Product Life Cycle

The product life cycle has 4 very clearly defined stages, each with its
own characteristics that mean different things for business that are trying
to manage the life cycle of their particular products.
 Introduction Stage
1. This stage of the cycle could be the most expensive for a company launching a new product.
2. The size of the market for the product is small, which means sales are low, although they will be
increasing.
3. On the other hand, the cost of things like research and development, consumer testing, and the
marketing needed to launch the product can be very high, especially if it’s a competitive sector.

Introduction phase – Self-driving cars. Self-driving cars are still at the testing stage,
but firms hope to be able to sell to early adopters relatively soon.
 Introduction Phase Strategies
• Raising product awareness through advertising / word of mouth.
• Offering the product at discount penetration pricing to tempt customers to try the product.
• Target early adopters and influential market leaders. For example, firms may offer free product reviews
to influential bloggers in the market.
• Firms need to find willing suppliers who are willing to stock.
• This phase will not be profitable because costs are high, but revenue relatively low.
 Growth Stage
1. The growth stage is typically characterized by a strong growth in sales and profits, and because the company
can start to benefit from economies of scale in production, the profit margins, as well as the overall amount
of profit, will increase.
2. This makes it possible for businesses to invest more money in the promotional activity to maximize the
potential of this growth stage.

Electric cars. For example, the Tesla Model S is in its growth phase. Electric cars still
need to convince people that they will work and be practical. As there are more
electric charging points and more people adopt, it becomes easier to sell to those
who are more skeptical of new technology like electric cars.
 Growth Phase Strategies

• Firms need to capitalize on growth to extend product sales from small retailers to big supermarkets.

• Firms can change marketing from niche areas to a more mass market.

• The firm can adapt to consumer feedback and offer new features/better consumer support.
 Maturity Stage 

1. During the maturity stage, the product is established and the aim for the manufacturer is now to
maintain the market share they have built up.
2. This is probably the most competitive time for most products and businesses need to invest
wisely in any marketing they undertake.
3. They also need to consider any product modifications or improvements to the production process
which might give them a competitive advantage.

Maturity – Ford Focus. The Ford Focus is a well-established car. It has a

good brand reputation and has reached its peak level of market
penetration.
It would be difficult to gain a significantly greater market share.
The product life cycle of the Ford Focus has been extended by constant
upgrades and redesigns to keep the car on top of the market.
 Growth Phase Strategies

• With peak market penetration, the firm may seek to increase prices to increase profitability.

• However, if the market is very competitive the firm may feel the need to keep prices low to defend market share.

• The firm may concentrate on seeking to improve the product to gain market differentiation and extend the period
of maturity.
 Decline Stage 

1. Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage.
2. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the
product have already purchased it), or because the consumers are switching to a different type of product.
3. While this decline may be inevitable, it may still be possible for companies to make some profit by
switching to less-expensive production methods and cheaper markets.

Diesel cars.

Since governments have expressed concern at the level of pollution

from diesel cars.

Some cities have threatened to ban diesel cars within a few years.

Sales have fallen considerably and the market for diesel cars may be in
terminal decline.
 Declining Phase Strategies

• In the decline phase, the firm may feel it is best to let the product go – e.g. diesel cars cannot solve issues of
pollution and damage to its brand reputation.
• However, with an iPhone, Apple let old models go, to be replaced by the next model.
• Decline and discontinuing the product can be a way to force customers to buy an upgrade – next time their
contract expires.
• Managed decline by targeting on a niche market.
 Pricing on PLC
• The life cycle of a product helps organizations make major pricing decisions and policies that ensure that the
product survives the cut-throat market competition and stays afloat no matter how challenging the situation
gets.

• By pricing over product lifecycle one can ensure that the buyers are enticed to choose a brand over the others
time and again.

• Pricing strategies can make or break a business! 

 Pricing in the Introduction Stage
• If the product is unique and consumers are introduced to something completely new, then the prices can be fixed
high. 

• With the high-prices, the massive development and promotional costs can be earned back. 

• If the product that you have launched onto the market already faces high competition, then you must set the price
lower than average to entice consumers to try out the new product.

• Setting the product price in the initial stage is tricky. If you set the prices too high, then price-sensitive customers
may refrain from even giving your product a try, and the others may consider your brand as being overly prized.

• On the other hand, if you set the prices very low, you might be signaling poorer quality.

• So, understand what you are offering -whether it is unique or not. It’s also vital that you understand the situation on
the market.
 Pricing in Growth Stage

• Now, when the market has accepted as a business need to focus on retaining customers.

• This can be done by decreasing the prices.

• It is during the growth stage when businesses can earn revenue to recover from the initial
investments and marketing expenditure as long as they are able to still price high enough to cover
their costs.

• Understand what the competitors are doing in the market and set competitive prices. 

• You may have to lower the costs to match-up to the competitive market.
 Pricing in Maturity Stage
• Competition at this stage gets fierce! Brands reach a saturation point by now, and revenue production
becomes very challenging. 

• The successful way out through this is to invest in re-creating the product and revamping it entirely to
create curiosity in customers.

• Some maturity life cycle stage pricing examples would be- introducing special discount period offers,
providing privileges to the loyal members, introducing exclusive membership offers, etc.

• These tactics work better than reducing the prices as these create curiosity in people. 
 Pricing in Decline Stage
• As the market saturates and reaches its lowest, making drastic changes in the pricing helps meet the
business goals.
• Three major evils that come into play at this point are high competition, changing customer needs
and market saturation.
• To survive this stage, businesses and brands must reduce production costs and minimize production
so we aren’t stuck with a huge inventory that then need to sell off at a minimum price.
• The focus must be to re-establish the name by adding new features to the product and market it to
the loyal niche.   
• The life cycle stage price elasticity varies at each development stage. With the competition rising at
every stage, making a brand the top priority for the consumers becomes the most challenging part.
• Through every stage that the product progresses the competition increases and makes consumers
more price sensitive.