Product Life Cycle

Introduction

Growth

Maturity

Decline

Sales
Sales

Profits Time

03/04/12

1

almost every product will undergo some sort of modification during its lifetime.Product Life Cycle Ninety percent of the products we use today did not exist in their current form five years ago. 03/04/12 2 . Similarly. Each stage of the product life cycle calls for a specially designed marketing strategy and a different marketing mix. a typical new product takes from its inception to its discontinuation. Product Life Cycle is a path. through its growth until it is mature and then finally its decline. This leads us to the concept of Product Life Cycle. 90% of the products we will be using five years from now do not currently exist. With today's rapid changes in technology. It describes the stages a product goes through from its introduction.

03/04/12 3 . The conditions in which a product is sold changes over time and must be managed as it moves through its succession of stages. purchasing. financial. manufacturing. Products require different marketing. The fact that products have a life cycle imply the following:     The products have a limited life. Profits rise and fall at different stages of product life cycle. Product sales pass through distinct stages. opportunities.Product Life Cycle Product life cycle Management is the succession of strategies used by management as a product goes through its product life cycle. and problems to the seller. and human resource strategies in each life cycle stage. each posing different challenges.

Product Life Cycle Stages of PLC Go rw thS tag e–T och uP ad s t o dI i urn A-etStc RSa o TMgn H eo sm tops urity Stage .Lap Mat Stage rs e eclin mpute D o 4 top C esk D 03/04/12 .

the product is launched in the market. The firm will create product awareness & develop a market for the product. Promotion is aimed at innovators & early adopters. The impact on the marketing mix is as follows:     Product branding & quality level is established. and intellectual property protection such as patents & trademarks are obtained (if it’s a new product).Product Life Cycle Stage I: Introduction In the introduction stage. No profits are made at this time. Price skimming may be used if the product is a new development & there are no competitors. as the development costs have not yet been covered. Informative advertising is used until the product becomes known. 5 03/04/12 . Or pricing may be low penetration pricing to build market share rapidly. Limited product availability in few outlets/locations.

Promotion is focused on building the brand. 6 03/04/12 . But competitors see the opportunity and enter the market. The new entries result in much product variety. or try to improve it to compete better. Profits start to be made as more and more customers buy the product. Advertising is changed to persuasive advertising to encourage brand loyalty. The impact on the marketing mix is as follows:     Product quality is maintained & additional features & support services may be added. Distribution channels are added as demand increases & customers accept the product. sales start to grow rapidly.Product Life Cycle Stage II: Growth In the growth stage. Some just copy the most successful product. Others try to refine their offerings to do a better job of appealing to some target markets. Price is reduced a little as new competitors have entered.

the competition gets tougher as aggressive competitors have entered the race for profits. A lot of persuasive advertising is done.features may be enhanced to differentiate the product from that of competitors. cash rebates. specialty advertising.competitive pricing or promotional pricing is used & there are a lot of price wars. and 7 demonstrations are used. Sales promotion tools like premiums. Price. less efficient firms can't compete with the increasing pressure on prices and drop out of the market. During the maturity phase. Many different approaches are used as appropriate to the product. Place. Producers begin to leave the market due to poor margins. Promotion.distribution becomes more intensive & incentives may be offered to encourage preference over competing products. Price wars and intense competition occur. coupons. The maturity phase of the life cycle is the longest phase for most products. discounts. The impact on the marketing mix is as follows:     03/04/12 Product. "free" goods. .emphasizes product differentiation. Industry profits continue to go down during maturity because promotion costs rise and competitors continue to cut prices to attract more business.Product Life Cycle Stage III: Maturity In the Maturity stage. Sales grow at a decreasing rate and then stabilize. At this point the market reaches saturation.

reduce costs & continue to offer it. Costs. They may also keep some sales by appealing to the most loyal customers or those who are slow to try new ideas. Discontinue the product.possibly rejuvenating it by adding new features & finding new uses. Profits. As sales decline. probably to a loyal niche segment. Harvest the product. but firms with strong brands may make profits until the end because they successfully differentiated their products. continue to rise. new products replace the old. as expected.Product Life Cycle Stage IV: Decline In the Decline stage. because competition is still intense. Price competition from dying products becomes more vigorous.liquidating remaining inventory or selling to another firm that is willing to continue the product. 8 03/04/12 . the firm has the following options:    Maintain the product. continue to erode during this stage with little hope of recovery.

the firm may stop sales from falling further by adopting extension strategies. export the product to another country Introduce a new. the saturation stage) of its product life cycle.adding free set-up and delivery are good examples. 9 03/04/12 . Some possible ways in which businesses might extend the life cycle of their product are as follows:       Introduce new variations of the original product.e. improved version of the product Sell through additional. e. e.g. Services can be added where none existed before -. a children’s version Use a new advertising campaign Sell into new markets.g. These are ways by which sales may be given a boost. different retail outlets Modify the 'augmented product'.Product Life Cycle Extension Strategies When the product reaches the end of maturity stage (i.

to integrate extension strategies during this period to maintain the high profit level.  Strengths – The product life cycle is considered as both straightforward and powerful model. consequently marketing actions could be taken too early or too late.Product Life Cycle Critical Analysis . Some go from introduction to decline. The product life cycle can also be use to alert the marketer. effective and timely marketing will take the product through each stage and can be planned in advance. when the product is in the stages of growth and maturity. It is not easy to tell which stage the product is in. The length of each stage varies enormously. as there are constant short-term fluctuations due to external factors.PLC In reality very few products follow such a prescriptive cycle. Not all products go through each stage. The decisions of marketers can change the stage. Weaknesses – It is hard to tell which stage the product is in. By using the model as guidance. By failing 10  03/04/12 . for example from maturity to decline by price-cutting.

Product Life Cycle Growth Maturity Decline Introduction 3G Mobile phones Bio-metric identification Video Calls Space Tourism Social Networking Smart Homes Touch Pads Laptops Desktop Computers Credit Cards Mosquito Coils GPS Devices Cheque books Smart Phones Fax Machines 03/04/12 11 .

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