Product Life Cycle (PLC)
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The product life cycle (PLC) outlines the stages products go through, from development to withdrawal, influencing strategies such as marketing and positioning. Key stages include development, introduction, growth, maturity, saturation, decline, and withdrawal, each characterized by specific sales, costs, and marketing objectives. While beneficial for forecasting and strategic planning, the PLC concept has limitations, particularly in predicting product behavior and variations across different products.
Product Life Cycle (PLC)
- 1. Product Life Cycle (PLC) 1 Dr. Amitabh Mishra
- 2. • Product Life Cycle shows the stages that products go through from development to withdrawal from the market. • The company’s differentiation and positioning strategies must change as the product, market, competitors changes over time. 2 Dr. Amitabh Mishra
- 3. Characteristics of PLC 1. Each product may have a different life cycle. 2. PLC determines revenue earned. 3. PLC may help the firm to identify when a product needs support, redesign, withdrawal, etc. 4. PLC may help in new product development planning. 5. PLC may help in forecasting and managing cash flow. 3 Dr. Amitabh Mishra
- 4. The Stages of the Product Life Cycle Most product life cycle curve take a bell shape form. Following are the stages of a standard PLC- 1. Development 2. Introduction/Launch 3. Growth 4. Maturity 5. Saturation 6. Decline 7. Withdrawal 4 Dr. Amitabh Mishra
- 5. Product Life Cycles Sales Time Development Introduction Growth Maturity Saturation Decline 5 Dr. Amitabh Mishra
- 6. Product Life Cycles 6 Dr. Amitabh Mishra
- 7. 1. The Development Stage • The Development stage of PLC begins when the company develops a new-product idea. This stage is characterized by- – Possibly large number initial ideas – Zero sales – High investment costs and – Negative profits 7 Dr. Amitabh Mishra
- 8. • The idea for New product may come from any of the following – 1. Market research – identifies gaps in the market 2. Monitoring competitors 3. Planned research and development (R&D) 4. Luck or intuition – stumble across ideas? 5. Creative thinking – inventions, hunches? 6. Futures thinking (Ex-what will people be using/wanting/needing 5,10,20 years hence?) 8 Dr. Amitabh Mishra
- 9. 2. Introduction/Launch • Introduction/Launch stage of PLC is characterized by- – Low sales – Negative profits – High cost per customer acquired 9 Dr. Amitabh Mishra
- 10. Sales Costs Profits Marketing Objectives Low sales High cost per customer Negative Create product awareness and trial Characteristics of Introduction Stage 10 Dr. Amitabh Mishra
- 11. Marketing Strategies at Introduction Stage Product Price Offer a basic product Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers Sales Promotion Heavy expenditures to create trial 11 Dr. Amitabh Mishra
- 12. Four Introductory Marketing Strategies Rapid- skimming strategy Rapid- penetration strategy Slow- penetration strategy Slow- skimming strategy Price Low High Promotion High Low 12 Dr. Amitabh Mishra
- 13. 3. Growth • The Growth stage of PLC is characterized by- – Rapidly rising sales – Increasing Revenues & Rising profits – Average cost per customer – Early adopters are targeted – Growing competition 13 Dr. Amitabh Mishra
- 14. Sales Costs Profits Marketing Objectives Rapidly rising sales Average cost per customer Rising profits Maximize market share Characteristics of Growth Stage 14 Dr. Amitabh Mishra
- 15. Marketing Strategies at Growth Stage Product Price Offer product extensions, service, warranty Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market Sales promotion Reduce expenditures to take advantage of consumer demand 15 Dr. Amitabh Mishra
- 16. 4. Maturity Stage • The Maturity stage of PLC is characterized by- 1. Sales reach peak 2. High profits 3. Cost of supporting the product declines 4. Ratio of revenue to cost high 5. Sales growth likely to be low 6. Market share may be high 7. Competition likely to be greater 16 Dr. Amitabh Mishra
- 17. Sales Costs Profits Peak sales Low cost per customer High profits Characteristics of Maturity stage 17 Dr. Amitabh Mishra
- 18. Marketing Strategies at Maturity Stage Marketing Objectives Product Price Maximize profit while defending market share Diversify brand and models Price to match or best competitors Build more intensive distribution Stress brand differences and benefits Price Price to match or best competitors Distribution Advertising 18 Dr. Amitabh Mishra
- 19. 5. Saturation • The saturation stage of PLC is characterised by- 1. Searching out new markets: 1. Linking to changing fashions 2. Seeking new or exploiting market segments 3. Linking to joint ventures – media/music, etc. 2. Developing new uses 3. Focus on adapting the product 4. Re-packaging or format 5. Improving the standard or quality 6. Developing the product range • New entrants likely to mean market is ‘flooded’. 19 Dr. Amitabh Mishra
- 20. 6. Decline and Withdrawal • The Decline and Withdrawal stage of PLC is characterized by- 1. Declining sales 2. Low cost per customer 3. Declining profits 4. Laggards are targeted 5. Declining competition 6. Change in Fashion and Technology 20 Dr. Amitabh Mishra
- 21. Sales Costs Profits Marketing Objectives Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Characteristics of Decline stage of PLC 21 Dr. Amitabh Mishra
- 22. Marketing Strategies at Decline Stage Product Price Phase out weak items Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers Sales Promotion Reduce to minimal level 22 Dr. Amitabh Mishra
- 23. PLC- Important Observations – Not all products follow this cycle: • Fads • Styles • Fashions • Individual brands may not follow this pattern – Sometimes a product may crash and not get to the maturity stage • Product Life Cycle - length of time at each stage - varies – depends on the products – can be a few months in each stage – or it can be years • Generally speaking, due to the – Competitive Environment – Technological Environment – The PLC is getting shorter 23 Dr. Amitabh Mishra
- 24. PLC Length and Shape Sales Sales Sales Time Time Time Style Fashion Fad 24 Dr. Amitabh Mishra
- 25. Limitations of the PLC 1. The life cycle concept applies best to product forms rather than to classes of products or specific brands. 2. The life cycle concept may lead marketers to think that a product has a predetermined life, which may produce problems in interpreting sales and profits. 3. It is only a descriptive way of looking at the behavior of a product and the life cycle can not predict the behavior of a product. 25 Dr. Amitabh Mishra