2. PRODUCT LIFE CYCLE
Like human beings, products
also have their own life-cycle.
From birth to death human
beings pass through various
stages e.g. birth, growth,
maturity, decline and death. A
similar life-cycle is seen in the
case of products. To say that a
product has a life cycle is to
assert four things:
5. Market Pioneering Features:
Costs are high,
Slow sales volumes to start,
Little or no competition,
Demand has to be created,
Customers have to be prompted
to try the product,
Makes no money at this stage
7. Growth Stage Features
Costs reduced due to economies of
scale,
Sales volume increases significantly,
Public awareness increases,
Competition begins to increase with
a few new players in establishing
market,
Increased competition leads to price
decreases.
9. Maturity Stage Features
Costs are lowered as a result of production
volumes increasing and experience curve
effects,
Sales volume peaks and market saturation
is reached,
Increase in competitors entering the market
Prices tend to drop due to the proliferation
of competing products,
Brand differentiation and feature
diversification is emphasized to maintain or
increase market share,
Industrial profits go down.
11. Decline Stage Features
costs become counter-optimal,
sales volume decline or
stabilize,
prices, profitability diminish,
profit becomes more a
challenge of
production/distribution efficiency
than increased sales.
12.
13. In Pioneering Stage
Pricing strategy should be
adopted: Market skimming or
market penetration.
14. In Growth Stage
The pioneer may has to change
his marketing strategies,
Has to persuade the customer
to prefer his brand.
15. In Maturity Stage
May try out product and
packaging modifications, and
promotional deals and make
special offers to new market
segments.
16. In Decline Stage
Some firms may try to link up
the sale of these products with
some other premium products.
May begin to prepare new
products.
18. Each stage of product life cycle is
an outcome of market
behaviour/repsonse.
19. The utility of PLC arises out of
following facts:
A product has to necessarily
pass through certain strategies
during its life,
What happens to it each stage
depends on market behaviour,
By manipulating market
behaviour, the life cycle stages
of the product can also
manipulated.
20. PLC Concept Helps Marketing
Strategy Formulation
Facilitates pre planning the
product launch,
Facilitates prolonging the
profitable phase,
Facilitates investment decisions
on products,
21. PLC Concept Helps Marketing
Strategy Formulation
Facilitates choice of appropriate
entry strategy
Facilitates choice of the right
time to exit
Provides useful clues for
managing customers
22. Facilitates Pre – Planning the
Product Launch
Elaborate pre – planning does
render the marketing man
equipped to charter the course
of product.
It provides him valuable lead
time
He can keep strategic options
ready in anticipation of the
range of events in the market.
23. Facilitates Prolonging the
Profitable Phase
Strategic routes for extending profitable
stage:
Finding out new users
Finding out new uses for the product
Popularising more frequent use of
the product
Making the product more distinctive
to the consumers
Adding real and/or psychological
value to the product
24. Facilitates Investment
Decisions on Product
This, in turn, will help
investment decisions on
products; the firm can assign
investment to the right products
and avoid committing heavy
resources on wrong products.
25. Linkage Between PLC
Concept and Entry Strategy
Different firms join the
market with their perspective
versions at different stages.
Basically four distinct entry
postures are possible for a firm
seeking entry into the market:
26. Linkage Between PLC
Concept and Entry Strategy
As an “innovator” at the
introduction stage in the life
cycle of the product
As an “early follower” in the
early growth stage.
As a “segmenter” in the late
growth stage
As a “me – too” maturity stage
27. Entry as Innovator
Innovators should have large
resources to innovate
They must have the capacity to
absrob the cost of product
failures
They must also have qualified
people on the R&D and
marketing front
28. Entry as Early Follower
They have to be good market
watcher.
They also need invest heavily in
R&D because they essentially
copy the innovator
They must have an organisation
capable of putting product
29. Entry as Segmenter
They identify certain market
segments with less competition
and concentrate on them
30. Entry as me – too
They don’t need much R&D
efforts
But they need a strong
marketing organisation to
compare with already
established competitors
31. PLC can be a Useful Tool in
Managing Customers
As a product moves through the
various phases of its life cycle,
the consumer also moves on
the path.
32. PLC can be a Useful Tool in
Managing Customers
The marketing man will gain a
great deal if he knows what
actually happens to the
consumer during this process
33. PLC can be a Useful Tool in
Managing Customers
The seller has to understand
when and how such transitions
take place in the experience
level of customers
34. PLC can be a Useful Tool in
Managing Customers
The changing expectations
through different strategy
routes:
Strenthening company customer
relationship
Augmenting the product
Improving service support and
modifying the pricing
approaches
35. PLC OPERATES AT THREE
LEVELS**
The product level
The product sub – category
level
The brand level
** See the book’s examples about
this title
36. Limitations of PLC
It’s difficult to measure where
the product is on its PLC graph
Furthermore, some products
have not experienced a decline.
E.g. Coca Cola and Pepsi
37. Limitations of PLC
Another factor is that differing
products would possess different
PLC "shapes". A fad product would
hold a steep sloped growth stage, a
short maturity stage, and a steep
sloped decline stage. A product such
as Coca Cola and Pepsi would
experience growth, but also a
constant level of sales over a
number of decades.
