Product Life Cycle shows the stages that products go through from development to withdrawal from the market. The company’s differentiation and positioning strategies must change as the product, market, competitors changes over time.

1. Product Life Cycle (PLC)
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2. • Product Life Cycle shows the stages that products go
through from development to withdrawal from the
market.
• The company’s differentiation and positioning
strategies must change as the product, market,
competitors changes over time.
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Dr. Amitabh Mishra

3. Characteristics of PLC
1. Each product may have a different life cycle.
2. PLC determines revenue earned.
3. PLC may help the firm to identify when
a product needs support, redesign, withdrawal, etc.
4. PLC may help in new product development planning.
5. PLC may help in forecasting and managing cash flow.
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4. The Stages of the Product Life Cycle
Most product life cycle
curve take a bell shape
form.
Following are the stages of
a standard PLC-
1. Development
2. Introduction/Launch
3. Growth
4. Maturity
5. Saturation
6. Decline
7. Withdrawal
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5. Product Life Cycles
Sales
Time
Development Introduction Growth Maturity Saturation Decline
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6. Product Life Cycles
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7. 1. The Development Stage
• The Development stage of PLC begins when the
company develops a new-product idea. This stage is
characterized by-
– Possibly large number initial ideas
– Zero sales
– High investment costs and
– Negative profits
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8. • The idea for New product may come from any of the
following –
1. Market research – identifies gaps in the market
2. Monitoring competitors
3. Planned research and development (R&D)
4. Luck or intuition – stumble across ideas?
5. Creative thinking – inventions, hunches?
6. Futures thinking (Ex-what will people be using/wanting/needing
5,10,20 years hence?)
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9. 2. Introduction/Launch
• Introduction/Launch stage of PLC is characterized by-
– Low sales
– Negative profits
– High cost per customer acquired
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10. Sales
Costs
Profits
Marketing Objectives
Low sales
High cost per customer
Negative
Create product awareness
and trial
Characteristics of Introduction Stage
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11. Marketing Strategies at Introduction Stage
Product
Price
Offer a basic product
Use cost-plus
Distribution Build selective distribution
Advertising Build product awareness among early
adopters and dealers
Sales Promotion
Heavy expenditures to create trial
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12. Four Introductory
Marketing Strategies
Rapid-
skimming
strategy
Rapid-
penetration
strategy
Slow-
penetration
strategy
Slow-
skimming
strategy
Price
Low
High
Promotion
High Low
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13. 3. Growth
• The Growth stage of PLC is characterized by-
– Rapidly rising sales
– Increasing Revenues & Rising profits
– Average cost per customer
– Early adopters are targeted
– Growing competition
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14. Sales
Costs
Profits
Marketing Objectives
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market share
Characteristics of Growth Stage
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15. Marketing Strategies at Growth Stage
Product
Price
Offer product extensions, service,
warranty
Price to penetrate market
Distribution Build intensive distribution
Advertising Build awareness and interest in the mass
market
Sales promotion Reduce expenditures to take advantage of
consumer demand
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16. 4. Maturity Stage
• The Maturity stage of PLC is characterized by-
1. Sales reach peak
2. High profits
3. Cost of supporting the product declines
4. Ratio of revenue to cost high
5. Sales growth likely to be low
6. Market share may be high
7. Competition likely to be greater
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17. Sales
Costs
Profits
Peak sales
Low cost per customer
High profits
Characteristics of Maturity stage
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18. Marketing Strategies at Maturity Stage
Marketing Objectives
Product
Price
Maximize profit while defending
market share
Diversify brand and models
Price to match or best competitors
Build more intensive distribution
Stress brand differences and benefits
Price Price to match or best competitors
Distribution
Advertising
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19. 5. Saturation
• The saturation stage of PLC is characterised by-
1. Searching out new markets:
1. Linking to changing fashions
2. Seeking new or exploiting market segments
3. Linking to joint ventures – media/music, etc.
2. Developing new uses
3. Focus on adapting the product
4. Re-packaging or format
5. Improving the standard or quality
6. Developing the product range
• New entrants likely to mean market is ‘flooded’.
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20. 6. Decline and Withdrawal
• The Decline and Withdrawal stage of PLC is characterized
by-
1. Declining sales
2. Low cost per customer
3. Declining profits
4. Laggards are targeted
5. Declining competition
6. Change in Fashion and Technology
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21. Sales
Costs
Profits
Marketing Objectives
Declining sales
Low cost per customer
Declining profits
Reduce expenditure and milk the brand
Characteristics of Decline stage of PLC
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22. Marketing Strategies at Decline Stage
Product
Price
Phase out weak items
Cut price
Distribution Go selective: phase out unprofitable
outlets
Advertising Reduce to level needed to retain
hard-core loyal customers
Sales Promotion
Reduce to minimal level
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23. PLC- Important Observations
– Not all products follow this cycle:
• Fads
• Styles
• Fashions
• Individual brands may not follow this pattern
– Sometimes a product may crash and not get to the maturity stage
• Product Life Cycle - length of time at each stage - varies
– depends on the products
– can be a few months in each stage
– or it can be years
• Generally speaking, due to the
– Competitive Environment
– Technological Environment
– The PLC is getting shorter
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24. PLC Length and Shape
Sales Sales Sales
Time
Time Time
Style Fashion Fad
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25. Limitations of the PLC
1. The life cycle concept applies best to product
forms rather than to classes of products or
specific brands.
2. The life cycle concept may lead marketers to think
that a product has a predetermined life, which
may produce problems in interpreting sales and
profits.
3. It is only a descriptive way of looking at the
behavior of a product and the life cycle can not
predict the behavior of a product.
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