Product Life Cycle
The product life cycle refers to the stages a product goes through from introduction to decline. These stages typically include introduction, growth, maturity, and decline. Understanding the product life cycle helps businesses make informed decisions about marketing strategies, pricing, and product development to maximize the product's potential in the market.
7 Key excerpts on "Product Life Cycle"
eBook - ePub- Sally Dibb, Lyndon Simkin(Authors)
- 2007(Publication Date)
- Routledge(Publisher)
...16: The Product Life Cycle (PLC) Key definitions The Product Life Cycle (PLC) emulates the human life cycle: introduction, growth, maturity and decline. Introduction denotes a product's first appearance in the marketplace, before any sales or profits develop. Growth is the PLC stage at which a product's sales rise rapidly and profits reach their peak. Maturity is the stage at which a product's sales curve peaks and starts to decline, profits continue to decline. Decline denotes the final stage of the PLC during which sales fall rapidly. PLC options are product deletion, modification or new product development. Key issues The Product Life Cycle (PLC) emulates the human life cycle, with introduction, growth, maturity and decline. It is a difficult concept to utilize in practice, but is very useful in allocating resources, assessing market attractiveness or managing product portfolios. Marketers must track sales and benchmark performance against rivals’ products and market conditions in order to deploy the PLC concept. The introduction stage is when sales are zero, the product is first offered to the target segment and profits are negative owing to the product development and marketing costs incurred before sales commence. Assuming the product satisfies target market needs and is adequately resourced in terms of marketing, it should enter the growth stage. Sales take off, but the number of competitors is likely to be low, leading to a peak in profits. Towards the end of this stage, competitors enter, increasing the number of rival products and reducing profitability. During the maturity stage of the PLC, sales level and then decline. Customers switch to new technologies or simply no longer desire the product. Gradually, companies withdraw their products in the face of declining sales...
eBook - ePub- Kenneth Kahn(Author)
- 2014(Publication Date)
- Routledge(Publisher)
...The focus of the marketing effort is to create awareness and get trial. During the growth stage, sales rise steadily, and the focus becomes to maximize market share. The maturity stage represents a leveling of sales, and the focus is profit maximizing and market share maintenance. The decline stage is the final stage characteristic of decreasing unit sales. In the decline stage the focal marketing strategy is to harvest the product, which represents a reduction in marketing expenditures while revenues are sustained for as long as possible. The Product Life Cycle also can be used to describe the possible development of an emerging market. In particular, the framework suggests that competition will be low in the introduction stage, but fierce during the growth stage as competitors see the growth potential of the respective market. During the maturity stage, the number of competitors will be reduced through mergers, acquisitions, and companies dropping out of the market. Market share at this point will be pretty much determined, with intense efforts needed to make headway into securing additional market share. The decline stage represents a declining number of competitors as companies leave the market. Exhibit 11.1 The Product Life Cycle It is important to use the Product Life Cycle concept as just a guideline, not a definitive model. By inappropriately using the Product Life Cycle, various companies have incorrectly determined that their product was declining, pulled resources from the product, and prematurely terminated their product. In one case, a toothpaste manufacturer saw sales decline over a period and concluded—based on the Product Life Cycle theory—that the product was in the decline stage. The company consequently reduced the amount of resources going to the product, which contributed to a further reduction in sales...
eBook - ePubA Product Manager's Cookbook
30 recipes for relishing your daily life as a product manager
- Ulrike Laubner(Author)
- 2017(Publication Date)
- Books on Demand(Publisher)
...4. Value Curves - The Product Life Cycle Every product and every service will have its peak sales period and its weak sales periods. In total, products go through five phases, each of which requires its very own marketing campaign. Innovation phase Introduction phase Growth phase Maturity phase Degeneration phase But how do you know what phase a product is in? How do you decide on the right marketing actions or on investing in new developments? Look at figures for the product since its launch to find out whether the product can be eliminated, needs further development, or would benefit from a new advertising campaign. You can also make some assumptions based on the historical data of similar products. The ideal Product Life Cycle Indicators of the state of the Product Life Cycle: Turnover and sales figures Contribution margin Marketing and sales expenses Development costs These numbers are indicators of where a product currently is in its life cycle. Development costs are lower in the introduction phase than in the innovation phase, but the marketing costs for launching new products are high. In the maturity phase, yields are ideally high and marketing expenses relatively low. However, these indicators alone do not tell the whole story. A slump in sales may also be due to the current economic situation. This means that to analyze the Product Life Cycle curve you will need to make further observations, such as noting the arrival of a new competitor, changes in the exchange rate, and trends in the market....
eBook - ePubThe Business Models Handbook
Templates, Theory and Case Studies
- Paul Hague(Author)
- 2019(Publication Date)
- Kogan Page(Publisher)
...38 Product Life Cycle Determining a long-term product strategy What the model looks like and how it works The concept of a life cycle is easy for us to understand. We face it every day of our lives. Babies are conceived, born, grow up, turn into adults, and eventually age and die. The same concept can be witnessed in products. Through understanding the Product Life Cycle it is possible for a company to develop a marketing strategy at each stage. Pre-birth At some stage an idea for a product is conceived. This is a delicate time for the embryo as a significant number of new ideas fail to make it. They may fail because they do not fulfil the needs of potential customers, the competition is too fierce, the costs of manufacturing are too high, or the penetration of the marketplace is too difficult. Pre-birth is not an easy time for a new concept. Clay Christensen, a professor at Harvard Business School, is on record as saying that 95 per cent of new products fail. 1 It is hard to know whether this figure is correct because many new products never get off the ground. Of those that are launched, there appears to be a consensus that 30–50 per cent fail (depending on the industry). 2 Whatever the failure rate, these figures indicate the difficulty of a new product gaining ground in a market that is already well served. Very few markets have vacuums waiting to be filled and new product launches require true innovation, good marketing support and excellent timing if they are to be successful. Youth As stated above, the launch period of a new product can be difficult. The new product needs to acquire a high level of awareness and this in turn must be supported with an appropriate promotional budget. Distributors and retailers must be persuaded that it is worth their while listing the new product...
eBook - ePubInternational Marketing (RLE International Business)
A Strategic Approach to World Markets
- Simon Majaro(Author)
- 2013(Publication Date)
- Routledge(Publisher)
...Nonetheless the concept is a useful one; it alerts the marketer to the fact that market dynamism affects not only the appearance and functionality of a product but also the effectiveness of the supportive marketing mix ingredients at each stage of the product's life. This is the aspect which is often overlooked by those who tend to describe the value of the product life concept as an impractical one. Briefly the Product Life Cycle concept can be summarised thus: every product has a life span of a limited duration. Some products live for many years, others have a short life. If the sales of the product are plotted over a period of time the result will be a curve as shown in Figure 23. The curve, or life cycle is normally divided into five distinct periods— introduction, growth, maturity, saturation and decline. Whilst the shape of the curve will be more or less the same for most products, the time duration and the rapidity of change from stage to stage will vary enormously among products. The life cycle of the hula-hoop only lasted a few months; the life cycle of the ballpoint pen has lasted many years although during those years the product has undergone fundamental marketing changes. The significant point to remember in this connection is the fact that in most instances the product's profits tend to follow a predictable pattern through the life cycle. Profits are either absent or substantially absent during the growth stage and reach a peak during the maturity stage. During the saturation stage they normally manifest signs of erosion and all but disappear during the decline stage. If we plot the profit performance on Figure 23 (the scale shown on the right-hand side) it would become apparent that in typical circumstances peak profitability is reached before peak sales...
eBook - ePub- Marilyn Stone(Author)
- 2007(Publication Date)
- Routledge(Publisher)
...This section explains each stage of the Product Life Cycle (PLC) and the marketing activities that accompany each stage. After completing this section, you should be able to: discuss the characteristics of the PLC; recommend marketing activities that are appropriate for each stage; evaluate the usefulness of the PLC as a marketing tool; modify the PLC to improve its effectiveness; use the PLC to assist in case study analysis. PLC After a product is launched there will be times when its sales levels will grow, times when they will be relatively static and other times when sales will decline, particularly if it is superseded by a new product that satisfies consumer needs better. Consider, for example, consumer preference for CD over vinyl records and the disappearance of launderettes in town centres following the introduction of domestic washing machines. The PLC is a model that helps describe the common levels of sales growth and decline that can be observed over the lifetime of a product (see Figure 8.2). The model helps marketers determine the level of support that is required to secure the present and future success of the product. Figure 8.2 indicates that there are four main stages in the PLC: introduction, growth, maturity and decline. These are each discussed in greater detail along with their implications for marketing strategy. Characteristics of the PLC The PLC illustrates the four key stages that a product is likely to experience between its launch and disappearance from the market. These stages are discussed below. INTRODUCTION When a product enters the market, sales will begin slowly and profit, if any, will be small owing to the lead time required for marketing efforts to take effect. As the product is new and untested, potential customers may be unwilling or reluctant to buy it...
eBook - ePubCreating Theoretical Research Frameworks using Multiple Methods
Insight from ICT4D Investigations
- Sergey V. Samoilenko, Kweku-Muata Osei-Bryson(Authors)
- 2017(Publication Date)
- Auerbach Publications(Publisher)
...Regardless of all the efforts at this stage to keep the marketplace interested in the product, the inevitable comes—the market is saturated with the product, and the popularity of the product falls. This marks the arrival of the fourth phase—decline. Stage 4—Decline This stage of the Product Life Cycle maps well to standardized product category of Vernon (1966). There are a few reasons for a decline in sales of the product—this could happen due to the introduction of a new substitute product, or be a result of a decreasing popularity among customers or increasing competition on the marketplace. The product could also become obsolete at this point—this would make the maintenance and service of the product more expensive as time goes by. Prices of the products at this stage are stable—no additional discounts are offered, and a relatively high price keeps generating profits for the producer while discouraging remaining loyal customers from continuing to purchase the product. The decline of sales also impacts the number and variety of distribution channels—the producer gradually trims down the distribution network until the minimum number of essential channels is left. Keeping efficiency of the remaining distribution channels high is very important, for profits are steadily declining. Eventually, the product is phased out. Criticisms and Applications of Product Life Cycle Model The common criticisms of the PLC model are associated with its limited predictive and explanatory power. Despite the presence of fairly well-delineated stages within the model, the real-life situation may not yield such clear-cut distinction of the stages, and the prediction of the duration of the stages themselves is not an easy task...
