Product Life Cycle
(PLC)
Introduction of PLC
Curve of Sales & Profit Life Cycles
Shapes of Product Life Cycle
Introduction Stage of the PLC
Lecture Growth Stage of the PLC
Outline Maturity Stage of the PLC
Decline Stage of the PLC
Summary of Product Life Cycle Stages
Reasons for Changes in Product Life Cycle
Patterns
PLC and the Customer adoption
Introduction of Product Life Cycle (PLC)
A company’s positioning and differentiation strategy must change as the
product, market, and competitors change over the product life
cycle(PLC)
When we say that a product has a life cycle we assert four things:
i. Products have a limited life.
ii. Products sales pass through distinct stages, each posing different
challenges, opportunities and problems to the seller.
iii. Profits rise and fall at different stages of the product life cycle.
iv. Products require different marketing, financial, manufacturing,
purchasing, and human resource strategies in each life – cycle stages.
Contd.
Product life cycle is the course of a product’s sales and profits over time.
Product life cycle(PLC) deals with the life of a product in the market with respect
to business or commercial costs and sales measures.
The four stages of each product lifecycle are introduction, growth, maturity and
decline.
Curve of Sales & Profit Life Cycles
Sales & profits ($)
Introduction Growth Maturity Decline
Time
Shapes of Product Life Cycle:
Sales Sales Sales
Time
Time Time
Classical Bell Shaped PLC A Pattern of Style A Pattern of Fashion
Sales Sales Sales Sales
Time Time Time Time
Growth-slump- maturity patterns A Pattern of Fad
Introduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Sales Low
Low
Costs
Costs High
High cost
cost per
per customer
customer
Profits
Profits Negative
Negative
Marketing
Marketing Objectives
Objectives Create
Create product
product awareness
awareness and
and trial
trial
Product
Product Offer
Offer aa basic
basic product
product
Price
Price Use
Use cost-plus
cost-plus formula
formula
Distribution
Distribution Build
Build selective
selective distribution
distribution
Promotion
Promotion Heavy
Heavy to
to induce
induce product
product trial
trial
Marketing Strategies for Introduction Stage
Promotion
High Low
Rapid- Slow-
High skimming skimming
strategy strategy
Price
Rapid- Slow-
Low penetration penetration
strategy strategy
Rapid Skimming Strategy:
New products are launched at high
price with high promotion.
High price helps the firms to recover
high profit per product and enables
early break even.
High promotional activities help for
high customer awareness and quick
adoption of new product.
Also used for products with high
brand value and customers are ready
to pay the high price for product.
Example: Apple iPhone
New products launched at high price but low
promotion.
High price helps the firms to recover high profit
per product and enables early break even.
Low promotion helps the marketing expenses
low
Mainly used for
Slow When market size is limited or market segment
Skimming
is very specific.
Market is aware of the product and brand.
Strategy: Customers are willing to pay higher price due
to higher brand value.
Less competition due to superior quality and
brand value.
Example: Mercedes Benz and Harley Davisson
new models.
New products launched at a low price but
with high promotion
Ideal to achieve fast market penetration and
large market share within a very short period
of time.
Normally used when:
Rapid The market is large
Market is unaware of the product
Penetration Customers are price sensitive
Strategy: High product competition
Cost decreases with high volume. High fixed
cost but low variable cost.
Example: Mobile services launched by a new
player in the market where new connections
or mobile SIM cards are sold at throw away
price to attract more customers.
New product is launched at a low price with low
promotion.
Low price increases sales and encourages
acceptance among the prospective buyers who are
very much price sensitive.
Low promotion reduces marketing cost
significantly.
Slow Mainly used when:
Penetration
Market is large
Market is highly aware of the product so less
Strategy: promotion is required
Market is price sensitive
Market is minimally sensitive to promos
There is some product competition in the market
place
Example: Launching a new and cheaper two wheeler
from a well known two wheeler company.
Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Sales Rapidly
Rapidly rising
rising
Costs
Costs Average
Average cost
cost per
per customer
customer
Profits
Profits Rising
Rising
Marketing
Marketing Objectives
Objectives Maximize
Maximize market
market share
share
Product
Product Offer
Offer extension,
extension, service,
service, warranty
warranty
Price
Price Penetration
Penetration strategy
strategy
Distribution
Distribution Build
Build intensive
intensive distribution
distribution
Promotion
Promotion Reduce
Reduce to
to take
take advantage
advantage of
of demand
demand
Marketing strategies for
Growth stage
During the growth stage, the firm uses several strategies to
sustain rapid market growth.
Improves product quality and adds new features and
improved styling.
Adds new models and flanker products(i.e., products of
different sizes, flavors, and so forth that protect the
main product).
It enters new market segments
It increases its distribution coverage and enters new
distribution channels.
It shifts from product- awareness advertising to
product- preference advertising.
It lowers price to attract the next layer of price –
sensitive buyers.
Maturity Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Sales Peak
Peak
Costs
Costs Low
Low cost
cost per
per customer
customer
Profits
Profits High
High
Marketing
Marketing Objectives
Objectives Maximize
Maximize profits
profits while
while defending
defending market
market share
share
Product
Product Diversify
Diversify brand
brand and
and models
models
Price
Price Match
Match or
or best
best competitors
competitors
Distribution
Distribution Build
Build more
more intensive
intensive distribution
distribution
Promotion
Promotion Increase
Increase to
to encourage
encourage brand
brand switching
switching
Three potentially useful ways to change the
course for a brand are market, product,
and marketing program modification.
Market Modification
Marketing Sales volume = no. of brand users * usage
strategies for rate per user.
Maturity stage Expand the no. of brand users
Convert nonusers
Enter new market segments
Attract competitors’ customers
Increase the usage rate among users
Have consumers use the product on more
occasions.
Have consumers use more of the product on
each occasion
Continued..
Have consumers use the product in new
ways.
Product modification
Trying to stimulate sales by modifying the
product’s characteristics through
Quality improvement:
Aims at increasing the product’s functional
performance.
Eg: Aashirvaad, Annapoorna, Pillsbury, Naturefresh
Feature improvement
Aims at adding new features, such as size, weight,
Continued.. materials, additives, and accessories, that expand the
product’s performance, versatility, safety, or
convenience.
Style improvement
Aims at increasing the product’s esthetics appeal.
Eg; New car models, New Coke
Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Sales Declining
Declining
Costs
Costs Low
Low cost
cost per
per customer
customer
Profits
Profits Declining
Declining
Marketing
Marketing Objectives
Objectives Reduce
Reduce expenditures
expenditures and
and milk
milk the
the brand
brand
Product
Product Phase
Phase out
out weak
weak items
items
Price
Price Cut
Cut price
price
Distribution
Distribution Selective:
Selective: phase
phase out
out unprofitable
unprofitable outlets
outlets
Promotion
Promotion Reduce
Reduce to
to minimum
minimum level
level
Increase investment
Resolve uncertainties - stable
investment
Selective niches
Marketing Harvesting
strategies for Divesting
Decline Stage To establish a system for identifying
weak products.
Some firms’ abandon declining
markets earlier than others.
Summary of Product Life Cycle Stages
PLC Elements Introduction Growth Maturity Decline
CHARACTERISTICS
1. Sales Low Fast Growth Slow Growth Declining
2. Profits Negligible Peak Level Declining Low
3. Cash inflow Negative Moderate High Low
4. Competitors Few Growing Many Declining
5. Customers Innovative Mass Market Mass Market Laggards
Increased Customer Awareness
Higher Disposable Income
Life style changes
Reasons for Change in Consumer’s need
Changes in structure
Product Life Increased Competition
Cycle Patterns: Emergence of newer category
Changes in Technology
Social System
PLC and the Customer adoption
• Innovators – process
» “first on the block” buyers
» Typically younger in age
» They enjoy taking risks with new
products
» They are mostly well informed
» Very small in numbers
» Tolerate failures
» They trigger the next level - Adopters
• Early adopters –
» These wait for initial purchases to
happen, product reviews
» They enjoy novelty, higher incomes
youth, educated, socially forward
» Opinion leaders
•Majority -
» Skepticism, senior in age,
mixed levels of education
» They build the sales volumes
» Don’t like to take too much
risk
» Competitors enter the market
when these come in
» Careful buyers & choosers
•Laggards -
» They avoid change
» Rely on existing products
until it outgrows completely
» Form the last small section
» They don’t need to much ad
& communication
Thank
You
