What is a Product Life Cycle (PLC)?
Do you really know what a product is? Well, a product is anything which is capable of satisfying customers’ needs. Product includes both physical or tangible products (car, type writer, computer, chair) and intangible products or services (health care, banking, insurance).
Definition of a Product Life Cycle
Strings of words mentioned below define what a product life cycle is:
“The stages through which a product develops over time is called Product Life Cycle (PLC)”.
“It is the period of time over which an item is developed, brought to market and eventually removed from the market”.
“The product life cycle is marketing concept that describes the way the revenues from the sale of a product behave over time”.
Stages of a Product Life Cycle
The product life cycle is broken down into four phases:
The Product Life Cycle (PLC) Curve
For all products, the life cycle is drawn is the form of a bell shaped curve. The beginning of the curve marks the introduction stage; the slope indicates growth stage; top of the curve signifies maturity; and the graph ends in the decline stage.
Theory of PLC: Biological Life Cycle Versus Product Life Cycle
The concept of Product Life Cycle is based on biological life cycle. For instance, when a seed is planted (introduction); it begins to pullulate (growth); it shoot out flowers and leaves (maturity); and after a defined period of time, it starts to shrink and eventually die out (decline).
Human beings also pass through the same phases of introduction, growth, maturity and decline in their lives. The same theory applies to a product. When a new product is launched in the market, it starts gaining customers; then it stabilizes and becomes mature; then after some time, it is taken over by the introduction of better and superior competitors therefore, it is withdrawn or harvested from the market.
Benefits of Using a Product Life Cycle for Revenue
Marketing managers consider product life cycle as an important measure of sales revenues. As you can see from the figure, the slope of the curve denotes the sales of a particular product. The more the slope, the more the sales. When a product is introduced in the market, the sales are negligible.
Due to marketing and promotion efforts, the demand of product starts to increase and as a result some revenue is generated. When more and more customers begin to buy the product, the revenues of the product reaches to maximum; this stage is called maturity.
A product can stay in maturity for several weeks, months or years depending on the external and internal market conditions and resources.
Finally, when a product better in features and functions is launched by a competitor into the market, the sales starts to decline; in some cases, companies have to disengage their products or services.
Product Life Cycle Management (Marketing)/ PLCM
Product life cycle management (or PLCM) is the succession of strategies used by business management as a product goes through its developmental life cycle. The conditions involving the promotion and sales of a product, involving advertising and market saturation vary over time and must be managed as it moves through the different stages of succession.
What is Marketing Mix?
A marketing mix is a pre-planned assortment of all those controllable elements which are involved in the planning of a product’s marketing. Typically, they include the following 4P’s”
- Product (often substituted by Presentation)
These four elements are adjusted until the correct combination is reached befitting the requirements of a product’s customers, while generating optimum income.
How to Create a Product Life Cycle
Introducing the Product : Brand Building
For the product life cycle to begin, the product must be launched in the market. This is done after target market is identified and ensured that the need for your product or service exists.
At this stage, sales will be very low because customers are not really aware of the product and its benefits.
Generating Demand: Promotion, Advertising, Marketing
The cost of advertising and initial distribution is extremely high as companies intend to create awareness of the product and target early adopters. The goal is to build market and generate demand.
Stage 1 Marketing Mix Implications
You need to have a fair idea of marketing mix implications for each stage.
|Product||Products are less in number|
|Price||Some companies keep the price high so as to cover their costs whereas others tend to keep it low so as to attract more early adopters.|
|Distribution||Initially, the distribution is done selectively|
|Promotion||Creation of awareness is the only goal of promotion|
Stage 2 Marketing Mix Implications
|Product||Improvement of product quality.|
|Price||If the demand of the product is high, price is maintained at high level whereas; if you want to target additional customer segments, reduce the price.|
|Distribution||To intensify distribution, discounts are offered to retailers.|
|Promotion||Improved promotional efforts.|
Stage 3 Marketing Mix Implications
|Product||Product is differentiated from those of competitors|
|Price||Maximum possible reduction in prices to be made|
|Distribution||Retain existing distributors by offering discounts as well as searching for more channels of distribution|
|Promotion||Intensive promotion efforts in order to establish brand loyalty|
Stage 4 Marketing Mix Implications
|Product||Fewer products left in product line.|
|Price||If the product is to be maintained, the prices are retained. In case of termination, prices are reduced to liquidate inventory.|
|Distribution||Channels are phased out gradually.|
|Promotion||Advertising expenditure reaches a minimum level|
Examples of Product Life Cycle (PLC)
Set out below are some suggested examples of products that are currently at different stages of the product life-cycle:
|Third generation mobile phones||Portable DVD Players||Personal Computers||Typewriters|
|All-in-one racing skin-suits||Breathable synthetic fabrics||Cotton t-shirts||Shell Suits|
|iris-based personal identity cards||Smart cards||Credit cards
Popular Cases of Product Life Cycles
- Pepsi Product Life Cycle Development
- Coca Cola Product Life Cycle Development
- Kellog’s Product Life Cycle Development
- Apple Product Life Cycle Development
- Nokia Product Life Cycle Development