3. Product Life Cycle
• A PLC consists of four stages:
– Introduction—most risky and expensive.
– Growth—both sales and profits rise, often
– Maturity—sales increase at a decreasing rate
and profits decline.
– Decline—demand drops, often because of
another product development.
5. Product Life Cycle - Concept
Concept describes sales and profit margin of a
given product category over a prolonged
Concept holds that a product’s sales and
profits change over time in a predictable
manner - in four stages of introduction ,
growth , maturity and decline.
6. PLC Concept Implications
Firms must generate new products or enter new
markets to sustain its profitability over time.
Objectives and strategy for a given product change
as it passes through various life cycle stages.
Opportunities and threats in each stage are
sufficiently well known to aid in the formulation of
the most appropriate marketing mix for each stage.
7. PLC - Applications
• To suggest appropriate functional area
emphasis by stages of life cycle
• To suggest appropriate grand strategy
• To time strategy changes
• To assess the balance of a corporate portfolio
of SBU’s to ensure that developing products
are introduced as others pass through growth
8. Introduction - Market Development
• This is when a new product is first brought to market ,
before there is a proven demand for it.
• Technical capability in all respects is still not
• How long this stage lasts depend on :-
-its degree of newness in market
-its fit into consumer needs
-presence of competitive substitutes.
10. Introduction - Responses
Strategic focus : build awareness
Marketing expenditures: very high
Marketing emphasis : create primary
Product : limited standardized
Price : low/ high
Distribution : limited
Promotion : educate on basic
features of product
11. Market Growth
• Demand begins to accelerate and size of total
market expands rapidly.
• It is the “Takeoff Stage”.
• Potential competitors jump in to the fray. Some
join with carbon copies of originals and others
with improved versions.
• Product and brand differentiations begin to
develop at this stage.
• Instead of seeking ways to get customers to try
the product the originator has to establish his
12. Product Life Cycle: Growth
• Sales increase at accelerating
• Profits increase
• Competition increases
• Strategies: Invest in product
15. Maturity Stage
• Evidence of market saturation.
• Over capacity becomes apparent.
• Sales now grow about on a par with
• Major focus is on creation of brand loyalty
and holding on to brand preference.
• Emphasis on competing more effectively.
16. Product Life Cycle: Maturity
• Sales slow down
• Profits level off
• Competition intense
18. Maturity - Responses
Strategic focus : defend share
Marketing expenditures : declining
Marketing emphasis : brand loyalty
Product : highly differentiated
Price : lowest
Distribution : intensive
Promotion : focus on brand
emphasis on product
tangibles or intangibles
19. Decline Stage
• Market decline triggered by industry
• Over capacity becomes endemic.
• Few companies weather the storm well
while others voluntarily / or forcibly quit
20. Product Life Cycle: Decline
• Lose market acceptance.
• Diminished popularity,
obsolete technology, or
22. Decline - Responses
Strategic focus : productivity
Marketing expenditures: low
Marketing emphasis : focused segments/
Product : Rationalized
Price : raise with increased
Distribution : selective
Promotion : selective promotion
only to attractive
23. The PLC, Marketing Objectives and
Competition None Growing Many Reduced
Stage of the product life cycle
Introduction Growth Maturity Decline
Total industry profit
24. Marketing Strategies for PLC
INTRODUCTION GROWTH MATURITY DECLINE
Fall as result of