Product Life Cycle

Chapter: - 7.

PRODUCT LIFE CYCLE:

 
- Successful new products may not last forever, during its life. Sales /profits generated     for by-product may vary.
- Variance depends on the market demand for product changing needs level is described by demand cycle curve such as:

- Demand may also decline due to a change in technology.
- Based on demand for a product it may be possible to create a concept that provides insights of the product’s competitive dynamics. This is called PRODUCT LIFE CYCLE.
- PLC concept implies:
 Products have a limited life.
 Product sales pass through distinct stages with each stage posing Challenges/Opportunities/ Problems.
 Profits rise/fall during different stages of product life cycle.
 Products require different marketing/manufacturing./ finance/ purchase/ HR strategies at each stage of Product Life Cycle.
- In most cases historical/ empirical data shows the sales/profits of a product as following a pattern (as per diagram)
- Pattern is:

-           Product Life Cycle curve is typically divided into 4 stages:
•   Introduction:            
 Product introduced in market.
 Slow sales growth.
 No profits as expenses are high.
 Growth:                    
 Period of rapid market acceptance.
 Profit increases.
 Maturity:                  
 Sales growth slows down.
 Profits stability then decline to fight competition.
 Decline:                    
 Sales decreases
 Profits decreases
- Stages are marked by changes in rates of sales growth.

PLC concept can be used to analyse:
 Product category (liquid/oral care/ skin care).
 Product form (white liquid/paste/cake).
 Products (vodka/ toothpaste/ soap).
 Brands (Smirnoff/ Colgate herbal/ Lux).

- Product categories have largest PLC’s. Many product category stay in maturity stage of PLC indefinitely.
-     Product forms follow PLC structure, i.e.,   better than product category as they pass through I/G/M/D strategies faster.
-... [continues]

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