PRODUCT LIFE CYCLE

(PLC)
PRODUCT LIFE CYCLE (PLC)

The conditions a product is sold under will change over time.

Product Life Cycle Management (PLM) is the succession of

strategies used by management as a product goes through
its life cycle.

PLM is more to do with the 4 Ps

PRODUCT LIFE CYCLE (PLC)

Sales Volume
MONEY

Unit Cost

INTRODUCTION GROWTH MATURITY DECLINE WITHDRAWAL

TIME
PRODUCT LIFE CYCLE (PLC)
MARKETING-MIX IMPLICATIONS
Introduction Stage
During the introduction stage, the primary goal is build awareness.
To establish a market and build primary demand for the product class.

Product - one or few products, relatively undifferentiated.

Price - generally high, assuming a skim pricing strategy

for a high profit margin as the early adopters buy the product
and the firm seeks to recoup development costs quickly.
In some cases a penetration pricing strategy is used and
introductory prices are set low to gain market share rapidly.

Distribution - distribution is selective and scattered as the

firm commences implementation of the distribution plan.

Promotion - promotion is aimed at building brand awareness.

Samples or trial incentives may be directed toward early
adopters. The introductory promotion also is intended to
convince potential resellers to carry the product.
PRODUCT LIFE CYCLE (PLC)

INTRODUCTION PHASE
• DEFINING THE POSITIONING
• ACHIEVING WHOLESALE DISTRIBUTION
• ACHIEVING RETAIL DISTRIBUTION
• AROUSING CONSUMER AWARENESS
• ATTRACTING CONSUMER TRIAL
• CONVERTING CONSUMERS TO THE PRODUCT
• ACHIEVING BUYING CONTINUITY
PRODUCT LIFE CYCLE (PLC)
MARKETING-MIX IMPLICATIONS
Growth Stage
During the growth stage, the goal is to gain consumer
preference and increase sales.

Product - new product features and packaging options;

improvement of product quality.

Price - maintained at a high level if demand is high, or

reduced to capture additional customers.

Distribution - distribution becomes more intensive.

Trade discounts are minimal if resellers show a strong
interest in the product.

Promotion - increased advertising to build brand preference.

PRODUCT LIFE CYCLE (PLC)
THE GROWTH PHASE
• INCREASING THE USER BASE
• EXPANDING DISTRIBUTION
• EXPANDING SHELF SPACE
• INCREASING PURCHASE FREQUENCY
• SHIFT FROM PRODUCT AWARENESS ADVERTISING
TO BRAND PREFERENCE ADVERTISING
• LOWER PRICES TO ATTRACT NEW LAYER OF PRICE
SENSITIVE BUYERS
• ENSURING ADEQUATE INVENTORIES AT
WHOLESALE AND RETAIL LEVELS
• EXPLORING LINE EXTENSIONS
PRODUCT LIFE CYCLE (PLC)
MARKETING-MIX IMPLICATIONS
Maturity Stage
During the maturity stage, the primary goal is to maintain
market share and extend the product life cycle.

Product - modifications are made and features are added in

order to differentiate the product from competing products
that may have been introduced.

Price - possible price reductions in response to

competition while avoiding a price war.

Distribution - new distribution channels and incentives to

resellers in order to avoid losing shelf space.

Promotion - emphasis on differentiation and building of

brand loyalty. Incentives to get competitors' customers to switch.
PRODUCT LIFE CYCLE (PLC)

THE MATURITY PHASE

• RETAINING CURRENT USERS
• ATTRACTING NEW USERS
• EXPANDING DISTRIBUTION
• OPTIMISING PRODUCT LINE AND PACKAGING
• OPTIMISING PRODUCT COSTS
PRODUCT LIFE CYCLE (PLC)
THE MATURITY PHASE STRATEGY
1. MARKET REVITALIZATION
VOLUME = NO. OF BRAND USERS X USAGE PER USER
a) INCREASING USERS
• CONVERT NON-USERS
• ENTER NEW MARKET SEGMENTS
• SNATCH COMPETITOR’S CUSTOMERS
b) INCREASING USAGE
• MORE FREQUENT USE
• MORE USAGE PER OCCASION
• NEW AND MORE VARIED USES
2. PRODUCT MODIFICATION
3. MARKETING MIX MODIFICATION
PRODUCT LIFE CYCLE (PLC)
THE MATURITY PHASE STRATEGY

4. REJUVENATION
• DEVELOP AND QUALIFY MAJOR PRODUCT
IMPROVEMENT
• REPOSITION PRODUCT
• ACHIEVE NEW DISTRIBUTION OUTLETS
• ACHIEVE CONSUMER TRIAL AND CONVICTION
• ATTRACT NEW USERS AND NEW USES

5. REINFORCEMENT
PRODUCT LIFE CYCLE (PLC)
MARKETING-MIX IMPLICATIONS
Decline Stage
During the decline phase, the firm generally has three options:
1. Maintain the product in hopes that competitors will exit.
Reduce costs and find new uses for the product.
2. Harvest it, reducing marketing support and coasting
along until no more profit can be made.
3. Discontinue the product when no more profit can be
made or there is a successor product.
Product - the number of products in the product line may be reduced.
Rejuvenate surviving products to make them look new again.

Price - prices may be lowered to liquidate inventory of discontinued products.

Prices may be maintained for continued products serving a niche market.

Distribution - distribution becomes more selective.

Channels that no longer are profitable are phased out.

Promotion - expenditures are lower and aimed at reinforcing the brand

image for continued products.
PRODUCT LIFE CYCLE (PLC)

DECLINE PHASE

• RETARDING ATTRITION IN USER BASE

• RESTRICTING PRODUCT LINE
• REDUCING PRODUCT COSTS
• RETARDING DISTRIBUTION LOSSES
• MAXIMISING IMMEDIATE PROFITS
PRODUCT LIFE CYCLE (PLC)
Characteristics
I G M D
Sales Low sales Rapidly rising Peak sales Declining
sales sales

High cost Average cost per Low cost per Low cost per
Costs per customer customer customer
customer

Profits Negative Rising profits High profits Declining profits

Customers Innovators Early adopters Middle majority Laggards

Stable number
Competitors Few Growing number Declining number
beginning to
decline
Marketing
Objectives I G M D
Reduce
Create product Maximize/GAIN Maximize profit while expenditure and
awareness and trial market share defending market share milk the brand
PRODUCT LIFE CYCLE (PLC)
Strategies I G M D
Product Offer a basic Offer product Diversify brands Phase out weak
product extensions, service, and models items
warranty

Price Charge cost-plus Price to penetrate Price to match or Cut price

market Best competitors

Place Build selective Build intensive Build more intensive Go selective:

Distribution distribution Distribution Phase out
unprofitable
outlets
Promotion Build product Build awareness & Stress brand Reduce to level
awareness among interest in the mass differences and needed to retain
early adopters and Market Benefits hard-core loyals
dealers

Sales Use heavy sales Reduce to take Increase to Reduce to

Promotion promotion to entice advantage of heavy encourage minimal
trial consumer demand brand switching level
 PRODUCT LIFE CYCLE (PLC)

CONSUMER BEHAVIOUR (Types)

Early Early Late

Innovators Adopters Majority Majority Laggards
2.5% 13.5% 34% 34% 16%

Percentage of Adopters by Category Sequence

Thank You