The Product Life Cycle (PLC) and Strategies at different

stages
Advertising strategies change with the change in stages of a product life. i.e. PLC This article
focuses on changes in way of advertising  when PLC stages changes.

Every product goes through a series of stages, namely the introduction, growth, maturity,
decline.

After a period of development it is introduced or launched into the market; it gains more and
more customers as it grows; eventually the market stabilises and the product becomes mature;
then after a period of time the product is overtaken by development and 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superior competitors, it goes into decline and is eventually withdrawn.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.

Thus in this case, a suitable advertising and promotion campaign is required to be identified and
followed.

Strategies for the differing stages of the PLC

Introduction stage of PLC  
The need for immediate profit is not a pressure. The product is promoted to create awareness. If
the product has no or few competitors, a skimming price strategy is employed. Limited numbers
of product are available in few channels of distribution. Advertising differentiates the product.

Print ad of a Printer giving details about its specifications

Growth stage of PLC  

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. Advertising
spend is high and focuses upon building brand. Market share tends to stabilise. Advertising
establishes participation with the marketplace.

Maturity stage of PLC  

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. Price wars and intense competition occur. At this point the market reaches saturation.
Producers begin to leave the market due to poor margins. Promotion becomes more
widespread and use a greater variety of media. Advertising puts price ahead of the
competition.

Decline stage of PLC  

At this point there is a downturn in the market. For example more innovative products are
introduced or consumer tastes have changed. There is intense price-cutting and many more
products are withdrawn from the market. Profits can be improved by reducing marketing spend
and cost cutting. Defensive advertising or for revitalization.

As a company grows and matures, other factors in its successful management and growth
become important. I will analyze a company's Growth Stages and identify common issues,
success factors and problems for each particular stage; identify Management Considerations and
Challenges as the company grows and matures; and consider Future Planning Requirements. As
a Company grows and matures, it is important the organization understands how to plan
effectively for new challenges, issues, markets and problems.

Small Business Growth Stages

- Basic Existence Stage

- Main Issues and Characteristics

1. Obtaining Customers
2. Delivering the product and service
3. Viable Services
4. Expand from key customers to broader sales base
5. Have enough Cash on Hand to cover Cash Flow demands
6. Owner performs all Management functions
7. Often a lack of Planning & Systems
8. Business just trying to remain viable
9. Have yet to stabilize production or product quality
10. Trying to gain sufficient customer acceptance
11. Business has strong demand on the Owner's time, cash and energy

- Survival Mode Stage

- Main Issues and Characteristics

1. Business demonstrates viability as business entity

2. Satisfies a base of customers
3. Focus shifts from existence to managing Cash Flow
4. Generate enough Cash Flow to break even, stay in business and finance growth
5. Focus on Market Niche exploitation
6. Simple organization and the owner begins to delegate to a manger. However, strong direction
and control still rests with the Owner.
7. Planning concentrates on Cash Flow Forecasting
8. Systems development & implementation in early stages.

- Obtaining Success Stage

- Main Issues and Characteristics

1. Exploits its Market Niche

2. Obtain Strategic goals
3. Expansions is important but stability, control and profitability are key as well
4. Owner's Options:
a. Expand and Grow the business
b. Maintain Stability as a means of support to the owner
c. Owner considers disengagement from the business
5. Market penetration
6. Competitive Edge
7. Functional Management & Owner Delegation
8. Management & Key Employee Competence
9. Generating sufficient Cash Flow
10. Planning for rough patches
11. Professional Staff: i.e. Controller, CFO, CEO
12. Production/ Service, Marketing, Strategic and Financial Systems established
13. Operational Budget Management
14. Growth Strategy Options
a. Consolidate Company, develop efficiencies and marshal resources
b. Use Retained Earnings and Cash Flow, leveraged with Finance, to grow the Company
c. Cash Flow Management & Profitability are key concerns to finance growth goals
d. Develop Key people and management
e. Strong Operational and Strategic Planning
f. Growth requires the owner's deep involvement (verses disengagement)

- Rapid Growth Stage

- Main Issues and Characteristics

1. Committed to a Growth Strategy

2. Concerned with adequately financing the growth stage
3. Need good ownership delegation to improve managerial effectiveness.
4. Enterprise develops complexity. Performance Control Systems are important
5. Established Expense and Budget Controls to maintain strong Cash Flow.
6. Profitability Planning Systems are critically important
7. Effective Financial Planning, Forecasting, Modeling and Strategy
8. Very skilled, experienced and competent Management Structure
9. Company systems are tested, adapted and highly delegated, but there is strong Strategic
Leadership from Top Management
10. Capacity to become a big business
11. Strong Potential for Business Sale Premium
12. Effective Delegation and reliance on talented Managers & Key Employees are keys to
success
13. Founding Entrepreneur(s) can opt out of business and have a more advisory role

- Maturity Stage

- Main Interests and Characteristics

1. Consolidate and Control profits

2. Retain advantage of relative small size, nimbleness and flexibility
3. Quick market change response time
4. Still retains the entrepreneurial spirit
5. Growth causes inefficiencies so must ensure the Management Structure continues to grow and
evolve. Strong Managerial Talent
6. Strong Budget, Operational and Strategic Planning capability and focus
7. MBO System (Management by Objectives)
8. Cost Systems
9. Extensive & well developed company systems and Management Structure
10. Strong Financial Resources
11. Convert Entrepreneurial spirit to a Formidable Market Force
12. Strong Market Niches and Competitive Edge
13. Exceptional Risk Management
14. Profitability boosted by successful Innovation
15. Strength in Market Branding and Recognition
16. Maintain Competitive Edge by anticipating Market changes and adapting better and faster
than competitors

Management Considerations and Challenges

- Key Management Factors and Areas: The following are areas which change in importance as a
company develops and grows, which often determines the success or failure of the enterprise:

1. Financial Strategy: Cash Flow and Finance

2. Personnel Planning: Amount, Depth, Structure and Quality of Key People and Management
3. System Integration: Product Development, Production Management, Cost Controls, Budgeting
Systems, Marketing Systems, Quality Management, Customer Relations, Strategic Planning,
Cash Flow Management, Profitability Analysis, Asset Management, and so forth.
4. Business Resources: Customer Service, Market Share, Market Growth, Market Penetration,
Market Trends, Supplier Relations, Manufacturing Processes, Facility Efficiencies &
Expansions, Distribution Systems, Sales Management, Innovation, Technology, Industry &
Market Positioning and Business Reputation.
5. Company Goals and Objectives
6. Operational Planning and Abilities
7. Supply Chain Management
8. Owners Willingness and Ability to Delegate
9. Strategic Long-Term Outlook and Management

- The Role of Business Planning: A good Business Planning Structure will look at the mentioned
factors (among others) and effectively plan, develop, install and implement systems and
processes to manage and anticipate these challenges throughout the business enterprise. A
company can grow, or for that matter, collapse, so quickly that it is very important to have
Planning and Control Systems in place to manage all the numerous variables which a business
encounters and considers. Therefore, as the business grows and changes, and as the markets and
competitors change, the small business has established systems and resources in place to
successfully handle and manage these changing forces and factors.

Future Planning

- Growth Considerations

1. Does the business have the quality and diversity of experience and talent needed to effectively
manage a growing company?
2. Does the business have systems in place and in development to effectively handle the needs
and demands of an expanding, diversifying enterprise?
3. Do the entrepreneur/ owner/ founder(s) have the foresight, inclination and ability to delegate
decision making to management?
4. Does the business have the Cash and Finance structure, along with an understanding of the
Risk Factors, to aggressively pursue rapid growth?

Application

In managing a growing, expanding and maturing Small Business, we presented a model by

which to evaluate and plan for the current business situation and future concerns and challenges.
By understanding the particular Growth Stage Characteristics and Issues, Management
Considerations and Challenges, as well as, Future Growth Planning Considerations, a business
can apply this planning format and model to anticipate problems and successfully sustain growth.
This model should be an integral part of a Company's Business Planning, Market Planning,
Product Development Planning, Strategic Planning, Sales Planning and Financial Planning and
Forecasting.

Conclusion

An imbalance of management factors and challenges can create serious problems for the
entrepreneur and his/her growing enterprise. We illustrated how the problems faced and the
respective skills necessary to effectively deal with challenges change and evolve as a company
grows, expands, and seeks success. Therefore, it is vitally important for business owners to
anticipate and strategically manage these factors as they become influential and important to the
enterprise.
As I explained in this article on Small Business Growth Management Strategies, a company's
stage of development determines the managerial factors which are necessary and important. A
Company's Planning Structure is vitally crucial in determining which factors and issues must be
faced and dealt with. Knowing its keys to success, development stage model and future planning
needs, a company's managers, entrepreneur, founders, executives, investors, advisors and
consultants can make much more informed strategic decisions and plan for future challenges.

The Case for a Business Consultant

When an entrepreneur is starting and growing a company, it becomes vitally important from the
outset to seek and obtain objective advice from experts. The Company Principals need expert
advisors on their team to discuss decisions and obtain objective advice; challenge the founders'
venture needs appraisal; provide an honest appraisal of strengths and weaknesses; review
decision making processes; identify survival tactics and needs; develop and implement a
business plan, marketing plan, strategic plan, sales plan, and financial strategy; build market
focus and niches; anticipate market trends; establish and sustain competitive edge; provide
financial foresight and planning; focus on cost controls, budgeting procedures, cash flow
management and maximizing profitability; along with obtaining the appropriate Financial
Resources to augment self-investment and achieve growth goals and opportunities. In short, a
Business Consultant, with an experienced track record, can fill this long requirement list, helping
the entrepreneur and his or her advisory and management teams to successfully start, structure,
plan, expand and profitably grow the enterprise.

Frank Goley is a business consultant and business coach, and he works for ABC Business
Consulting. He is an expert in developing, writing and implementing business plans, funding
plans, marketing plans, strategic plans and business turnaround plans. Frank is author of The
Comprehensive Business Plan Workbook - A Step by Step Guide to Effective Business Planning,
and he writes the Business Success Strategies Blog.
It covers how you can extend the mature or adulthood stage of your marketing product life cycle
using market segmentation.

Marketing Product Life Cycle: Mature Stage

Introduction
In the maturity stage of your product’s marketing product life cycle, your product reaches
adulthood. During this stage, you can expect sales to continue increasing, but at a slower pace
than in the growth stage.

Part of the decrease in sales results from more competitors capturing a piece of your product’s
market. Increased competition often demands that you decrease your product’s price in order to
retain its market share.

Marketing Product Life Cycle:

Maintaining Market Share
During Mature Stage
Thus, your main marketing goal during this stage is to maintain market share. This sometimes
requires:

 modifying your product to make it more competitive,

 lowering your product’s price,
 providing additional incentives to your resellers, and
 emphasizing your product’s distinguishing characteristics through branding.

Marketing Product Life Cycle:

How Market Segmentation
Helps Survive The Mature Stage
Market segmentation will enable you to successfully survive the maturity stage of your
marketing product life cycle by:

 using competition segmentation to determine competitive products’ strengths and

weaknesses,
 conducting a competition analysis to determine your product’s strengths and distinguishing
characteristics, and
 doing a price analysis to determine the best price for your product in order to keep your
market share while still making a profit.
By using market segmentation in these ways, you’ll be able to compete better and can keep your
product bringing in sales and profits longer.

The next post in this series covers how market segmentation can extend the decline stage of your
marketing product life cycle.

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