“ The stages through which the individual products
develop over a period of time is known as product
The product life cycle concept is derived from the
fact that a given product’s volume and revenue
follow a typical pattern of four –phases cycle.
This life cycle is the representative fact of the
existence of every product.
If we plot a graph of sales volume versus time for
a product, generally, the PLC represents a bell-
shaped or s-shaped curve.
3. THE FOUR STAGES OF PRODUCT LIFE
4. PRODUCT LIFE
Product Introduction Growth Maturity Decline
5. INTRODUCTION STAGE OF THE
Sales Low sales
Costs High cost per customer
Create product awareness
Marketing Objectives and trial
Product Offer a basic product
Price Use cost-plus
Distribution Build selective distribution
Advertising Build product awareness among early
adopters and dealers
6. Example- 3rd generation Mobile Phones.
Marketing Strategy used in Introduction
Rapid Skimming- Launching the new product at
high price and high promotional level.
Slow skimming- Launching the new product at
high price and low promotional level.
Rapid Penetration-Launching of product at low
price with heavy promotion.
Slow penetration- Launching the new product at a
low price and low level of promotion.
7. Growth Stage of the PLC
Sales Rapidly rising sales
Costs Average cost per customer
Profits Rising profits
Marketing Objectives Maximize market share
Offer product extensions, service,
Price Price to penetrate market
Distribution Build intensive distribution
Advertising Build awareness and interest in the
8. Marketing Strategy Used in Growth Stage:
Improved product quality and add new product
features and styling.
Add new models and products of different sizes,
color, shapes etc.
Enter new market segments.
Increase distribution coverage enter new
Shifts from product awareness to product
Lower prices to attract next layer of price
9. Maturity Stage of the PLC
Sales Peak sales
Costs Low cost per customer
Profits High profits
Marketing Objectives Maximize profit while defending
Product Diversify brand and models
Price Price to match or best competitors
Distribution Build more intensive distribution
Advertising Stress brand differences and benefits
10. Marketing Strategy Used in Maturity Stage:
2. Mar ket Modification-
Converting non users.
Entering new market segments.
Win competitors customers.
Redefine target market.
2. Product Modification-
Adopting advance technology.
11. Decline Stage of the PLC
Sales Declining sales
Costs Low cost per customer
Profits Declining profits
Marketing Objectives Reduce expenditure and milk the brand
Product Phase out weak items
Price Cut price
Go selective: phase out unprofitable
Advertising Reduce to level needed to retain
hard-core loyal customers
12. MARKETING STRATEGY USED IN DECLINE
Increase the given firms investment to dominate
the market or strengthen its competitive
Maintaining the given firms investment level
until the uncertainties about the industry are
Decrease the firms investment selectively, by
dropping the unprofitable customers group, while
simultaneously strengthening the firms
investment niche segments.
Harvesting the firms investment to recover cash
Divesting the business quickly by dropping off its
assets as advantageously as possible.
13. PLC CONCEPT IS BASED ON FOLLOWING
Not all product introduced in the market essentially
pass through all stages of its life cycle. It is also
possible that the product may attain introduction
stage and then get phased out.
There is no definite line of demarcation between the
various stages of product life cycle.
At the same time, a product may be in different
stages of its life cycle in different segment of the
market. For example, the product concerned may be
in the introduction stage in Asian market while facing
decline in western countries.
The time span of each stage in product life cycle in
respect of each product may vary. Thus, a product
may experience longer period in growth stage and
relatively short period in maturity stage.
The Product Life-Cycle This CTR corresponds to Figure 9-2 on p. 288 and relates to the material on pp. 287-293. Instructor’s Note: This CTR can be used to overview the life cycle concept. Strategies appropriate for each stage are discussed on the following CTRs. Product Life Cycle Stages Product Development. Development begins when the company finds and develops a new product idea. During development the product has costs but no sales. Development costs must be strategically weighed against the projected length of the product's PLC. Introduction. During the introduction of new products initial sales growth is slow as the market is just becoming aware of the product. Profits are usually nonexistent at this stage due to heavy promotional spending. Growth. This stage is characterized by rapid market acceptance of the product and increasing profits. Maturity . In maturity there is a slowdown in sales growth as the product has achieved acceptance by most potential customers. Profits may level off or decline as marketing costs increase to defend existing market share. Decline. In this period sales begin to fall off and profits decline dramatically.
Introduction. In this stage marketers spend heavily on promotions to inform the target market about the new product's benefits. Low or negative profits may encourage the company to price the product high to help offset expenses. companies can concentrate on skimming strategies to generate high profits now or on penetration strategies to build market share and dominant the market for larger profits once the market stabilizes. Product Life Cycle Strategies Product Life-Cycle Strategies This CTR relates to the material on pp. 289 and 293.
Product Life-Cycle Strategies This CTR relates to the material on pp. 289-290 and 293. Product Life-Cycle Strategies Growth. In this stage the company experiences both increasing sales and competition. Promotion costs are spread over larger volume and strategic decisions focus on growth strategies. Strategies include adding new features, improving quality, increasing distribution, and entering new market segments.
Product Life Cycle Strategies Maturity. In this stage the company must manage slower growth over a longer period of time. Strategic decisions made in the growth stage may limit choices now. Marketing managers must proactively seek advantage by either market modification to increase consumption, product modification to attract new users (quality, feature, and style improvements), or marketing mix modification in an attempt to improve competitive position. Product Life-Cycle Strategies This CTR relates to the material on pp. 290-292 and 293.
Product Life-Cycle Strategies This CTR relates to the material on pp. 292-293. Product Life Cycle Strategies Decline. In this stage the costs of managing the product may eventually exceed profits. Rate of decline is a major factor in setting strategy. Management may maintain the brand as competitors drop out, harvest the brand by reducing costs of support for short term profit increases, or drop the product (divest) altogether.