Product life cycle (PLC)

Product life cycle (PLC)is the succession of strategies used by business

management as a product goes through its life cycle. The conditions in which a product is
sold (advertising, saturation) changes over time and must be managed as it moves
through its succession of stages.

Like human beings, products also have their own life-cycle. From birth to death
human beings pass through various stages e.g. birth, growth, maturity, decline and death.
A similar life-cycle is seen in the case of products. The product life cycle goes through
multiple phases, involves many professional disciplines, and requires many skills, tools
and processes. Product life cycle (PLC) has to do with the life of a product in the market
with respect to business/commercial costs and sales measures. To say that a product has a
life cycle is to assert four things:

• that products have a limited life,

• product sales pass through distinct stages, each posing different challenges,
opportunities, and problems to the seller,
• profits rise and fall at different stages of product life cycle, and
• products require different marketing, financial, manufacturing, purchasing, and
human resource strategies in each life cycle stage.
 Stage Characteristics
1. costs are high
2. slow sales volumes to start
3. little or no competition
1. Market
4. demand has to be created
introduction stage
5. customers have to be prompted to try the product

6. makes no money at this stage

1. costs reduced due to economies of scale
2. sales volume increases significantly
3. profitability begins to rise
4. public awareness increases
2. Growth stage
5. competition begins to increase with a few new players in
establishing market

6. increased competition leads to price decreases

1. costs are lowered as a result of production volumes
increasing and experience curve effects
2. sales volume peaks and market saturation is reached
3. increase in competitors entering the market
4. prices tend to drop due to the proliferation of competing
3. Maturity stage
products
5. brand differentiation and feature diversification is
emphasized to maintain or increase market share

6. Industrial profits go down

1. costs become counter-optimal
2. sales volume decline or stabilize
4. Saturation and 3. prices, profitability diminish
decline stage
4. profit becomes more a challenge of production/distribution
efficiency than increased sales

Introduction.
The need for immediate profit is not a pressure. The product is promoted to create
awareness. If the product has no or few competitors, a skimming price strategy is
employed. Limited numbers of product are available in few channels of distribution.

Growth.
Competitors are attracted into the market with very similar offerings. Products become
more profitable and companies form alliances, joint ventures and take each other over.
Advertising spend is high and focuses upon building brand. Market share tends to
stabilise.

Maturity.
Those products that survive the earlier stages tend to spend longest in this phase. Sales
grow at a decreasing rate and then stabilise. Producers attempt to differentiate products
and brands are key to this. Price wars and intense competition occur. At this point the
market reaches saturation. Producers begin to leave the market due to poor margins.
Promotion becomes more widespread and use a greater variety of media.

Decline.
At this point there is a downturn in the market. For example more innovative products are
introduced or consumer tastes have changed. There is intense price-cutting and many
more products are withdrawn from the market. Profits can be improved by reducing
marketing spend and cost cutting.