Product Life CycleProduct Life Cycle(PLC)(PLC)

By: Shreyansh PasariBy: Shreyansh Pasari

TopicsTopics

The Four Major Stages:The Four Major Stages: Market IntroductionMarket Introduction Market GrowthMarket Growth Market MaturityMarket Maturity Sales DeclineSales Decline

GraphGraph

ExampleExample

Pros and ConsPros and Cons

Stage 1: Market IntroductionStage 1: Market IntroductionSales are low as the new idea is first introduced Sales are low as the new idea is first introduced to the market. to the market. Customers may not be aware of the productCustomers may not be aware of the product’’s s benefits and features and may not be aware of benefits and features and may not be aware of the product itself.the product itself.Most companies experience losses during the Most companies experience losses during the market introduction stage.market introduction stage. A lot of money is spent on promotion and product A lot of money is spent on promotion and product

development to build product awareness.development to build product awareness. Promotion is aimed at innovators and early adopters.Promotion is aimed at innovators and early adopters.

Pricing:Pricing: Low penetration pricing Low penetration pricing High skim pricingHigh skim pricing

Stage 2: Market GrowthStage 2: Market Growth

Rapid growth in sales and profitsRapid growth in sales and profits More product awarenessMore product awareness

Competitors see the opportunity and enter Competitors see the opportunity and enter the market.the market. Some competitors will copy the product or Some competitors will copy the product or

may try to make it better or more appealing to may try to make it better or more appealing to other target markets. other target markets.

The new entries result in more product The new entries result in more product variety.variety.

Additional features and support services Additional features and support services may be added to:may be added to: Combat competitionCombat competition Retain customersRetain customers

Promotion is aimed at a broader audience.Promotion is aimed at a broader audience.

More distribution channels are More distribution channels are established.established.

Stage 3: Market MaturityStage 3: Market MaturityMost common stage in the cycle.Most common stage in the cycle.Sales begin to level off. Sales begin to level off. The competition gets tougher as more The competition gets tougher as more competitors have entered the market.competitors have entered the market. Increased competition creates a downward Increased competition creates a downward

movement in prices.movement in prices.

Industry profits are largest, but it is also Industry profits are largest, but it is also when industry profits begin to decline. when industry profits begin to decline. Promotion is targeted to create brand Promotion is targeted to create brand differentiation.differentiation.

Stage 4: Sales DeclineStage 4: Sales Decline

Sales continue to decline.Sales continue to decline. Shrinking marketShrinking market

New products replace the old.New products replace the old.

Firms will often try to use extension Firms will often try to use extension strategies.strategies.

Companies may be able to keep some Companies may be able to keep some sales by appealing to their most loyal sales by appealing to their most loyal customers.customers.

When in the decline stage, a firm may:When in the decline stage, a firm may:

MaintainMaintain: enhance the product by finding new : enhance the product by finding new uses or by adding new features.uses or by adding new features.

HarvestHarvest: reduce costs and continue to offer : reduce costs and continue to offer the product to a targeted niche.the product to a targeted niche.

DiscontinueDiscontinue: sell the product to another firm, : sell the product to another firm, or liquidate inventory.or liquidate inventory.

Example: New Flavor of PepsiExample: New Flavor of PepsiStage 1: Market IntroductionStage 1: Market Introduction Pepsi bottles the new flavored product and Pepsi bottles the new flavored product and

places it on the market for consumers. places it on the market for consumers. Pepsi also spends a lot of money advertising Pepsi also spends a lot of money advertising

the new flavor creating awareness.the new flavor creating awareness.

Stage 2: Market GrowthStage 2: Market Growth Customers like the flavor and begin to make Customers like the flavor and begin to make

routine purchases. routine purchases. Coke introduces their competing flavor.Coke introduces their competing flavor.

Stage 3: Market MaturityStage 3: Market Maturity More competitors enter the market taking More competitors enter the market taking

some of Pepsisome of Pepsi’’s profits.s profits.

Stage 4: Sales DeclineStage 4: Sales Decline Customers have moved on to the next new Customers have moved on to the next new

flavor.flavor. Some loyal fans stay behind.Some loyal fans stay behind.

ProsPros

The product life cycle is a useful model when The product life cycle is a useful model when deciding possible stages of a product or deciding possible stages of a product or service.service.

Useful to help demonstrate how marketing Useful to help demonstrate how marketing strategies can vary at different stages of a strategies can vary at different stages of a product's life. product's life. PromotionPromotion Pricing StrategiesPricing Strategies

ConsCons

Tends to be backward looking Tends to be backward looking We only know which stage we have been in We only know which stage we have been in

after it has been completed. after it has been completed.

Only looks at a single product when most Only looks at a single product when most firms have many products.firms have many products.

DeterminismDeterminism

Thank You.