Product Life CycleIts concept

What is Product Life Cycle? The course of a product’s sales and profits over its lifetime. It involves five distinct stages: product development,

introduction, growth, maturity, and decline.A company’s

products are born, grow, mature, and then decline, just

as living things do.

Stages of PLC

The PLC has five distinct stages: 1. Product development begins when the company finds and

develops a new-product idea. 2. Introduction is a period of slow sales growth as the product is

introduced in the market. 3. Growth is a period of rapid market acceptance and increasing profits. 4. Maturity is a period of slowdown in sales growth because the

product has achieved acceptance by most potential buyers. 5. Decline is the period when sales fall off and profits drop.

Some products die quickly; others stay in the mature stage for a long, long time.

The elements described by PLC

The PLC can describe: a product class (Fuel

powered automobiles)

a product form (MPV – multi passenger vehicle)

a brand (Renault Lodgy)

The PLC concept application to styles, fashions & fad Style - A style is a basic and distinctive mode of expression. e.g., styles appear in homes (traditional home, ethnic – styled home, modern styled home) ; clothing ((formal, casual); & art (realist, surrealist, abstract).Style has a cycle showing several periods of renewed interest. Fashion- A currently accepted or popular style in a given field.e.g., the more formal “business attire” look of corporate dress of the 80s and90s gave way to the “business casual” look of the new millennium.Fashions tend to grow slowly, remain popular for a while, and then decline slowly. Fad - A temporary period of unusually high sales driven by consumer

enthusiasm and immediate product or brand popularity.e.g., Low – carb diets

Types of New Products

Newness L M H

LNot Very New

Cost Reductions

11%

Repositioning 7%

M Moderately New

Product Line Extensions

26%H

Very NewNew Product

Lines 20%

New to the World 10%

Market

FIRM

Why Do Firms Introduce New Products? Support additional usage Better meet needs of slightly different sub-segments

through differentiation Address needs of potential emerging segments Encourage variety seeking Enhance sales of current products

CUSTOMER

Counter encroachment by alternative products Control shelf space

COMPETITION

Alter brand image Replacing and improving mature products is a key

success factor for a firm

COMPANY

Introductory Stage Growth Maturity Decline

Product Life Cycle

Revenue Profit

Sales

Profit

Technology Adoption Cycle

No.

of A

dopt

ers

Introductory Phase

Introduction stage The PLC stage in which a new product is first distributed and made

available for purchase. Introduction takes time, and sales growth is apt to be slow. Profits are negative or low because of the low sales and high distribution

and promotion expenses. Much money is needed to attract distributors and build their inventories. These firms focus their selling on those buyers who are the most ready

to buy.

Growth Stage

The PLC stage in which a product’s sales start climbing quickly. Attracted by the opportunities for profit, new competitors will enter the

market. Profits increase during the growth stage as promotion costs are spread

over a large volume and as unit manufacturing costs decrease. It improves product quality and adds new product features and models. It enters new market segments and new distribution channels. The firm faces a trade-off between high market share and high current

profit.

Maturity stage

The PLC stage in which a product’s sales growth slows or levels off. This maturity stage normally lasts longer than the previous stages, and

it poses strong challenges to marketing management. Competitors begin marking down prices, increasing their advertising and

sales promotions, and upping their product development budgets to find better versions of the product.

The company can try modifying the marketing mix—improving sales by changing one or more marketing mix elements.

Decline Stage

The PLC stage in which a product’s sales decline. Sales may plunge to zero, or they may drop to a low level where they

continue for many years. This is the decline stage. As sales and profits decline, some firms withdraw from the market.

Summary of Product Life-Cycle Characteristics, Objectives, and Strategies

Introduction Growth Maturity Decline

CharacteristicsSales Low sales Rapidly rising

salesPeak sales Declining sales

Costs High cost per customer

Average cost per customer

Low cost per customer

Low cost per customer

Profits Negative Rising profits High profits Declining profits

Customers Innovators Early adopters Middle majority Laggards

Competitors Few Growing number

Stable numberbeginning to decline

Declining number

Summary of Product Life-Cycle Contd.

Introduction Growth Maturity DeclineMarketing Objectives

Create productawareness and trial

Maximize market share

Maximize profit whiledefending market share

Reduce expenditureand milk the brand

Summary of Product Life-Cycle Contd.Introduction Growth Maturity Decline

StrategiesProduct Offer a basic

productOffer product extensions, service, warranty

Diversify brandand models

Phase out weak items

Price Use cost-plus Price to penetrate market

Price to match or beat competitors

Cut price

Distribution

Build selective distribution

Build intensive distribution

Build more intensivedistribution

Go selective: phase out unprofitable outlets

Advertising Build product awareness among early adopters and dealers

Build awareness and interest in the mass market

Stress brand differencesand benefits

Reduce to level needed to retain hard-core loyals

Sales Promotion

Use heavy sales promotionto entice trial

Reduce to take advantage of heavy consumer demand

Increase to encouragebrand switching

Reduce to minimal level