Product Life Cycle


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Product Life Cycle

  1. 1. Presentation On <ul><li>Assigned By:- </li></ul><ul><li>Mrs. Khyati Kapil </li></ul><ul><li>Presented By:- </li></ul><ul><li>Gaurav Jyoti </li></ul><ul><li>MBA “N” Section </li></ul>Product life Cycle (PLC)
  2. 2. Definition <ul><li>A new product progresses through a sequence of stages from Introduction to Growth, Maturity and Decline. This sequence is known as the Product Life Cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and marketing mix. A product revenue and profits can be plotted on life cycle stages . </li></ul>
  3. 3. The Product Life Cycle <ul><li>A product's life cycle (PLC) can be divided into several stages characterized by the revenue generated by the product. If a curve is drawn showing product revenue over time, it may take one of many different shapes . </li></ul>
  4. 4. Product Life Cycle Curve
  5. 5. Product Life Cycle with Profit Curve Sales/Profits Time PLC and Profits PLC Losses Break Even Profits
  6. 6. Introduction Stage <ul><li>When the product is introduced, sales will be low until customers become aware of the product and its benefits. Some firms may announce their product before it is introduced, but such announcements also alert competitors and remove the element of surprise. </li></ul><ul><li>Product - Branding and quality is maintained. </li></ul><ul><li>Pricing - Low penetration. </li></ul><ul><li>Distribution - Selective until consumers show acceptance to the product. </li></ul>
  7. 7. Growth Stage <ul><li>The growth stage is a period of rapid revenue growth. Sales increase as more customers become aware of the product and its benefits and additional market segments are targeted. </li></ul><ul><li>Product – Quality is maintained and additional features and support services may be added . </li></ul><ul><li>Price - Maintained at a high level if demand is high., or reduced to capture additional customers. </li></ul><ul><li>Distribution - Distribution becomes more intensive. </li></ul><ul><li>Promotion - Increased advertising to build brand preference. </li></ul>
  8. 8. Maturity Stage <ul><li>The maturity stage is the most profitable. While sales continue to increase into this stage due to brand awarenes, advertising expenditures will be reduced. Sales promotions may be offered to encourage retailers to give the product more shelf space over competing products to remain competitive in the market. </li></ul><ul><li>Product - Modifications are made and features are added in order to differentiate the product from competing products that may have been introduced. </li></ul><ul><li>Price – May be low because of new competition. </li></ul><ul><li>Distribution - New distribution channels and incentives to resellers in order to avoid losing shelf space. </li></ul><ul><li>Promotion - Emphasis on differentiation and building of brand loyalty. Incentives to get competitors' customers to switch. </li></ul>
  9. 9. Decline Stage <ul><li>Eventually sales begin to decline as the market becomes saturated, the product becomes technologically obsolete, or customer tastes change. If the product has developed brand loyalty, the profitability may be maintained longer. </li></ul><ul><li>During the decline phase, the firm generally has three options: </li></ul><ul><li>Maintain the product in hopes that competitors will exit. Reduce costs and find new uses for the product. </li></ul><ul><li>Harvest it, reducing marketing support and coasting along until no more profit can be made. </li></ul><ul><li>Discontinue the product when no more profit can be made or there is a successor product. </li></ul>
  10. 10. Summary of PLC Characteristic , Objective and Strategies Reduce to minimal level Increase to encourage brand switching Reduce to take advantage of heavy consumer demand Use heavy sales promotion to entice trial Sales promotion Reduce to level needed to retain hard core-loyals Stress brand difference and benefit Build awareness and interest in the mass market Build produvt awareness among early adopters and dealers Advertising Go selective ,phase out unprofitable outlets Build more intensive distribution Build intensive distribution Build selective distribution Distribution Cut prise Price to match the best competitor Price to penetrate market Charge cost-plus Price Reduce expenditure and milk the brand Maximize profit while defending market share Maximize market share Create product awareness and trial Marketing objective Laggards Middle majority Early adopters Innovators Customer Declinning profit High profit Rising profit Negative Profit Low cost Low cost Average cost High cost Cost Declining sale Peak sale Rapidly increasing sale Low sales Sales Decline Maturity Growth Introduction Charecteristic
  11. 12. Criticism Of PLC concept <ul><li>No way to predict the length of each phase . </li></ul><ul><li>It can not be used Sales Forecasting </li></ul><ul><li>It can be self fulfilling </li></ul><ul><li>Needs wide range of data to analyze the Product phase </li></ul>
  12. 13. Conclusion <ul><li>The Product Life Cycle describes how Product goes through the four stages and the different mix of marketing activities in each phase is done to maximize the profitability of the product . </li></ul>
  13. 14. Questions