Product Life Cycle- PLC

Like human beings, products also have a life-cycle and they pass through
different stages in their life-cycle. These stages in the life of a product are
collectively known as product life-cycle.

The product life-cycle is an important tool for marketers. Each stage of PLC
requires different type of marketing strategies . So the marketer should know
exactly in which stage of the life cycle , their product exist .The length of the cycle
and the duration of each stage may vary from product-to-product

The PLC has four stages :

- introduction,
- growth,
- maturity and
- decline
Product Life Cycle- PLC
 Characteristics of PLC - Introduction Stage:

• In the first stage, the product is introduced in the market .

• Since the product is not known to all consumers , sales volume and profit
margins are low.

• Competition is very low, distribution is limited and cost is relatively high.

• Heavy expenditure is incurred on advertising and sales promotion to get
market acceptance.

• Often a product incurs loss during this stage due to high start up costs and
low sales turnover.

Marketing strategies - Introduction Stage:

Mainly, there are two strategies adopted for the products at the introduction
stage. These are, Skimming and Penetration strategies. The products are
launched to the market at a relatively high price , is called Skimming strategy.
If the products are launched to the market at a relatively low price , is called
Penetration strategy.

• Rapid Skimming – High price + High promotion

• Slow skimming - High price + Low promotion

• Rapid Penetration - Low price +High promotion

• Slow Penetration - Low price + Low promotion ,

Other than these,the following may also be adopted at the introduction

stage.

• Attractive gift as an ‘introductory offer’ may be offered to customers,

• Attractive discount to dealers.

• ‘Money back’ guarantee may be offered to encourage the people to try the
product.
 Characteristics of PLC - Growth Stage:

• As the product gains market acceptance, demand and sales grow rapidly.

• Competition increases and prices fall.

• Production and distribution are widened.

• The promotional expenditure remains high because of increasing

competition and due to the need for effective distribution.

• Profits are high on account of large scale production and rapid increase in
sales turnover.

Marketing strategies -Growth Stage:

• New versions of the product may be introduced to satisfy the requirements

of different types of customers.

• Brand image of the product is created and strengthened through advertising

and publicity.

• The price of the product is made competitive.

• Customer service is enhanced.

• Distribution channels are strengthened to make the product easily available

wherever required.

Characteristics of PLC -Maturity Stage:

• During this stage prices and profits fall due to high competitive
pressures.

• Growth rate becomes stable and weak firms are forced to leave the
industry.

• Heavy expenditure is incurred on promotion to create brand

loyalty.
• Firms try to modify and improve the product, to develop new uses
to the product and to attract new customers in order to increase
sales.

Marketing strategies - Maturity Stage

In order to prolong the maturity stage,

• The product is differentiated from the rival products.

• Brand image of the product may be emphasised

• New markets may be developed.

• New uses of the product are developed.

• Reusable packaging is introduced.

Characteristics of PLC - Decline Stage:

• Market saturated with the product and demand falls considerably.

• Prices decline further due to stiff competition and firms fight for retaining
market share.

• Sales and profits inevitably fall unless substantial improvements in the

products or reduction in costs are made.

• The product is gradually displaced by some new products due to changes in

buying behaviour of customers.

• Promotion expenditure is drastically reduced.

Marketing strategies -Decline Stage

In order to avoid sharp decline in sales,

• New features may be added in the product.

• The packaging may be made more attractive.
• Economy packs or models may be introduced to revive demand.
• Selective distribution may be adopted to reduce costs.

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