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Product life cycle


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Product life cycle

  2. 2. DEFINITION“ The stages through which the individual products develop over a period of time is known as product life cycle.” The product life cycle concept is derived from the fact that a given product’s volume and revenue follow a typical pattern of four –phases cycle. This life cycle is the representative fact of the existence of every product. If we plot a graph of sales volume versus time for a product, generally, the PLC represents a bell- shaped or s-shaped curve.
  3. 3. THE FOUR STAGES OF PRODUCT LIFECYCLEIntroductionGrowthMaturityDecline
  4. 4. PRODUCT LIFE CYCLESales andProfits ($) Sales Profits Time Product Introduction Growth Maturity Decline Develop- mentLosses/Investments ($)
  5. 5. INTRODUCTION STAGE OF THEPLC Sales Low sales Costs High cost per customer Profits Negative Create product awareness Marketing Objectives and trial Product Offer a basic product Price Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers
  6. 6.  Example- 3rd generation Mobile Phones. Marketing Strategy used in Introduction Stages- Rapid Skimming- Launching the new product at high price and high promotional level. Slow skimming- Launching the new product at high price and low promotional level. Rapid Penetration-Launching of product at low price with heavy promotion. Slow penetration- Launching the new product at a low price and low level of promotion.
  7. 7. Growth Stage of the PLC Sales Rapidly rising sales Costs Average cost per customer Profits Rising profits Marketing Objectives Maximize market share Offer product extensions, service, Product warranty Price Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market
  8. 8.  Marketing Strategy Used in Growth Stage: Improved product quality and add new product features and styling. Add new models and products of different sizes, color, shapes etc. Enter new market segments. Increase distribution coverage enter new distribution channels. Shifts from product awareness to product preference advertising. Lower prices to attract next layer of price sensitive buyers. Examples- Hyundai-I10.
  9. 9. Maturity Stage of the PLC Sales Peak sales Costs Low cost per customer Profits High profits Marketing Objectives Maximize profit while defending market share Product Diversify brand and models Price Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits
  10. 10.  Marketing Strategy Used in Maturity Stage:2. Mar ket Modification- Converting non users. Entering new market segments. Win competitors customers. Redefine target market.2. Product Modification- Quality Improvement. Adopting advance technology. Product Differentiation.
  11. 11. Decline Stage of the PLC Sales Declining sales Costs Low cost per customer Profits Declining profits Marketing Objectives Reduce expenditure and milk the brand Product Phase out weak items Price Cut price Go selective: phase out unprofitable Distribution outlets Advertising Reduce to level needed to retain hard-core loyal customers
  12. 12. MARKETING STRATEGY USED IN DECLINESTAGES Increase the given firms investment to dominate the market or strengthen its competitive position. Maintaining the given firms investment level until the uncertainties about the industry are resolved. Decrease the firms investment selectively, by dropping the unprofitable customers group, while simultaneously strengthening the firms investment niche segments. Harvesting the firms investment to recover cash quickly. Divesting the business quickly by dropping off its assets as advantageously as possible.
  13. 13. PLC CONCEPT IS BASED ON FOLLOWINGASSUMPTIONS- Not all product introduced in the market essentially pass through all stages of its life cycle. It is also possible that the product may attain introduction stage and then get phased out. There is no definite line of demarcation between the various stages of product life cycle. At the same time, a product may be in different stages of its life cycle in different segment of the market. For example, the product concerned may be in the introduction stage in Asian market while facing decline in western countries. The time span of each stage in product life cycle in respect of each product may vary. Thus, a product may experience longer period in growth stage and relatively short period in maturity stage.