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6.4.1 Introduction to PLC

The Product Life Cycle (PLC) is a concept derived from the biological life cycle. Just as living beings go through stages of birth, growth, maturity, and eventual decline, so do products and services. Understanding the PLC is critical for businesses to plan strategies tailored to each stage of a product’s market life.

Stages of the Product Life Cycle

  1. Introduction Stage
  2. Analogy: A seed is planted.
  3. Description: The product is launched in the market. It is new, and awareness is low.
  4. Characteristics:
    • High costs due to marketing, research, and distribution efforts.
    • Sales grow slowly as the market learns about the product.
    • High risk of failure; many products do not move beyond this stage.
    • Profits are minimal or negative.

  5. Strategies:

    • Focus on creating awareness through advertising and promotions.
    • Target early adopters and innovators.
    • Build strong distribution channels.

  6. Growth Stage

  7. Analogy: The seed begins to sprout.
  8. Description: The product gains acceptance, and sales increase rapidly.
  9. Characteristics:
    • Rising sales and profits as the market expands.
    • New competitors may enter the market with similar offerings.
    • Economies of scale start to lower production costs.

  10. Strategies:

    • Focus on differentiating the product from competitors.
    • Expand distribution to reach a wider audience.
    • Invest in customer satisfaction to build loyalty.

  11. Maturity Stage

  12. Analogy: The plant reaches adulthood, with stable growth.
  13. Description: Sales peak as the product becomes widely accepted.
  14. Characteristics:
    • Slower growth, with market saturation approaching.
    • Price competition increases as more players enter the market.
    • Profit margins may shrink due to competitive pressures.

  15. Strategies:

    • Diversify product offerings with variations or updates.
    • Use promotions to sustain market share.
    • Focus on retaining existing customers and maximizing efficiency.

  16. Decline Stage

  17. Analogy: The plant begins to shrink and eventually dies.
  18. Description: Sales and profits decline as customer interest wanes.
  19. Characteristics:
    • Reduced demand due to changing preferences or newer alternatives.
    • High inventory costs and shrinking profitability.
    • Companies may exit the market or reposition the product.
  20. Strategies:
    • Decide whether to rejuvenate the product through innovation or discontinue it.
    • Focus on niche markets if the product still holds value for specific customers.
    • Minimize costs and optimize inventory management.
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