(Compiled by Deep Banerjee, Marketingpundit.com) Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline). The conditions under which a product is sold will also change over time. The Product Life Cycle refers to the succession of stages a product goes through. Product Life Cycle Management is the succession of strategies used by management as a product goes through its life cycle After a period of development, a product: - which is introduced or launched into the market gains more and more customers as it grows; - eventually the market stabilizes and the product becomes mature; - then after a period of time the product is overtaken by development and - with the introduction of superior competitors, it goes into decline and is eventually withdrawn. However, most products fail in the introduction phase. Others have very cyclical maturity phases where declines see the product promoted to regain customers.
Characteristics/ Strategies for the differing stages of the Product Life Cycle 1. Market introduction stage • Need for immediate profit is not a pressure. • Product is promoted to create awareness. • Demand has to be created. • Customers have to be prompted to try the product. • Costs high. • Sales volume low. • No/ little competition - competitive manufacturers watch for acceptance/ segment growth. • Limited numbers of product are available in few channels of distribution. • Losses. 2. Growth stage • Competitors are attracted into the market with very similar offerings. • Products become more profitable and companies form alliances, joint ventures and take each other over. • Sales volume increases significantly. • Costs reduced due to economies of scale. • Public awareness is high. • Advertising spend is high and focuses upon building brand. • Market share tends to be at its peak. 3. Maturity stage • Those products that survive the earlier stages tend to spend longest in this phase. • Sales grow at a decreasing rate and then stabilise. • Producers attempt to differentiate products and brands are key to this. • Prices tend to drop due to the proliferation of competing product. • Market reaches saturation. • Producers begin to leave the market due to poor margins. • Promotion becomes more widespread and use a greater variety of media.
Compiled by: Deep Banerjee, Marketingpundit.com (Product Life Cycle)
4. Decline stage • There is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. • There is intense price-cutting. • Many more products are withdrawn from the market. • Profits can be improved by reducing marketing spend and all round cost cutting. • Consumer demand for spare parts, maintenance and or product servicing.
Lessons of the Product Life Cycle (PLC)
It is claimed that every product has a life cycle. A product gets launched, it grows, and at some point, may die. A fair comment is that - at least in the short term - not all products or services die. Jeans may die, but clothes probably will not. Legal services or medical services may die, but depending on the social and political climate, probably will not. Even though its validity is questionable, it can offer a useful 'model' for managers to keep at the back of their mind. Indeed, if their products are in the introductory or growth phases, or in that of decline, it perhaps should be at the front of their mind; for the predominant features of these phases may be those revolving around such life and death. Between these two extremes, it is salutary for them to have that vision of mortality in front of them. Thus, the life cycle may be useful as a description, but not as a predictor; and usually should be firmly under the control...