Product life cycles show the stages that a product goes through from its introduction, to its growth, and then to its decline. Here is a graph to show the product life cycle:
Features:
• Each product may have a different life cycle.
• PLC determines revenue earned.
• Contributes to strategic marketing planning.
• May help the firm to identify when a product needs support, redesign, reinvigorating, withdrawal, etc.
• May help in new product development planning.
• May help in forecasting and managing cash flow.
• The Product Life Cycle (PLC) has Five Stages
• Product Development, Introduction, Growth, Maturity, Decline.
• Not all products follow this cycle: Fads, Styles, Fashions
The product life cycle concept can be applied to a:
• Product class (soft drinks)
• Product form (diet colas)
• Brand (Diet Dr. Pepper)
Stages in Product Life Cycle:
1. Introduction: The product is introduced. Sales grow slowly and informative advertising start to attract customers. Price skimming could be used if the product is new to the market. The main aim of sales is to breakeven.
2. Growth: Prices rise rapidly. Persuasive advertising is used to encourage brand loyalty. Prices may be reduced a little. Sales start to generate profits since costs have been covered.
3. Maturity: Sales rise more slowly. Competition forces prices to be lowered and the firm uses competitive pricing. Advertising is used to maintain sales. Profits are at their highest.
4. Decline: Product go out of fashion and sales and profits decline. Advertising eventually stops. It is no longer profitable to produce the product.
The length of each stage varies with products. The business needs to identify which stage their products are in so that they can use a suitable marketing strategy for it.
Extending the Product Life Cycle
Extending the Product Life Cycle
When a product has reached its maturity or saturation stage a business mayadopt extension strategies to stop sales from falling which extends the product life cycle. Sales are given a boost by these strategies.
