Product Life Cycle

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Concept

 Products have a limited life.

 They pass through different stages each
having its own opportunities &
challenges.
 Profits rise & fall during the different
stages.
 Different strategies need to be adopted
during the different stages.
 Definition: Aggregate demand over an
extended period of time.
 PLC can be used to analyze a product
category (cooking medium), a product
form (vegetable oil), a product (sunflower2
Stages

1 4
2 3

Sales

Profit

Time

3
Stages
1. Introduction –risky & expensive-slow sales
growth-customers unfamiliar with product
so stimulate demand with promotion
program-negative or nonexistent profits.
Eg: Bajaj XCD 135.
2. Growth – market acceptance –increasing sales-
profits improve-competition develops-prices
fall-profits fall towards the end. Eg: ITC
Bingo chips.
3. Maturity – slowdown in sales as the product
has achieved its potential buyers-profits
stabilize or decline due to price
competition. Eg: Sony TV sets.
4. Decline – sales are down & profits erode-it may
be because a better & less expensive 4
Forms

 Style – distinctive mode of expression

appearing in the field of human
behaviour. It comes & goes. Eg: Friday
dressing by Allen Solly.
 Fashion – currently accepted popular
style in a given field. It may fade away
with time. Eg: Disc brakes in two-
wheelers.
 Fad – fashion that comes quickly,
adopted with great zeal, peak early &
decline very fast. Do not survive much
time as they do not satisfy a strong 5
Forms
Style

Fashion Fad

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Strategies

 Introduction – if a company can bring a new type

of product in the market then it can have the
pioneer advantage. But it requires huge
investment & risks. Eg: Diet Coke. A company
can also enter the market after other
companies have done so.
 In any case introduction stage is characterized
by huge promotional expenditure (to inform
customers, induce trials) & low or negative
profits. Strategies taken are:
1. Rapid skimming – high price high promotion-
done when market is unaware of the product-
those who become aware can pay the high
price. Eg: Apple I-pod.
2. Slow skimming – high price low promotion-done
when market is aware of the product &
people can pay high price. Eg: Swiss watches 7
Strategies
3. Rapid penetration – low price high promotion-
market is unaware, customers are price
sensitive, strong competition. Eg: Launch of
Koutons.
4. Slow penetration – low price low promotion-

market is aware, customers are price sensitive.

Eg: Clinic plus 50p. sachet.
 Growth – sales start climbing as early adopters
like the product & others start buying
-competitors enter, price falls. Strategies
taken are:
1. Enter new markets.
2. Add new models.
3. Lowers price further to attract next layer of price
sensitive buyers.
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Strategies
 Maturity –sales slowdown, profits stabilize.
Strategies include:
1. Market modification-convert nonusers
(telebrands products), win competitors’
customers (switch to Tata indicom) &
increase usage with existing customers
(brush twice a day).
2. Product modification-quality improvement i.e.
increasing its functional performance (new
advanced Rin), style improvement i.e.
increasing product’s aesthetic appeal
(digital display, LED lights in bikes).
 Decline – sales are down profits are down.
Strategies may be to cut cost, divest or wait
for good times. 9
Planned obsolescence

 Make existing products out of date &

increase the market of replacement
products.
1.Technological obsolescence – technical
improvements lead to more effective
products & old products are
deserted. This is socially &
economically desirable. Eg:
gramophone records, cassettes, CDs.
2.Style obsolescence – superficial
characteristics of a product are
altered so that the new model is
differentiated from the old one.
Intended to make people feel in 10
Comparisons

Introduction Growth Maturity Decline

Customers Innovators Mass Mass Loyal
CompetitionLittle Increasing Intense Decreasing
Sales Low Rapid Slow/no Declining
growth growth
Profits None High Declining Low/none
Costs High Declining Stable Low
Distribution Scattered Intensive Intensive Selective

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