The Product Life-Cycle represents the five stages that a product
experiences from when it enters the market until its decline in the
market.
- Introduction – In the introduction stage, the consumers are
unaware of the product and hence there is a lot of investment in
marketing and promotional activities. There is a low level of
competition during this stage. It is the introduction stage that
gives the company an idea about the consumer response to their
product. The costs are kept high and the main objective of the
introduction stage is to increase the demand for the product with
the hope of capitalizing on it in the future stages.
- Growth – During this stage, the effective marketing strategies
carried out in the introduction stage have reaped their rewards.
There is an increase in the volume of sales and the revenue
generated, thereby acknowledging its popularity. If there is an
increase in competition, then the product might still be heavily
advertised and modified to suit the demands of the customers.
- Maturity – In the maturity stage, the level of increase in
demand and sales volume is comparatively low. Most people are aware
of the product, and hence obtaining new customers is difficult.
There is increasing competition and hence the prices have to be
dropped. The marketing activities are mainly directed towards the
innovative features in a bid to keep the competition at bay.
Although there is a decrease in the profit margin, the sales volume
remains fairly high.
- Saturation – In the saturation stage, the sales volume has
peaked and there is no scope for further growth. The sales will
reach a saturation point and will more or less remain stable
throughout this stage. The competitors will take some of the market
share and hence the companies have to search and promote alternate
applications of the product.
- Decline – This is the last stage of the product life cycle.
This stage is characterised by an inevitable decline in sales.
There is a decrease in demand combined with the loss of market
share, as the increased competition causes the sales to falter.
Marketing activities are kept to a bare minimum and prices are
greatly reduced
Eventually the product retires out of the market unless it is
innovated and finds relevance amongst the customers.
Critiques of PLC
- A Product’s success is not guaranteed. Many products will never
be able to leave the introduction stage to achieve growth or
maturity. Every product does not follow the product life cycle. It
is not a reliable method and there can be variations to it.
- It is difficult to predict how fast or slow the product will
move ahead in the cycle.
- The graph is totally reliant on sales data. Thus, if there is
any fluctuation in the sales data, then the PLC graph will be
unable to predict the overall rise and fall of the product.
- Different markets have different conditions. Therefore,
products which suffer a decline in one market may not suffer the
same fate in other markets.