand offers both forms of the product. For instance, PRIL dish

wash bar competes with its own counterpart PRIL liquid cleaner.

(Source: http://archives.chennaionline.com/events/business/2004/05pril.asp)

Example 2: A chocolate brand and a shampoo brand may follow the same PLC stage even

if they are not related in any manner. But, marketing strategies for both may be entirely

different since the products cater to different consumer needs and wants. So, in this case,

the same PLC stage will not help either brand to evaluate or compare strategies.

c) Some products continue to be in fixed stage while some other products follow cyclical PLC stages.

They don‟t go to decline stage and keep fluctuating between maturity and saturation stage or


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between growth and maturity stage or may enter the decline stage and when it does, company will

re-launch it again to the Introduction stage.

Example 1: “Nirma” washing powder as soon as it is observed that it may enter a decline

stage, the company instantly positions the brand once again in the minds of the consumers

using the same, established and popular advertising jingle that uses these Hindi words

excluding the brand name – “Washing Powder Nirma, Doodh Se Saphedi...... Sabki pasand

Nirma......” Some advertising experts believe that Nirma is in Maturity stage of PLC for a long

time.

(Source: http://www.nirma.co.in/detergents.htm)

Example 2: Products such as Salt or Sugar will always be in maturity stage irrespective of

the brand.

Example 3: Some products are recognised as extinct after it undergoes the Decline stage

but the company may re-launch it in a new way with new innovative features and offers. It

may take time for re-launching a product or brand but there is every chance that it will gain

acceptance in the market and become more popular than before. “Onida” TV sets are

believed to be in the decline stage but talks are that company is planning to re-launch the

brand once again.

Example 4: Fashion accessories and fashionable products or garments are always cyclical.

It is said that “Fashion never goes out of Fashion”, so, a fabric design or a particular jeans

which is outdated now may once again be in fashion in near future.

d) Some products may not follow the order in the stages of PLC. They may directly enter the decline

stage after it is introduced in the market or they may enter back to the maturity stage from saturation

stage.

Example 1: „Blue Pepsi‟ launched in 2002 by Pepsi during was not welcomed in the market

especially in Indian markets and it straight away entered the decline stage although it is still

available in a few countries.

(Source: http://en.wikipedia.org/wiki/File:Pepsi-blue_bottle.gif)

Example 2: Even though the demand for mobile phones is constantly increasing, it is

believed that mobiles have entered the maturity stage. But, the landline connections are still

in the growth stage especially in India.


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e) A product such as public utilities and facilities may never have a PLC stage even though marketing

activities are carried out for such products. For example, basic necessities such as water or

electricity will have consistent demand even if the sources or way it is offered may change.

Case in reference –

Concept and Evolution of Social Networking sites:

Social Networking Sites or SNS are web-oriented services that provide users with the required facilities to

open an individual space or profile or an account in the respective networks that has a user name and

unique password for access. Once the web page or user account is created, it will let the user to connect,

establish and maintain friends, contacts and interact with them whenever they access their account.

Similarly, it allows the user‟s friends also to respond, interact and give comments to the user‟s account.

Online communities are more group oriented and permits the users or individuals to join such communities

that interest them. In Marketing, Service is also regarded as a product and that‟s why SNS will be referred

to as a Product.

SNS are networks established through technology and internet sites that allow users to connect and

interact with their friends, family, colleagues and other people within their individual networks. It focuses on

building and establishing relationships with people who share similar interests, hobbies and as a medium of

keeping in touch. Photos, videos and messages are also shared through the sites.

The first recognizable SNS launched in 1997 was SixDegrees.com that enabled users to create profiles

and maintain friends list. Although, SixDegrees had the necessary features of SNS, it failed eventually and

its founder says it was launched much before and people got accustomed to Social Networking only later.

Model PLC for Social Networking Sites (SNS):

Today, technology and internet are playing key roles in communication and interactions. One is able to

connect to people living in different parts of the world instantly. E-mails, messaging, Instant chatting,

blogging, social networking are happening on the internet and rising as well. Although, most communication

technology and web-based services were started with business objectives in mind, these facilities gained

popularity among common people as a way to connect to far away friends and relations.

With reference to PLC, and without particularly mentioning any specific Social Networking Site, a model

PLC showing the present PLC stage of SNS service is as follows:

A Social Network


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In the above chart, it is fairly clear that in the period between 1996 till 2002, there was a slow increase in

the usage of the SNS that were available. But, after 2002 there was rapid increase in the number of SNS

as well as a further increase in the number of users. A rough estimate is as follows:

Before the inception stages of SNS that is during the research and development of the networking protocol

system structure and its necessary features, it was considered as a never before used medium of

communication. Businesses were using such types of networking for purely professional reasons. So,

during the initial phase say from 1996 to 2000, markets were tried with a few SNS that were launched but

no on really took much notice of it and there were hardly any users. Service providers for SNS sites were

themselves unsure about the SNS features and how to go about its development.

Slowly, progress was seen after 2001 and the numbers began to increase in terms of number of SNS and

users. Once, the market potential, need and its scope for growth was certain, it was recognised in the

market and many IT enabled facilities supported the product‟s growth. Developers and system

administrators‟ cam forward with ideas and new features to make product user-friendly and popular.

Thereafter, SNS gained a respectable market position and the years 2003 to 2006 saw an upward

movement in the number of SNS and its usage rate.

Although, it would be rather difficult to tell the exact number of users even through market research, it is

clear that SNS usage will be much higher in the years to come. Since, the product itself is growing along

with the usage, it‟s a constant rise for both - SNS and its users.

Timeline/year of the launch dates of major SNSs and when community sites re-launched with SNS

features is as follows:

310

25

0 0 02

9

42

0 0 0

R & D Introduction Growth Maturity Saturation Decline

No. of users

No. of sites

2009

2008

2006

2004

2002

2000

1998

1996

Tim

e /

Ye

ar

PLC stages – Currently SNS at Growth stage

Roughly estimated figures in Percentage


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(Source: http://jcmc.indiana.edu/vol13/issue1/boyd.ellison.html)

The most popular SNS in the recent times are Orkut, Facebook, Linkedin, My Space and Twitter apart from

others which are gaining popularity. Besides, a user may have his/her profiles in two or more of the SNS

and may update them as and when required or depending upon the interest.

SNS on the Rise...

(Such as WAYN, ibibo,

interactive gaming sites

such as Zapak, so on)


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(Source: www.orkut.com) (Source: www.twitter.com)

Marketing Relevance of SNS:

In Indian scenario, SNS has a mixed response from users. Some are addicted to it and have „n‟ number of

friends on their friends list while some have just started to open up new accounts in the sites. But, the

influence of SNS on people is vividly seen across the media channels and as a Word-of-Mouth. Whether it

is Shashi Tharoor‟s political remarks on Twitter or HImesh Reshammaiya‟s dialogues in a Hindi Movie

regarding relationship status – “It‟s Complicated” which was derived from Facebook or whether it is the new

words popping out as a result of these sites such as “Unfriend” or “Scrap” is getting enough recognition

atleast from the youth market. From hobbies, photos, games to discussing movies, TV channels, movie

stars, sports through online communities – all these are happening things on the SNS. Following is a briefly

presented SWOT analysis of SNS with respect to its founders, users and the businesses:-

Parties concerned

SWOT analysis

Makers/Founders of SNS Marketers/Other

Companies Users of SNS

Strengths

New & innovative

methods will provide

Competitive edge

More usage will result

into more revenue

Development in IT

systems, wide spread of

Internet will result into

more usage

Patents, copyrights &

other protection laws

will help in

differentiation & making

SNS unique

Easily sponsor products on

the sites

Acts as an advertising

medium

Viral marketing or W-O-M

More Exposure & Easy

recognition by the users

Platform to use different

kinds of promotional tools

Increased popularity of

the SNS will lead to more

advertising

Better and instant

interactions with other

people

More connectivity and

economical than other

mediums comparatively

High accessibility

Time & distance barriers

are overcome

Establishing contacts &

maintain online

relationships

Weakness

Low connectivity factors,

Internet usage, illiteracy

cannot be overcome by

SNS

Lack of interest by the

founders or inability to

meet requirements will

lead to closure of the

SNS

Inability to convince

people about the

usefulness of SNS

Ads usually ignored by

users

Hidden visibility on the

sites will be a waste

High fee charges by SNS

for advertisements

Improper knowledge on

dealing with SNS or

using it will be a demerit

Complicated or technical

details will be hard to

figure out

Forgetting passwords or

inability to log in

Lack of safety or security

of data


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Opportunities

Scope for newer & user

friendly ways can attract

more users as SNS is still

in its PLC Growth stage

Time & distance

between people

provides scope for more

usage

Can lead to Customised

communication with users

Ads could be more

interactive on the sites

Can result into contractual

agreements with SNS for

fixed time durations

Scope to extend

contacts & business

relations

Chance to meet new

people & create positive

influences or

revolutionary changes in

the world

Threats

Constant Technological

change will hamper

growth & may even lead

to closure of the site

People could be bored

or remain inactive users

on SNS

Privacy issues, cyber

crimes, bad publicity can

have a negative impact

on SNS

Closure of networking

sites will cause less

exposure

It can create a highly

competitive environment

between products

Users are prone to avoid

any links on the sites, so it

may threaten inter-

activeness or participation

from users

Privacy issues & cyber

crimes can influence

users to withdraw from

SNS

Wrong W-O-M can

affect users’ interest in

involving themselves in

SNS

No matter how much popularity SNS gains in future and whether its PLC stage remains in the Growth

status for long, marketers will continue to tap these avenues for promoting their products and reaching out

to more people.

As for the users of the SNS, privacy of information and account details especially passwords are riskier

since anything is not considered safe on the internet. As is the fact, social networking is also subject to

virus attacks, hacking, and cyber crime can negatively affect the users. Therefore, most of the networking

sites are issuing safety guidelines, caution messages and certain net principles or advices to the users so

as to stay safe on the net. SNS guide the users by providing them information and constantly advising the

users:

To use strong and uncommon passwords

To watch out for suspicious links

To ensure correct Log in page

To avoid any unnecessary contacts or friendliness with strangers

To maintain secrecy of the passwords and not to reveal any important or confidential information

this can be termed as Privacy issues.

Conclusion:

The future of SNS and its usage is still underway. How soon SNS enters the Maturity phase of PLC is

quite hard to determine. But, the question remains how soon is too soon as the scope for Growth is

tremendous.

References:

http://en.wikipedia.org/wiki/Product_life_cycle_management

http://www.frost.com/prod/servlet/mcon-mktmeasures-life-cycle.pag


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http://courses.unt.edu/kt3650_9/sld001.htm

http://jcmc.indiana.edu/vol13/issue1/boyd.ellison.html

The Hindu - Business Line dated March 22nd

2010

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Product Life Cycle - Relevance