2. It is the life of a product in the market with respect to
business/commercial costs and sales measures.
To say that a product has a life cycle is to assert four things:
Product has a limited life.
Product sales pass through distinct stages, each posing different
challenges, opportunities, and problems to the seller.
Profits rise and fall at different stages of the product life cycle.
Products require different marketing, financial, manufacturing, purchasing
and human resource strategies in each life-cycle stage.
Four main stages:
7. Slow sales growth; offering of basic product
Negative or low profits
Little or no competition
Customers have to be prompted to try the product (awareness creation)
Intensive personal selling to channel members.
Promotional expenditures are at their highest ratio to sales.
Prices tend to be high because costs are high.
Firms focus on those buyers who are most ready to buy.
Speeding up innovation time is essential in an age of shortening PLCs.
To be first can be rewarding, but risky and expensive.
Concept of pioneer’s advantage.
First movers also have to watch out for ‘second mover advantage’.
8. • High price
RAPID SKIMMING • High promotion
• Large market unaware of product
• High price and low promotion
SLOW SKIMMING • Market aware of product
• Competition non intense
• Low price intense competition
RAPID PENETRATION • High promotion price sensitivity
• Large market unaware customer
• Low price
SLOW PENETRATION • Low promotion
• Large market, aware customers, price sensitive
10. Rapid climb in sales; brand building
Purchase by early adopters
Increase in public awareness; intensive distribution
Bringing product extensions, warranty and service
New competitors enter, attracted by the opportunities
Prices fall slightly or remain as it is, depending on demand increase and
Promotional expenditure maintained the same or at slightly increased
level to meet competition and to educate the market.
Decline in the promotion-sales ratio
Increase in profits because of economies of scale and learning effect
Possibility of a trade-off between high market share and high current
11. Focus shifts towards brand building
Bringing product extensions, warranty & services
Adding new features and improving quality/style/look
Entering new market segments
Increasing distribution coverage
Price reduction to attract new buyers
Example- Hyundai- i10 car
13. Sales volume peaks and market saturation is reached at some point
Costs reduced but prices also tend to drop because of competition
This stage normally lasts longer than the previous stages and poses big
challenges to marketing management as profits go down.
Majority buyers make repeat purchases, laggards join them
Can be divided into three phases: growth, stable & decaying maturity
Growth phase- sales growth rates start to decline, no new distribution
channels to fill, new competitive forces emerge.
Stable phase- sales flatten on a per capita basis because of market
saturation, future sales governed by population growth & replacement
Decaying phase- the absolute level of sales start to decline, customers
begin switching to other products, intensified competition.
14. • Quality improvements (durability, reliability, etc.)
• Feature improvements (utility, safety, convenience, versatility, etc.)
Product • Style improvements (aesthetic value)
• Converting non-users and winning competitor’s customers
• Entering new market segments
Market • Encouraging usage rate (more frequent use, more usage per time)
• Changes in price and distribution of product
Marketing • Changes in sales promotion and personal selling
mix • Changes in services (delivery, maintenance, technology assistance)
16. Decline in sales because of technological changes, shift in consumer
tastes, and increased competition
Laggards and repeat purchases driven sales
Costs become counter-optimal
Overcapacity, increased price cutting, reduced promotion & profit erosion
Most of the product class usually die at this stage
Withdrawal from market or reduction in number of products offered
It is also possible to extend the life of the product by various means
17. Appropriate strategy depends upon the exit barrier, industry’s relative
attractiveness, product category, and the company’s competitive strength
Different strategies used:
HARVESTING DIVESTING LIQUIDATING
• Gradually • Selling the • Bringing the
reducing a product to product to an
product or another firm if end &
business it has strong dropping off
costs while distribution & the assets
trying to residual
maintain sales goodwill
20. STYLE: a basic & distinctive mode of expression appearing in a field of
human endeavor (homes, clothing, and art). A style can last for
generations and go in & out of vogue.
FASHION: a currently accepted or popular style in a given field. Fashions
pass through 4 stages- distinctiveness, emulation, mass fashion, and
decline. The length of a fashion cycle is hard to predict.
FAD: a fashion that comes quickly into public view, is adopted with great
zeal, peaks early, and declines very fast.
The acceptance cycle is short
Fads tend to attract only a limited following who are in search of
excitement and distinctiveness
Fail to survive because they don’t normally satisfy a strong need
21. Most product life cycle curves are portrayed as bell shaped. However,
three common alternate patterns are also noted many-a-times:
22. Most product life cycle curves are portrayed as bell shaped. However, three
common alternate patterns are also noted many-a-times:
Growth-slump-maturity pattern: sales grow rapidly just after introduction and
then fall to a petrified level that is sustained by late adopters buying the product
for the first time and early adopters replacing it. Often characteristics of small
Cycle-recycle pattern: often describes the sales of new drugs. Aggressive
promotion of new drugs produces the first cycle. Later, sales start declining and
another promotion push produces a second cycle (usually of smaller magnitude
Scalloped pattern: sales pass through a succession of life cycles based on the
discovery of new-product characteristics, uses, or users. Eg.- sales of nylon: In
thread, in parachute, etc.
23. When a product reaches the
maturity stage, following
strategies can be adopted to
extend the life of the product:
Repackaging and redesigning (to
make them seem new and attract
Launch in new markets
Revised promotion (to gain new
audience and remind the current
Adding value (new features to the
24. There are three levels of PLC:
Product level (eg. Dell XPS 15 laptop)
Category level (eg. Desktop, laptop, netbook, tablet PC)
Brand level (HP, Lenovo, Dell, Acer, Apple, Sony)
Determines the revenue earned
Helps the firm in being proactive
Contributes to strategic marketing planning
May help the firm to identify when a product needs support, redesign,
revitalization, withdrawal, etc.
May help in new product development planning or creating a marketing
mix for success of a brand/product.
25. Product planning
Maintaining a proper balance of product at different stages of PLC
Pre-planning product launch
Making investment decisions on products
Choosing appropriate entry and exit strategy
Prolonging the profitable phase (by highlighting new uses, adding new
Shortening the product development time
26. PLC patterns are too variable in shape and duration to be generalized
Marketers can seldom tell which stage their product is in.
For specific products, the duration of each PLC stage is unpredictable.
A product may appear to be mature when actually it has reached a
plateau prior to another upsurge.
The PLC pattern is the self-fulfilling result of marketing strategies and that
skillful marketing can in fact lead to continued growth.
Use of PLC may lead to inappropriate actions sometimes.
Because of these limitations, strict adherence to PLC can lead a
company to misleading objectives and strategy prescriptions.