Product Life Cycle Class 12

Managing Product Life Cycle

The product life cycle (PLC) shows a products sales history in 4 stages:

  1. Introduction
  2. Growth
  3. Maturity and
  4. Decline

The company has to make changes in its marketing mix as there are changes in the environment, buyer behavior, and the composition of the market.

The PLC concept can be used to a:

product category like soaps…...the Longest PLC

particular product form like soap bars, liquid soaps

particular brand like Lux……the Shortest PLC

 

The Four Stages of Product Life Cycle:

  1. Introduction Stage

In Introduction Stage a new product is introduced, and it is always risky, even for a skillful marketer. A new product category requires a long introductory period because primary demand must be aroused. Selective demand follows after that. Then competitors enter the market.

Characteristics of Introductory Stage

  • Inducing acceptance and attaining initial distribution.
  • High operational costs, due to inefficient production levels, high learning time etc.
  • High promotion costs.
  • Customers with low awareness and trial purchase.
  • Low competition from indirect or substitute products.
  • Losses due to low sales volume.
  • Limited distribution and high promotional expenses.

Marketing Strategies in Introduction Stage

  1. Products are promoted to create awareness and develop market.
  2. The price can be low for penetration or high to recover the development costs.
  3. Distribution is selective till consumers accept the product.
  4. Education of the consumers to enhance the product awareness.

 

  1. Growth Stage

During the Growth stage the product sales begin to increase rapidly as old customers make repeat purchase and new customers enter the market.

Characteristics of Growth Stage

  • Reduced costs due to economies of scale.
  • Increased competition.
  • Market expansion due to new customers.
  • Dominant position in the market.
  • Increase in profits.
  • Increased cost of promotion.

Marketing Strategies in Growth Stage

As there’s an increase in competitors, the firm tries to build brand preference and increase market share.

  1. Product quality is maintained with additional features and support services.
  2. Pricing remains same.
  3. Distribution channels are added as demand rises.
  4. Promotion is done to increase customers.

 

Product Life Cycle Class 12

 

3. Maturity Stage

Those products that are able to face competition and acceptance of customers enter the maturity stage. Rivals begin to copy product features of successful brands. Due to increased competition, prices decrease, which discourage the middlemen to stay or support as before due to decreased profit margins.

Marketers improve their product and marketing mix to fight competition, during the maturity stage.

Characteristics of Maturity Stage:

  • Economies of large-scale decrease costs.
  • Peak sales with market saturation.
  • Entry of Competitors in the market.
  • Low prices due to increased competition.
  • Advertising cost on brand differentiation.
  • Product feature diversification to maintain or increase market share.
  • Decrease in industrial profits.

Marketing Strategies in Maturity Stage

  1. Increased role of product managers to create and maintain product image.
  2. Changes in the product and marketing mix due to increased competition.

 

4. Decline Stage

During this stage as the customers change their preferences for better products. However, product categories last longer.  The number of competitors decrease thus decreasing the limited product versions for the customer.

Sales and profits decline rapidly. Brands with only strong customer loyalty stay to earn profits. It also sees hidden costs like management time, sales force attention etc.

During this stage, companies need to take care of their dying products.

Characteristics of Decline Stage

  • Decreasing sales due to drop in consumer interest.
  • Reduced profits due to decreased sales and price reductions.
  • Market saturation leading to limited growth opportunities.
  • Shifts in consumer preferences and technological advances.
  • Competitors may also leave the market, focusing on more profitable products.
  • Companies may take cost cutting measures to maintain profitability.
  • Ultimately, the product may be phased out or replaced with a newer version.

Marketing Strategies in Decline Stage

  1. The product is maintained by additional new features or finding new uses.
  2. The costs can be reduced, and it can be offered to loyal segment.
  3. The product can be discontinued or sold to another firm willing to stay in the market.

Product Classification Class 12