PLC - PRODUCT LIFE CYCLE

The life cycle of a product is associated with marketing and management decisions
within businesses, and all products go through five primary stages: development,
introduction, growth, maturity, and decline. Each stage has its costs, opportunities, and
risks, and individual products differ in how long they remain at any of the life cycle
stages.

Development
The product development stage is often referred to as “the valley of death.” At this
stage, costs are accumulating with no corresponding revenue. Some products require
years and large capital investment to develop and then test their effectiveness. Since
risk is high, outside funding sources are limited. While existing companies often fund
research and development from revenue generated by current products, in startup
businesses, this stage is typically funded by the entrepreneur from their own personal
resources.

Introduction
The introduction stage is about developing a market for the product and building product
awareness. Marketing costs are high at this stage, as it is necessary to reach out to
potential customers. This is also the stage where intellectual property rights protection is
obtained. Product pricing may be high to recover costs associated with the development
stage of the product life cycle, and funding for this stage is typically through investors or
lenders.

Growth
In the growth stage, the product has been accepted by customers, and companies are
striving to increase market share. For innovative products, there is limited competition at
this stage, so pricing can remain at a higher level. Both product demand and profits are
increasing, and marketing is aimed at a broad audience. Funding for this stage is
generally still through lenders or through increasing sales revenue.

Maturity
At the mature stage, sales will level off. Competition increases, so product features
may need to be enhanced to maintain market share. While unit sales are at their highest
at this stage, prices tend to decline to stay competitive. Production costs also tend to
decline at this stage because of more efficiency in the manufacturing process.
Companies usually do not need additional funding at this stage.
Decline
The decline stage of the product life cycle is associated with decreasing revenue due to
market saturation, high competition, and changing customer needs. Companies at this
stage have several options: They can choose to discontinue the product, sell the
manufacturing rights to another business that can better compete or maintain the
product by adding new features, finding new uses for the product, or tap into new
markets through exporting. This is the stage where the packaging will often announce
“new and improved.”