6.4.2 Product Life Cycle : Conceptual Framework

The Product Life Cycle (PLC) is a widely used framework in marketing and business strategy. It represents the stages a product goes through in the market, from its introduction to its eventual decline. The curve of the PLC is typically S-shaped, representing sales or other performance metrics over time.

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Stages of the Product Life Cycle

1. Introduction Stage
2. Description: The product is launched into the market.
3. Characteristics:
   • Low sales and high costs.
   • No or minimal profits.
   • High marketing expenses to build awareness and establish a distribution network.
   • High risk of failure as market acceptance is uncertain.
4. Challenges:
   • Overcoming competition and building trust among early adopters.
   • Ensuring product quality and managing production efficiently.

5. Strategies:

   • Invest in advertising and promotions to create awareness.
   • Use penetration pricing (low price) or skimming (high price for premium positioning).
   • Focus on niche markets and early adopters.

6. Growth Stage

7. Description: The product gains market acceptance and sales increase rapidly.
8. Characteristics:
   • Rapid growth in sales and rising profits.
   • Entry of competitors into the market.
   • Increased economies of scale reduce production costs.
   • Market share becomes a critical focus.
9. Challenges:
   • Maintaining product quality amidst scaling.
   • Differentiating from competitors to sustain growth.

10. Strategies:

    • Expand distribution channels to reach more customers.
    • Enhance the product with features or variations.
    • Focus on customer satisfaction to build loyalty.

11. Maturity Stage

12. Description: Sales growth slows down as the product reaches its peak in market penetration.
13. Characteristics:
    • Sales stabilize or begin to decline gradually.
    • Maximum profits are often realized during this phase.
    • High competition leads to pricing pressures.
    • Customers may become bored or look for alternatives.
14. Challenges:
    • Retaining existing customers and keeping the product relevant.
    • Avoiding complacency and preparing for market shifts.

15. Strategies:

    • Diversify the product line (e.g., new variants, bundles).
    • Focus on cost control to sustain margins.
    • Engage in promotional activities to maintain interest.
    • Explore new markets or customer segments.

16. Decline Stage

17. Description: Sales and profits decline as the product loses relevance or competition offers better alternatives.
18. Characteristics:
    • Shrinking market demand and reduced profitability.
    • High inventory costs as sales decrease.
    • Product obsolescence due to technology or changing preferences.
19. Challenges:
    • Deciding whether to rejuvenate or phase out the product.
    • Managing declining resources effectively.
20. Strategies:
    • Consider product rejuvenation with updates or innovations.
    • Target niche markets that still find value in the product.
    • Phase out the product to reduce losses.

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The PLC Curve

• X-axis: Time.
• Y-axis: Performance metric (e.g., sales, profits, return on investment).
• The curve typically shows sales or profits against time:
• Introduction: Slow growth, low sales.
• Growth: Rapid increase in sales and profits.
• Maturity: Sales plateau, maximum profits.
• Decline: Sales and profits drop.

Key Observation:
- Most products fail in the Introduction Stage due to lack of market acceptance or inability to compete.
- The Maturity Stage often delivers the maximum profits, but brands must identify when to innovate or retire the product to avoid a decline.

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Application of the PLC

1. Data Dependency:
2. To analyze a product's life cycle, reliable historical data on sales or profits is essential.

3. For new products, industry or competitor data can offer insights.

4. Examples:

5. Music Industry:

   • Evolved through vinyl records, tapes, CDs, MP3 players, and streaming services.
   • Each format had its own PLC within the broader industry's life cycle.

6. Limitations:

7. If a product is too new (e.g., a month old), there won’t be enough data to draw its PLC curve.

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